Check-in Check-Out Managing Hotel Operations, 9E Gary K Vallen Solution Manual

Online Instructor’s Manual to accompany

Check-In, Check-Out: Managing Hotel Operations Ninth Edition

Gary K. Vallen Jerome J. Vallen

TABLE OF CONTENTS CHAPTER

1 2 3 4 5 6 7 8 9 10 11 12 13

Notes to the Instructor Text Outline The Traditional Hotel Industry The Modern Hotel Industry The Structures of the Hotel Industry Forecasting Availability and Overbooking Global Reservations Technologies Individual Reservations and Group Bookings Managing Guest Services Arrival, Registration, Assignment, and Rooming The Role of the Room Rate Billing the Guest Folio Cash or Credit: The City Ledger The Night Audit Hotel Technology Introduction to Examinations Answer Sheets

PAGE iv vii 1 11 21 31 41 54 64 79 90 101 113 125 134 145 147

EXAMINATIONS Unit I For Chapters 1 – 3 Unit II For Chapters 4 – 6 Unit III For Chapters 7 – 9 Unit IV For Chapters 10 – 11 Unit V For Chapter 12 – 13 Final Examination

Unit I-1 Unit II-1 Unit III-1 Unit IV-1 Unit V-1 Final-1

BONUS QUESTIONS

Bonus-1

iii

Check-In Check-Out Notes to the Instructor This 9th edition maintains the traditions that have assured the text’s popularity over nearly four decades! It has been revised again and again to keep the content current, accurate and interesting.

A work as complete as this allows each instructor to pick and choose sections that best meet class needs. Whether the book is used for an introductory course, a rooms management class, a hotel management seminar or as a supplement to accounting or housekeeping classes, information is available. Detailed chapter outlines and a complete index quickly reference the proper text sections.

Since its inception, friends and users have suggested ideas, examination questions, overheads, and photos. They have pointed out errors, misprints and misspellings. Thank you. Please continue contributing to the quality of both the text and the Instructor’s Manual. To contact us: Gary Vallen, Professor School of Hotel and Restaurant Management Northern Arizona University NAU Box 5638, Flagstaff, AZ 86001-5638 Tel: 928-523-1702; Fax 928-523-1711 Gary.Vallen@nau.edu

Jerome Vallen, Dean Emeritus Harrah College of Hotel Administration University of Nevada Las Vegas 2183 Eagle Watch Drive Las Vegas, 89012 Tel: 702-260-4548 jvallen@nevada.edu

Recommended Approach For Each Chapter: This 9th Edition has some excellent resources for the instructor. Take advantage of these (identified below in italics) by: • Introducing each chapter using PowerPoint visually reinforces the outline and content. o Each Chapter Outline is on its own page(s) if the faculty member prefers to distribute it or use it as an overhead.

• Remaining sensitive to the Objectives and Goals of the chapter.

• Emphasizing the Professional Vocabulary and Key Concepts throughout classroom discussion.

• Engaging in interactive discussion around each Incident in Hotel Management and deciding if the class brainstormed better answers than the authors of the text!

• Assigning end-of-chapter Problems. o Ask a different student (previously unannounced) to explain his/her answer.

• Reviewing Answers to the 5 True/False Challenges.

• Administering the Chapter Quiz provided for each chapter.

• Administering Unit Quizzes, which can also be incorporated in the final examination.

Recommended Extra Credit Assignments In addition to the usual extra credit assignments, we suggest two other options. iv

1. Require a weekly written answer to one of the Problems, say #3 of each chapter, for 5 or 6 consecutive weeks. Miss one week and the extra credit is lost! But this allows someone to join in for the second 5 or 6 weeks. Extra, extra credit for those who complete both 5 or 6 week assignments.

2. Require a one-page summary of a magazine article that pertains to anything in the outline. Student must attach a copy—no originals accepted (they’ll cut the library’s magazines)—of the article.

This broadens the faculty member’s resources as well as the student’s understanding.

Guidance for Preparing the Course Syllabus Pages vii through x of the text, The Table of Contents, contains a broad outline of the textbook.

Faculty members may wish to pick specific topics to include in the syllabus (or to exclude) since it is unlikely that all the material can be covered in a single semester.

Enrichment for Student and Faculty Use Each edition of the text strives to be more readable and to provide the user more resources than with previous editions. Here are some of the available resources: NOTE: Please remember the entire Instructor’s Manual is available online. That means you can download, alter, and print exams, vocabulary terms, chapter outlines, end-of-chapter questions… whatever you wish.

THE INSTRUCTOR’S MANUAL has been structured so that each chapter follows the same format: o Preparing The Lecture: A listing of objectives and goals. o What The Chapter Is All About: A brief recap of key content. o Some Chapter Highlights: Key concepts. o Chapter Outline: Stands alone on separate page for easy distribution or overhead. o Professional Vocabulary: Several important terms re-stated and defined. o Answer to An Incident in Hotel Management: Answer to assist discussion of incident listed at the end of each text chapter. o Answers to End-Of-Chapter Questions: Answers to the questions following each chapter in the textbook. o Chapter Quiz: For each of 13 chapters, a quiz is provided. Each quiz has 5 true/false questions, 5 multiple choice questions, and 1 short essay question. o Answers to Quiz Questions: Provides instructor answers against which to grade quizzes. o Unit and Final Exams: Designed for easy preparation. o Bonus Supplemental “Pick and Choose” Exam Questions: Designed to provide an additional inventory of quiz and exam questions to those faculty who wish to alter certain questions on quizzes and exams.

v

IN THE TEXT o Frequent headings and shorter sentences to increase readability. o Occasional restatements of topics to reinforce learning. o Web site assignments. o Detailed and cross-referenced index. o Numerous photographs, exhibits, and charts. o Alphabetized glossary.

vi

Check-In Check-Out Text Outline

CHAPTER 1 – THE TRADITIONAL HOTEL INDUSTRY Understanding the Hotel Business The Service Culture A Cyclical Industry How Hotels Count and Measure Special Characteristics of the Hotel Business Traditional Classifications Size Class Type Plan Variations on the Themes CHAPTER 2 – THE MODERN HOTEL INDUSTRY New Product Patterns Segmentation, Brand, and Image New Product Segments Mixed-Use Projects and Other Hotel Segments New Market Patterns Marketing to the Individual Guest Marketing to the Group New Ownership Patterns The State of the Industry Ownership and Financing Alternatives New Management Patterns Hotel Chains Management Contracts and Management Companies CHAPTER 3 – THE STRUCTURES OF THE HOTEL INDUSTRY The Organizational Structure Ownership The General Manager The Hotel (or Resident) Manager The Rooms Manager Manager of Guest Services The Building Structure The Old versus the New Numbering for Identification Room Shape and Size Bed and Bath

vii

CHAPTER 4 – FORECASTING AVAILABILITY AND OVERBOOKING Forecasting Available Rooms The Simple, Unadjusted Room Count Adjusted Room Count Overbooking The Perfect Fill Reservations are Legal Contracts Minimizing the Overbooking Problem CHAPTER 5 – GLOBAL RESERVATIONS TECHNOLOGIES Global Distribution A Brief History Seamless Connectivity Application Service Providers Traditional Reservation Channels Other Trends in Electronic Reservations Automated Revenue Management Systems The Yield Management Revolution Automated Yield Management Systems CHAPTER 6 – INDIVIDUAL RESERVATIONS AND GROUP BOOKINGS Components of the Reservation Automated Phone Systems Information Contained in the Reservation Reservation Information Flow Reservation Coding Convention and Tour Group Business The Group Rooms Contribution Segments of Group Business Booking the Convention Negotiating Convention Rates Handling Tour Group Reservations CHAPTER 7 – MANAGING GUEST SERVICES Total Quality Management (TQM) Total Quality Management in Innkeeping The Real Components of TQM Total Quality Management Defined Customer Relations Management (CRM) Customer Relations Denied Measuring Guest Services Americans with Disabilities Act Complaints

viii

CHAPTER 8 – FROM ARRIVAL TO ROOMING Greeted on Arrival Moments of Truth Registration Walk-Ins Registered, Not Assigned (RNA) Waiting Lines The Registration Card Assignment No-Smoking Rooms Pets The Assignment Process Did Not Stay Establishing Credit and Identity Rooming the Guest The Uniformed Services Rooming Slips Arriving at the Room Green Hotels CHAPTER 9 – THE ROLE OF THE ROOM RATE Room Rates and the Economy Supply and Demand Competition Elasticity Additional Factors in Rate Surcharges Discounts from the Rack Time as a Factor in Rates Arrival Time Departure Time The 24-Hour Stay Day Rates Incentive Rates The American-Plan Day Determining the Proper Room Rate The Hubbart Room Rate Formula The Building Cost Rate Formula The Ideal Average Room Rate Upselling CHAPTER 10 – BILLING THE GUEST FOLIO What the Chapter is all About The Sale and Record Keeping of Services Preparing the Folio ix

Recording (Accounting) for Each Transaction Accounts Receivable Types of Accounts Receivable (A/R) The Folio: The Individual Account Receivable The Folio: The Group Account Receivable Understanding Charges and Credits Posting to the Folio (The Account Receivable) Overview of the Billing Procedure Recording Charges to Accounts Receivable Recording Credits to the Folio CHAPTER 11 – CASH OR CREDIT (THE CITY LEDGER) Cash Cash Paid Outs Cash Receipts The Cashier’s Daily Report Other Related Issues Credit and the City Ledger Review: The City Ledger Credit Cards Other Cards Other City-Ledger Categories Master Accounts Groups, Packages and Company-Sponsored Functions Individual City-Ledger Receivables Managing Cash and Credit Managing Cash Managing Checks Managing Credit CHAPTER 12 – THE NIGHT AUDIT The Auditor and the Audit The Night Auditor Overview of the Audit Posting Room Charges Revenue Verification Reconciling Using a Property Management System Interfacing Different Systems Verifying Basic Data Reports from the Night Audit Reports to the Manager CHAPTER 13 – HOTEL TECHNOLOGY Technology in the Guest Room: Historical View A Look Back x

Costs and Benefits Technology in the Room: The New Generation Locking Systems Radio Frequency Identification (RFID) Energy Management and Climate Control Systems Fire-Safety Systems Minibars Inroom Safes Communication Systems A Brief History of Telephone Service Internet Access Future of Hotel Telephones Wake-Up Systems Voice Mail Where’s My Phone?

Other Technologies Inroom Entertainment Systems At the Desk

xi

CHAPTER 1 The Traditional Hotel Industry Preparing The Lecture: 1. Use the chapter outline (provided on its own page for distribution or overhead use) to structure the week’s work. Better still: Use the Power Point.

2. Aim to develop specific objectives for the students: • A framework of historical reference that will document the direction of hotel development and demonstrate the industry's vibrancy across the centuries.

• An appreciation for the magnitude of the hotel industry and the variety of its products.

• A sense of the cyclical nature of the lodging industry.

• A desire to build a technical vocabulary as an entree to the profession and a prerequisite to understanding the lectures and reading materials that follow.

• An ability to compute and comprehend the three, basic formulas: Percentage of Occupancy (%); Average Daily Room Rate (ADR); and Revenue Per Available Room (RevPar).

3. Establish lecture goals, which might include: • Identifying the hotel type, plan, and estimated rate whenever a hotel brand is named during the class hour.

• Distinguishing between plans and differentiating these from classes of hotels.

• Understanding the limitations of rating systems especially outside of the United States.

• Describing the service culture and the impact technology has played in recent decades. This might include a preliminary discussion on how the shift to newer but less personal forms of service (self-check-in and check-out, for instance) impacts the role of the hospitality service provider in the 21st century.

• Touch on the impact of social network sites (including travel blogs, Twitter, and Facebook) on the industry.

• Present the idea that BECAUSE the hotel industry is so dynamic in nature, it can provide an exciting career path.

What The Chapter Is All About: The introductory unit explains the hotel business. Students better understand the rooms division if they appreciate the history, magnitude and culture of the industry. Chapter 1 does this using several techniques. A brief history of hotelkeeping emphasizes its changing profile. Definitions, specialized vocabulary, and basic industry formulas introduce terminology that is prerequisite both to professional membership and a better understanding of the material to come.

The hotel industry makes a major economic contribution to the global economy by serving both business and tourism development. When the economy is strong, the lodging industry is generally strong. But just as the economy has its cycles of good times and bad, so does the hotel 1

business. Factors such as oil prices, inflation, and terrorism impact the fiscal health of lodging industry. The industry's ups and downs reflect the limitations inherent in hotelkeeping. (1) The product is perishable – a room not sold tonight is lost forever. (2) The location and product inventory (rooms) are fixed – they cannot be moved as demand patterns change. (3) Entry into the business takes large amounts of capital – creating huge fixed costs that necessitate high occupancies to achieve break-even status. (4) Activity is seasonal – with all the adjunct problems of operating an ebb-and-flow business. All of which contributes to boom-and-bust cycles as business volume lags or exceeds the industry's break-even point.

Hotelkeeping is a varied business. Hotels differ in size (as measured in number of rooms); in class (of services rendered); in purpose of use (type of hotel); and in plan offered (meals provided or not). Worldwide, most governments – with the United States the major exception – have classified and formalized these differences into rating systems.

Room rate is one measure used by the industry worldwide. Average Daily Rate (ADR), is a helpful indicator for guests, but serves managers, owners and lenders equally well. Percentage of Occupancy is another standardized measurement. In some countries, it is a ratio of the number of rooms sold to the number of rooms available for sale. Many other countries, as well as the international organizations that monitor the industry, use a Percentage of Bed Occupancy (number of beds sold as a ratio to the number of beds available) as the measuring norm.

Some Chapter Highlights: What Is The Hotel Business? The quantitative value of the business (market share) is measured in Percentage of Occupancy (Number of Rooms Occupied ÷ Number of Rooms Sold). The qualitative value of the business (the class of hotel) is measured by Average Daily Rate or Sales Per Occupied Room (Room Sales Measured in Dollars ÷ Number of Rooms Sold).

Traditional Classifications are used to identify the many segments that now comprise the industry. The size and location of the property, its services and charges (including the various “plans” for including meals in the daily room rate), and the nature of its clientele (leisure, business, discount, convention, etc.) are among the traditional identifications. Chapter 2 offers additional groupings, new classifications that have emerged as the industry adapts its profile to a changing society.

Along with the basic math principles (ADR, occupancy, RevPar), vocabulary words and terms are also introduced in this chapter as a means for developing industry professionalism. Key concepts such as break-even point, perishability of inventory, seasonality of demand, full-service to limited-service classifications, employee-to-room ratios, and rating systems are all presented in this chapter. They lay the foundations on which the student builds understanding and clarity.

2

CHAPTER 1 THE TRADITIONAL HOTEL INDUSTRY Chapter Outline: UNDERSTANDING THE HOTEL BUSINESS The Service Culture A Cyclical Industry How Hotels Count and Measure Occupancy Sales per Occupied Room RevPar (Revenue per Available Room) Double Occupancy Break-even Point Special Characteristics of the Hotel Business Perishability Location Fixed Supply High Operating Costs Seasonality TRADITIONAL CLASSIFICATIONS Size Mom-and-Pop Motels Class Average Daily Rate Full-Service to Limited-Service Number of Employees Rating Systems Worldwide The U.S. System Type Commercial Hotels Residential Hotels Extended-Stay Hotels Resort Hotels The Megaresort Plan European Plan Continental Plan (Continental Breakfast) American Plan Modified American Plan Variations on the Themes Bed and Breakfast (B&B) Boutique Hotels Trophy Hotels 3

Professional Vocabulary: Average Daily Rate (ADR), expressed in dollars and cents, represents the hotel's (or the chain’s, or the industry's, or the community's, or the nation's) ability to achieve a given level of earnings per room. ADR is a measure of room rate actually paid by guests rather than room rate quoted to them.

Average Daily Rate is obtained by dividing the total revenue from all room sales for the period (day, week, month, year) by the total rooms sold for the period: Room Sales (Dollars) ÷ Number of Rooms Sold. As an “average,” it does not represent the sale of any given room. Also commonly known as “Sales Per Occupied Room” and “Average Room Rate.”

Boutique Hotels have gained fashion during the past decade or so. Like a boutique shop, boutique hotels are small, upscale, and very fashionable, with a limited product and clientele.

Initially, few boutique hotels were profitable, so they were often tagged, "Trophy Hotels."

Trophy Hotels are owned for the pleasure of ownership—more like trophies than financial investments. Careful financing, marketing, and operating skills have changed boutique hotels to profitable ventures. Social networks play into the mystique and draw of the properly marketed boutique hotel. Creating a chain of boutique hotels (standardizing them) seems to be an oxymoron to some.

Occupancy is expressed in decimals or percentages. Occupancy represents the hotel's (or the chains, or the industry's, or the community's, or the nation's) ability to achieve a given level of business volume. For the hotel industry, business volume is the number of guest rooms sold.

Unlike other products which can be replaced on the shelves when their number are depleted, rooms sold are limited by the number actually built, called the number of rooms available for sale. Percentage of Occupancy is computed using the formula, Number of Rooms Sold ÷ Number of Rooms Available For Sale.

Per-key cost is the per-room cost, either the cost per room to build or the resale price per room.

Hotels are valued based on this figure. The fact that hotels are real estate subjects their value to swing with the economic cycle.

Perishability refers to vacant rooms as an item of inventory. The industry’s mantra is “an unsold room tonight can never be sold again.” Opportunities, whether taken advantage of or missed, cannot be recaptured. As such, the optimal handling of an establishment’s rooms leads to “moments of truth” each day.

Plan gets more attention than it merits. Almost every hotel in the United States and the vast majority elsewhere operate on the European Plan (EP). Under the EP, meals – if taken in the hotel at all – are charged separately and in addition to the room charge.

American Plan (AP) hotels include three meals (breakfast, luncheon and dinner) within the room charge. All-inclusive hotels usually serve meals around the clock. Hotels operating on the Modified American Plan (MAP) change or modify the number of meals included with the room rate. Lunch, the midday service, is the meal usually eliminated.

4

Answer to An Incident in Hotel Management: The incident highlights a real failure by management to provide towels to guests. The result was a dissatisfied guest, upset because his family was charged for two towels taken out of the guestroom and left on the beach. The hotel’s immediate response should be to contact the guest by telephone or chat with him face-to-face if he is still on property. Additionally, the hotel should credit the guest back for the $22 he was charged. Something beyond that might be deemed worthy (a small gift sent to the family to remind them of their vacation) if the guest seems especially upset.

This incident goes beyond mere towels, though. Why is management not receiving complaints from other guests about low towel inventory? Are complaints hardly listened to by front office employees? Are front office employees even asking departing guests about their stay? Certainly a refresher course on proper handling of guest complaints is warranted. In addition, why has housekeeping not requisitioned additional towels? Who is responsible for stocking and inventorying beach towels. Is the employee visiting the beach every half hour?

Answers to End-Of-Chapter Questions: 1. Begin with 63,000 rooms as a given.

Assume a loss of (here student must insert an estimate), say, 50% after reductions already in place (page 23 of the text has 10% assigned to permanent guests). 63,000 - 6,300 = 56,700 rooms @ 60% occupancy (page 10 of the text) = approximate 34,000 rooms per day sensitive to the attack. Assume an average daily rate of $85 (page 10) and the impact to last 6 months (185 days).

Answer: $85 x 34,000 rooms =$2,890,000 x 185 days = $534,650,000. x 50% (or whatever assumption the student makes) = approximate loss of $267,325,000.

The correct answer depends on the approach; the actual values are of less importance.

2. An inspector shopping a hotel property would rate several categories. A partial list might be: Physical Plant, which would include cleanliness, working order, light bulbs, etc. for: Exterior Lobby Elevator Corridors Restrooms Courtesy and Interaction, which includes spoken word, body language, attention span, etc. for: Reception Bellstand Doorman Telephone Signage Guest Room , which includes cleanliness, completeness, odor, working order, etc. for: Tub and Sink Television Stationery Clock/Radio Laundry bag 5

Dining Room, which includes reception, cleanliness, friendliness, quality of food, etc. for: Greeting Comfort Hot food Flavor Variety Reservations, which includes identification of reservationist, promptness of response, etc. for: Answering Voice Tone Knowledge Selling Sign Off Between three and five grades, from excellent to unsatisfactory should be part of each evaluation. The instructor should review the exhibit in Chapter 7 for design and format.

3. At the time of preparation, Fall 2011, the industry is experiencing a weak period in its economic cycle. To demonstrate the cycle as it played out in 2011, CalculatedRisk on 2/17/2011 gave these industry figures: "Overall, the U.S. hotel industry’s occupancy increased 1.7% to 54.7%, ADR was up 0.7% to US$97.88, and RevPAR finished the week up 2.4% to US$53.51...The occupancy rate really fell off a cliff in the 2nd half of 2008, and then 2009 was the worst year for the occupancy rate since the Great Depression. The occupancy rate started to improve in the Spring of 2010, and was above the 2008 rates later in the year.

However, so far, 2011 is closer to the weak occupancy rates of 2009 and early 2010 than to the median for 2000 through 2007. [http://www.calculatedriskblog.com/2011/02/hoteloccupancy-rate-hotels-struggling.html Data Source: Smith Travel Research, Courtesy of HotelNewsNow.com] Just eight months later on 10/13/2011, CalculatedRisk presented this data: "In year-over-year comparisons for the week, occupancy rose 1.5% to 64.4%, average daily rate increased 2.8% to US$104.48, and revenue per available room finished the week up 4.3% to US$67.32. [http://www.calculatedriskblog.com/2011/10/hotels-occupancy-rate-shows-slight-year.html From HotelNewsNow.com: STR: U.S. hotels report slight performance gains Data Source: Smith Travel Research] Caution to not overbuild still drives hotel companies. The student should answer in the specific period in which the text is being used by quoting occupancy and ADR in terms of today versus historical experience. Other factors to keep in mind over the coming years; the U.S. and global economy (recession, inflation, unemployment); oil prices ($87.40 per barrel at the time of this writing), etc.

4. Hotels have had traditionally high break-even points. Recent refinancing and improved building techniques have helped rein in the high fixed costs, which contribute to the high break-even points.

Costs are: Fixed: Mortgage interest; real estate taxes; fire and extended insurance coverage; etc.

Semifixed: Utilities and energy consumption (heating, lighting, water); labor and fringe benefits; etc.

Variable: Laundry costs; food and beverage purchases; labor; paper supplies; etc.

6

5. Exhibit 1-4 reports the MGM Grand Hotel has 6,850 rooms. There are 365 days per year.

Therefore, the number of available rooms at the MGM Grand is 2,500,250 (365 x 6,850).

If the hotels hopes to achieve occupancy of 82%, it must sell 2,050,205 rooms: Number of Rooms Occupied Number of Rooms Available for Sales

2,050,205 2,500,250

= 82%

6. The City of Atlanta, Georgia has approximately 67,000 hotel rooms. Therefore, a 1% rise in occupancy adds 670 rooms. If the typical hotel has 0.6 (six-tenths) employee per room, than each 670 room increase requires 402 employees.

Answers to Quiz Questions That Follow: 1. True: 2. False: 3. False: 4. True: 5. False: The U.S. Bureau of the Census has no such provisions or definitions.

6. e 7. d Business travelers are usually single occupants.

8. b 9. a 10. d While innovation is a necessity of the business for survival in the competitive hotel environment, it is not a recognized characteristic of the industry.

Short Answer:

Part A: Describe the business cycle that dictates the economic ups and downs of the hotel industry.

Numerous factors impact travel. Following the significant terrorism incident of 9/11/01, all travel stopped. And then as travel returned, transient travel represented a higher ratio then it had previously. Experts identified this as regional driving travelers who sought accommodations at nearby attractions because of their fear to fly. They wanted a vacation, so took one in their "backyard." Corporate travel stayed lower than pre-9/11 numbers for well over a year.

As the economy heats up, corporate travel increases. There is usually a bubble of travel before the rise in the overall economy. In other words, even when the country finds itself in a depression, corporate travel may begin increasing as business levels begin rising; sales persons, regional meetings, and the like all perk-up even when the overall economy is still in slumber.

Similarly, travel doesn't slow until a recession is in full-bloom. This is because regional meetings, corporate retreats, and conventions, all of which are booked far in advance, tend to continue into the early months of a recession.

7

Part B: At what stage of the cycle is the industry currently in? How do you know that?

Although many experts have been calling for an end to the current recession, others suggest we are in for a long-haul. Still, statistics don't lie. The lodging industry is having a solid year where occupancy levels and ADR are approaching their highs of 2007. Certainly there are weak markets across the United States. But many metropolitan centers are having a very solid year.

No doubt, when the economy does turn around, the lodging industry will be posied for some very profitable years.

8

Check-In Check-Out Quiz: Chapter 1 _________________________ Name _________________________ Identification Number

_________________________ Section _________________________ Hour

T/F Questions: Circle either T for True or F for False. (Questions that are partially false should be marked False.)

1. Geography is important to the resort hotel; population to the residential hotel and businesses to the commercial hotel. T F 2. Because hotels have large fixed costs (interest on debt payments, licenses, taxes, etc.), they are able to break-even at very low rates of occupancy. . T F 3. Most cities in the U.S.A., New York City especially, have limited their hotels to either a commercial or residential class; that is, commercial hotels may not accept long-term guests. T F 4. A hotel that sold 240 rooms last night with a total rooms revenue of $24,000 has an average daily rate of $100.00. T F 5. Legal definition and regulations by the U.S. Bureau of the Census require properties of 500 rooms or more to be called Hotels, those of 50 rooms or less to be called Motels, and those in between to be called Motor Inns or Motor Hotels. T F

Multiple Choice: Circle the one answer that best completes the thought.

6. In an effort at better marketing, limited service hotels have adopted newer terminology, including: a.

Select Service b.

Minimal Service c.

Focused Service d.

Both a and b e.

Both a and c 7. The smallest degree of double occupancy would most likely be in: a.

Resort hotels b.

Ski chalets c.

Boutiques 9

d. e.

Business hotels Family-oriented facilities

8. Calculate RevPar for the following hotel. The hotel had 300 rooms available for sale last night.

The hotel sold 200 rooms and had gross rooms revenue of $36,000. Calculate RevPar: a. $180.00 b. $120.00 c. $18.00 d. $12.00 e.

None of the above 9. The important Occupancy Ratio is computed: a.

Number of Rooms Occupied ÷ Number of Rooms Available b.

Number of Rooms Available ÷ Number of Rooms Occupied c.

RevPar x Number of Rooms Double Occupied d.

RevPar x ADR e.

Both c and d since they almost produce the same mathematical values 10. Which of the following is NOT usually considered to be a characteristic of the hotel industry? a.

Perishability b.

Fixed location c.

Seasonality d.

Innovation e.

None of the above; they are all regular characteristic of innkeeping

Short-Answer: Answer briefly with short paragraphs, phrases, or exhibits.

This question requires two brief statements: Part A: Describe the business cycle that dictates the economic ups and downs of the hotel industry.

Part B: At what stage of the cycle is the industry currently in? How do you know that?

10

CHAPTER 2 The Modern Hotel Industry Preparing The Lecture: 1. Use the chapter outline (provided on its own page for distribution or overhead use) to structure the week’s work. Better still: Use the Power Point.

2. Aim to develop specific objectives for the students: a. A knowledge of the several structural patterns (franchise, referral, management contract, joint venture, and management lease) that have emerged as the industry adapts to changing environments and innovates to meet the competition. b. A sense of the change in host-guest relations when the hotel and the guest deal through third parties and the consequences thereof. c. An understanding of the dichotomy of the hotel as an operating business and the hotel as a real estate investment. d. The importance of branding and the effect of brand segmentation, including the bankruptcies that have resulted in the current economic downturn. A desire to build a technical vocabulary as an entree to the profession and a prerequisite to understanding the lectures and reading materials that follow.

3. Establish lecture goals, which might include: a. Developing the students’ acceptance of change, whether it be market driven, financially required, or operationally necessitated, as a paradigm of the hotel industry and as an element of the student’s professional profile. b. In understanding brand, the student should analyze the effects of brand segmentation resulting in brand dilution and brand confusion. c. Mastering the meaning of elasticity and its link to Chapter 1's discussions of ADR and RevPar in order to apply the concept to room rate quotations and yield management systems, which come in later chapters. d. Sensing the rapid change in market preferences and the type of lodging facilities that then emerge, in order to foresee what may yet be on the horizon.

What The Chapter Is All About: Chapter 2 continues with the text's introduction to the hotel industry. The historical thread of the first chapter extends into the introductory pages of the second. Whereas Chapter 1 focused on basic concepts (definitions, formulas, and history), Chapter 2 attends to present-day business.

Hence the title, the “Modern Hotel Industry.” Chapter 2 is really about the state of the industry and equally important about the rapid changes taking place within.

Historically, transportation dictated the composition of the inn. The character of the industry is still shaped by travel and transportation, but other components now impact on the industry's structure. Among these are new methods of marketing and distribution; new approaches to ownership and finance; new concepts of management organization and product delivery; and 11

new visions for the hotel’s role in larger commercial projects. Each has impacts on operations, especially that of the rooms division.

New product patterns have emerged and they are driven by branding and amenity creep. The patterns are interlaced and focus on segmentation, brand, and image, including mixed-use projects. Amenity creep spills into preferred guest programs whose naming and benefits are blurred in the branding wars resulting from segmentation. The impact of new ownership patterns on all of this is still unfolding. Joint ventures are a sign of the financial times, since individual investors are leery of assuming 100% of the risk.

At the guest level, advances in technology have come into play. No longer is the norm that of a single guest making a single reservation directly with the hotel. A host of intermediaries has been interposed between the guest and the hotel. This theme of intermediaries – third parties – is repeated throughout the book. Whether for reservations, folio settlements with credit cards, telephone systems, incentive packaging, or whatever, intermediaries (third parties) have taken on the hotel's business. They wedge themselves between the guest and the hotelkeeper, weakening the host/guest relationship and complicating the function of “managing hotel operations,” the text’s secondary title. This trend has also re-defined the travel agent’s role.

Mass travel and group business, which were introduced in the previous chapter, receive more detailed attention in Chapter 2. Conventions and trade shows, which mix both group and individual business, are contrasted to incentive groups and single entity bookings, purer forms of group business. Tour and wholesale packages, the leisure side of group business, emphasize the elasticity of price and demand.

Some Chapter Highlights: The chapter starts and ends with a discussion of segmentation: the shattering of one industry definition into many pieces. Changes in the hotel product reflect the changing demands of the buyer/guest. Buyers of products expect choice: choice in auto models; choice in financial instruments; choice in beers. So, too, in lodging, which has been segmented into categories and subcategories. Segmentation gives rise to budget, limited-service, and hard-budget subdivisions within the economy sector, itself but one division within an ever-segmenting industry.

One trend seems contradictory to lodging's segmentation. As a whole, commercial hotels grow more like resorts even as resort hotels mirror their commercial counterparts. The former add recreational facilities like spas and running tracks. The latter extend their operating year by filling the house with business meetings and convention groups.

With today’s changing economics, there are no longer hard and fast rules for the lodging industry. Whether the product is a hard budget Motel 6 or a luxury Four Seasons, they are both members of a vast landscape.

12

CHAPTER 2 THE MODERN HOTEL INDUSTRY Chapter Outline: NEW PRODUCT PATTERNS Segmentation, Brand and Image Segmentation Brand Brand Equity New Product Segments Economy (Budget, or Limited Service) Hotels Amenities and Amenity Creep How Budgets Compete Hard Budgets All-Suite Hotels Extended Stay Corporate Housing Mixed-Use Projects and Other Hotel Segments Mixed-Use Projects Casino/Hotels Conference Centers Spas Fitness Centers NEW MARKET PATTERNS Marketing to the Individual Guest Guest Profiles Business/Leisure Travelers International Guests Preferred-Guest Programs Nonguest Buyers Marketing to the Group Tourist/Leisure Visitors The Tour Package The Inclusive Tour (IT) Package Business/Commercial Groups Conventions Trade Shows The Single Entity Incentive Tours NEW OWNERSHIP PATTERNS The State of the Industry 13

Turmoil and Churning Churning A Consolidating Industry The Global Village Ownership and Financing Alternatives Individual Ownership Real Estate Investment Trusts (REITs) Condominiums and Timeshares Condominium Ownership Condo Hotels Timeshares Exchanges Role of the Timeshare Joint Ventures and Strategic Alliances NEW MANAGEMENT PATTERNS Hotel Chains Parties to the Deal Consortia and Membership Organizations Management Contracts and Management Companies Management Contracts Management Companies Leasing (Renting) Franchising The Franchise Flag

14

Professional Vocabulary: Brand Equity. Brand Equity is critical to increased sales especially as new brand names flood the marketplace. Value in the brand name is often lost when the industry’s mega chains use separate designations for segments within their ownership umbrella. Who knows that SpringHill Suites is a Marriott brand or that Inter-Continental Hotels owns Holiday Inn? (See Exhibit 2-1.) The value, the equity in the brand, is lost when the affiliation is not clear.

Breakage is created when certain guests do not use specific products or services included in their package. The total package sum has been collected, but one or more services have not been delivered. If the hotel has sold the package, the breakage accrues to the hotel. If a wholesaler created and sold the package, the breakage accrues to the wholesaler. Wholesalers pay the hotel for each guest service used, evidenced by a voucher redeemed at the time of use. If a guest doesn’t utilize the particular service (say a cocktail with dinner), no voucher changes hands and the hotel has no evidence with which to charge the wholesaler.

Churning or “twisting” refers to any rapid buying and selling and in our case, of hotels. Major hotel churners are not even hotel companies. The current economic cycle makes real estate purchase a lucrative proposition but the 2001 angst is repeating in 2008-2012 with collapse, financial reorganizations or outright bankruptcies as a result.

Condominiums and Timeshares give hotel financing a new twist. With condominiums, the occupant/owner becomes the lender. The occupant/owner buys the real estate from the builder/promoter, who may then be able to bypass traditional banking sources.

With the original timeshares (now interval ownership or fractionals) the buyer/lender bought nothing but the right to use the property for a fixed number of years. Interval ownership, which long suffered a questionable reputation, has gained respectability with the entry of Disney, Marriott and Hilton into the field. Equally important, “deeded” timeshares now allow the buyer/lender to actually take title to the unit. Even so, the chance for resale of vacation condos, but especially of timeshares, is very poor!

Franchise Flags. Franchising provides name recognition and the metaphor is that the franchisor sells its “flag” to the franchisee. The franchisee gains the strength of the parent in that guests make no distinction between them. Services should be key when selecting a franchise flag. New flags (brands) are flying even as consolidation shrinks the number of, and grows the size of, surviving hotel companies. Given the impact of the internet and web 2.0, where brand loyalty is rapidly on decline or even disappearing, the strength of the franchise flag should be revisited.

Mixed-Use Projects are created when developers combine many products under one venture. A resort hotel built around a golf course, for example, might be part of an even larger development including; retail shopping, houses, condominiums, timeshares, restaurants, and high-rise office buildings. In a desire to draw vacationing families, entertainment for teenagers is worth scrutinizing.

15

Packaging opens another market segment for the hotel. That’s why both the industry and its third-party “partners” offer room, meals, entertainment and transportation to leisure guests for one fixed price. (Hotels have refrained from including the high-risk transportation ingredient in their proprietary packages.) The guest pays for all the services with one fixed price; the package rate. The importance of a hotel offering their own inclusive tour (IT) packages to couples or small groups of friends lies in bypassing the wholesaler and their fees.

Answer to An Incident in Hotel Management: The incident revolves around a guest who counted on shuttle transportation only to be disappointed time and again. The hotel offered complimentary transportation, but it was sporadic and not well-managed. And the result was that it cast an unprofessional pallor on the hotel.

Clearly, a senior manager needs to take this department under control. Whether it is a bellperson who drives the shuttle, a dedicated shuttle driver, or a front office staff person, the issue remains the same: Shuttles leave on-time and return on-time! Front office communication with the shuttle via cell phone or walky-talky is easy enough to establish. With shuttle—front desk communication, the hotel can proactively educate waiting guests of slight delays in schedule.

Policies, like what procedure to follow if the shuttle is already full (as with an airline crew) need to be established so all parties know if waiting guests are treated to a complimentary taxi ride or are asked to wait for the next shuttle or be on their own for taxi costs.

The other question is how should the hotel handle the current guest who is exasperated by the hotel’s lack of reliable shuttle service. Management needs to thank her for alerting them to such a grave oversight, and attend to whatever she may ask in restitution. Refunding taxi ride receipts is entirely within reason. Inviting her back with a free upgrade on her next stay is a nice way for the hotel to showcase its new shuttle service procedures.

Answers to End-Of-Chapter Questions: 1. The only limit to this answer is the student’s marketing imagination and some balance in reasoning: Free Parking Free In-room Films Bathroom Amenities Business Center Packaged Services Breakfast Included in the Room Rate Concierge Services Convention Concierge No Local Telephone Charges 2. A large company offers greater geographic opportunities and more varied professional experiences. Most likely, the chain has a formal training program, which the local, individual hotel may lack. Chain employment offers a wider range of professional contacts to be used when its time to move on. On the other hand, the local franchise represents a greater chance for identification and recognition. Its family-oriented environment may be a better place to work and offer a better chance at generalized training, rather than a narrower specialization.

16

3. Best Western is not listed among the best know management companies or franchise names, because Best Western is neither a management company nor a franchise; although its logo and identification are certainly among the best known worldwide, from Europe to Central America.

Companies like Best Western, which is headquartered in Phoenix, Arizona, are affiliations of independently owned properties that use one umbrella and one logo to identify themselves to the public. In so doing, they promise a given level of quality and service. Best Western International, Inc. owns none of the hotels. It has no franchising rights to sell. It is merely an affiliation of individual owners who pay fees to operate, advertise and market their memberowned system.

4. By segmenting, the hotel industry has essentially focused on particular segments of the marketplace. To attract a particular type of guest, each property must offer what that guest wants. Once that is done, the hotel can reach out for secondary markets sensitive, at all times, to the preservation of its primary market.

5. Hotel A, which is owned (ownership is what the text identifies as “one party to the deal”) by the Vallen family, is managed by Richfield Management Company (another party to the deal), but flies the flag, the logo, and utilizes the reservation system of the franchiser, Promus Hotels (still another party to the deal).

Hotel B is a much simpler structure. Promus Hotels is the owner, using its own identification and logo and managing the property itself, having hired Vallen as the general manager to do that managing job. Vallen is an employee of Promus.

6. Not practical to list all the possibilities that the student might research. The question lists several areas on which the answer might focus. Other areas that may strike the student’s interest are losses from an act of God; insurance that must be carried; limits on managing or franchising other properties within a given area; change of management; business interruption insurance; ADA laws; etc.

Answers to Quiz Questions That Follow: 1.

2.

3.

4.

5.

6.

7.

8.

True: Competition has forced management companies to become equity participants.

False: Franchisees can operate their own properties or hire other, third-party, management companies. They may, in some cases, actually hire the franchiser to manage the franchised property.

True True False: Spas can actually be very profitable departments for hotel operators. a. As an affiliation of individual owners, Best Western is the answer. e. Government is the only one listed which would not be found in a mixed use project. e. These attributes are also what give the franchise flag its strength. and strong locations, a is wrong because budgets have no F&B.

17

9.

10.

c. Historically, as hoteliers have struggled to gain an edge over their competition, amenity creep and the upward spiral of innovations it has encouraged cannot be understated. b. REITS are Real estate Investment Trusts, a means of owning real estate.

Short Answer: The very environment that creates better living standards (higher wages and more

vacations for all citizens) impacts hotel business profitability. To offset those costs, French hoteliers invest in properties with lower labor costs (economy properties). Of course, this is not exclusive. Upscale and mid-priced hotels continue to operate. Since 2007, France like other countries has had to adapt to new global economic realities. At the start of 2011, the economy, growing at an estimated 1.5%, is just picking up, but deficits are continuing to rise. The budget deficit for 2010 is estimated at 7.7%. This may affect the percentages of the mix of budget hotels to upscale and mid-range offerings.

18

Check-In Check-Out Quiz: Chapter 2 _________________________ Name _________________________ Identification Number

_________________________ Section _________________________ Hour

T/F Questions: Circle either T for True or F for False. (Questions that are partially false should be marked False.)

1. A pure management contract is almost unknown today because management companies must put up some equity if they hope to win the management contract. T F 2. In order to assure quality standards, franchise contracts require the franchise buyer (the franchisee) to hire the franchise seller (the franchisor) to manage the franchise. T F 3. Brand equity is the inherent value that the shopper’s recognition gives to the brand. There is equity (value) in the brand if that recognition carries a positive image. T F 4. Casino hotels earn most of their revenue from casino win, assigning a secondary role to room sales, which is the primary earner of traditional hotels. T F 5. Spas are widely available, but not profitable; hotels offer them merely as an amenity – part of the amenity creep that competition has forced on many hotels. T F

Multiple Choice: Circle the one answer that best completes the thought.

6. Which lodging company does not own, nor manage, nor lease, nor franchise hotels? a.

Best Western b.

Cendant c.

Hilton d.

Inter-Continental e.

None of these, each chain does some of each 7. Which of the following components would NOT be in a mixed-use project? a.

Hotels b.

Retail c.

Entertainment d.

Businesses e.

Government

19

8. Which criterion is needed for a hotel name to carry brand equity? a.

Instant identification b.

Broad distribution c.

Consistent quality d.

Assured level of service e.

All of the above 9. Historically, which of the following is the most influential factor driving innovation in the hotel industry: a.

Downturns in the economic cycle b.

Focus of the populace on travel in general c.

Amenity creep d.

Importance of innovation as seen by individual property managers e.

Whether or not brand equity is seen as important at any given time 10. REITS are: a.

Real Estate Insured Treasuries – federal loans to minority business persons if used to develop lodging facilities b.

Real Estate Investment Trusts – methods of financing real estate, often hotels, through shares sold to the public c.

Real Estate Issues Taskforce – watchdog group that monitors environmentally sensitive places (along beach fronts, for example) not open to hotel or other business development d.

The “RE[ed] International Treaty,” which limits resort developers from using strong currencies in under-developed nations e.

None of the above

Short-Answer: Answer briefly with short paragraphs, phrases, or exhibits.

Since the end of World War II, the French government has leaned “left,” toward a labor/socialistic environment. Providing numerous social services for its citizens has driven up social-security payroll taxes. Minimum wages are high and there are many paid holidays.

Coincidentally, France has a much larger ratio of economy-budget/hard-budget hotels compared to higher-priced hotels when compared to similar ratios in other nations. Explain.

20

CHAPTER 3 The Structures of the Hotel Industry Preparing The Lecture: 1. Use the chapter outline (provided on its own page for distribution or overhead use) to structure the week’s work. Better still: Use the Power Point.

2. Aim to develop specific objectives for the students: • A mental image of the organizational structure of a hotel, and a recall of which positions report to which.

• An understanding of the interconnect between the various rooms division personnel and their interdependency with other departments and divisions especially accounting, engineering, and housekeeping.

• An appreciation of the diversity of room products (size, shape, contents, exposure, etc.) even though the industry appears to sell but one product.

• An ability to distinguish among bed types and between bed types and room types.

• An understanding of the changes in hotel security needs and scope as a result of changes both inside and outside of the hotel industry.

• A grasp on the effects of self-service trends and what that means for an industry that is based on hospitality.

3. Establish lecture goals, which might include: a. Naming positions within the front office and describing their duties and responsibilities. b. Distinguishing the level of staffing and the organizational structures that differentiate various types, sizes, classes, and plans of hotels. c. Identifying job duties and preparing for Chapter 7's discussion of employee empowerment. d. Visualizing the design of guest floors, guest rooms, and guest accommodations as a basis for assigning arrivals.

What The Chapter Is All About: Chapter 3 concludes the opening unit, which was designed to provide the student a foundation from which to understand the industry. The balance of the text relies on the students’ understanding of these introductory topics: the hotel’s organization; its market structures; ownership patterns; mathematical/statistical measures; etc. The units that follow examine in detail the duties, responsibilities and procedures for managing the hotel portion of the hospitality enterprise.

Different terms are used throughout the text to add clarity and expertise to the students’ vocabulary. All refer to the management of the property’s hotel division. This chapter outlines the role of other departments: food and beverage, sales, housekeeping, and security among them.

21

No department operates independently from the others, but the rooms department has a special distinction; it produces the most revenue and the most profit. The rooms division has no cost of goods sold as with food and beverage.

Chapter 3 distinguishes between the Resident Manager, or Hotel Manager, and the Rooms Manager. Though this is done more for the convenience of educating the student than the reality of the industry, where several positions, including the Assistant Manager, are usually combined into one. For discussion, the Resident Manager has operational responsibility for the entire hotel, except food and beverage. The Rooms Manager has less responsibility and may have the assistance of either or both an Assistant Manager and/or a Front-Office Manager. The latter focuses chiefly on the operational areas of the physical front desk. Large hotels have Assistant Managers for each of the day's three shifts. Otherwise, the 24-hour workday may be covered by an "executive-on-duty." Often, managers from all departments rotate through this position to assure executive coverage for a business that never closes. It also builds management depth.

Hotels restructured dramatically during the 1980s and 1990s. Numerous middle-management positions were cut, and many titles were collapsed into one. Chapters 1 and 2 reviewed the fiscal causes behind this downsizing. Hotels offset the diminished management structure by enlarging the scope of employee authority and responsibility (see Chapter 7, where this discussion is resumed with the introduction of quality assurance and employee empowerment). As the lodging industry enters a period of recovery, many of these lost positions will likely be reinstated. Whether this is true, or not, for the sake of educating the student, the text draws on many of the traditional positions even as they are being downsized and eliminated throughout the industry.

From the organizational charts, it should be apparent to the student that the rooms department is but one unit within the operating hotel. Moreover, it is not an independent unit. It is heavily dependent on all other departments in the hotel. For example, the reservations department—the next major unit (Chapters 4 – 6) to be introduced in the text—works closely with hotel sales and marketing. Housekeeping’s coordination with the front desk is essential to the sale of rooms.

Housekeeping also works closely with maintenance and engineering. Front office cashiers have a direct relationship with the accounting department. Tragedies and near-misses in the last decade (flood, fire, hurricane, earthquakes, bomb threats, and hostage-taking) require security to have emergency plans in place and orchestrated responses with all departments.

Notwithstanding the interdependence of the rooms division with other hotel departments, the front office is the most important department in the hotel. The best evidence for such a statement goes all the way back to Chapter 1. Many hotels function without food and beverage. In smaller hotels, there may be no marketing department, the responsibility for which is handled by the rooms or general manager. The same is often true of the human resources function. Still other hotels outsource their payroll and accounting systems. But no hotels outsource their front office departments! The very definition of the hotel as a purveyor of rooms requires the presence of front office and housekeeping staff.

22

Some Chapter Highlights: The organizational structure presented in this chapter is a composite picture. Chapters 1 and 2 emphasized how hotels differ in size, plan, type, purpose, markets, and even the design of the front desk. As they differ, various organizational structures emerge. Hotels designed around family or transient travel, for example, structure reservations, various packages, registration, and even billing differently from hotels marketed towards, say, conventions. Similarly, the organization and design of convention hotels selling blocks of discounted rooms differs from that of corporate hotels delivering individually sold rooms at higher ADRs. Casino hotels—where hotel rooms play second-fiddle to gaming revenues—certainly differ dramatically from traditional models.

The General Manager (GM) has ultimate responsibility for the rooms division as he/she does for all functions within the hotel. The GM manages a variety of departments, including many support departments which have little guest interaction. Included in the list of support departments are human resources, accounting, marketing, legal counsel, and the like.

The two major operating divisions of full-service hotels are rooms and food and beverage (F&B). Food is a large department, involving the kitchen (purchasing, storage, and preparation); food outlets (restaurants, room service, conventions, and catering); and stewarding (dishwashing, ware, as in glassware and silverware, and sanitation). Beverage operations may have their own senior manager (manager or director of bar and beverage), but this position will likely report to a food and beverage director (or vice-president). Even in a large hotel, the bar and beverage department is not as large as the food function, and requires less skill than the kitchen. Fewer beverage items are inventoried, although their unit costs are greater.

The structure of the front office needs to consider the twenty-four hour work schedule of the desk. Some departments, telephone and front desk, need to be staffed without interruption, 24/7, 365 days a year. Other functions like reservations or uniformed services operate on more abbreviated schedules. Housekeeping, engineering, and the concierge also operate on limited hours (particularly so in response to falling occupancy). Part-time or casual employees are widely used throughout the lodging industry although less frequently at the desk than, say, in housekeeping.

What Is the Front Office? can best be answered with the overworked explanation that it is the "heart" of the hotel, the "hub" of guest activity. The sale of rooms accounts for more revenue and profit than all other major hotel departments combined (casino hotels excepted). The front desk is the center of guest communications and, consequently, the place to which guests turn for remedy of problems. Chapter 7, Managing Guest Services, returns to this theme of guest relations for which the front desk is the pivotal point.

The building structure of the world's hotels is changing, paced by innovations in architecture and materials. The open design of the modern hotel (in contrast to those of 75 years ago) requires a larger "footprint," more land per room. Increased land costs become a significant factor in setting room rates, as discussed in Chapter 9. The same holds true for the modern bath— providing more square footage for hotel baths (super luxury baths measure 120 square feet or 23

11.15 square meters, the typical size of a standard bedroom in many homes) adds measurably to room rates. Budget hotels hold down rates by limiting baths to under 40 square feet (3.72 square meters).

Beds and hotel bedding (soft goods) have undergone similar changes. Beds are bigger today to accommodate bigger guests. Bigger beds mean bigger rooms, another explanation for the larger footprint of the modern hotel. The average bed configuration has also changed. Queens and kings have all but replaced double beds as accommodations for two persons. If available at all, double beds are used as twins, say, for tour group business. As such, hotel room bed choices have narrowed; many new hotels offer just one bed type. Often that is two queen beds, a configuration which nicely accommodates both families and unrelated guests.

24

CHAPTER 3 THE STRUCTURE OF THE HOTEL INDUSTRY Chapter Outline: THE ORGANIZATIONAL STRUCTURE Ownership The General Manager From Host to Executive Strength and Salaries Support Departments The Food and Beverage (F & B) Department The Hotel (or Resident) Manager Housekeeping Organization of the Department Duties of the Department Working with the Desk Security Security’s Charge An Ever-widening Role Other Departments The Rooms Manager Room Reservations The Uniformed Services Concierge The Concierge Floor The Telephone Department Manager of Guest Services Structure of the Front Office Working Hours The Shift or Watch The Split Shift Forecast Scheduling Design of the Lobby Design of the Desk Guest-Service Agents Cashiers THE BUILDING STRUCTURE The Old versus the New The Old: Inside Rooms The New: Suites and All-Suites Corner Rooms 25

Motor Inns Numbering for Identification Floor Numbering Room Numbering Adjoining or Connecting Rooms Elevators Room Shape and Size Room Shape Room Size Total Square Footage How the Room is Used Bed and Bath The Bed Bed Sizes and Symbols Single Beds Twin Beds Double Beds Queen and King Beds Hollywood Beds Studio Beds (Rooms) Sleigh Beds Day Beds Sofa Beds Rollaway Beds (Cots) Cribs Water Beds Futons Wall Beds Future Beds The Bath

26

Professional Vocabulary: Exposure describes the direction to which the guest-room window faces. A variety of descriptions are used to report that view. Most often, exposure is by direction: north, south, east or west. Terrain is used also to describe exposure: mountainview, oceanview, lakeside. Manmade identifications include poolside, golf course, and even slopeside for ski resorts.

Exposure is a valuable sales tactic by front office personnel. With proper training, certain hotels can add upwards of $100 or more to the room rate for select rooms (oceanside, for example) based solely on the view. Almost all hotels have a few rooms where guest-room exposure is considered a negative (for example, when the room overlooks the receiving dock, garbage pickup, or employee entrance). Clearly, exposure would not be a sales tactic for such rooms.

Compcierge is an outgrowth of the computer era (comp-cierge). The role will continue to evolve, but compcierges presently come in two forms. A compcierge may be a technology expert who assists with guest computer support and/or supports the technology needs of groups such as conventions, or a compcierge may be a computer terminal (or kiosk) which provides local information.

Forecast Scheduling is used to control labor costs. Using estimated room occupancy from reservations and historical records (Chapters 4 through 6), demand is projected. Based on this demand estimate, departments create labor schedules. Busier days mandate heavier staffing schedules in many departments (front desk, bell desk, housekeeping, food, and beverage, golf, spa, and related front-of-the-house departments), slower days require lighter schedules.

On-change rooms are in flux, awaiting housekeeping services between a guest’s check out and the next guest’s check in. Therefore, communication between housekeeping and the front desk is essential to the sale of rooms. There are in-between ways to handle this as guests arrive early, such as allowing the guest to check in but keep their belongings at the front desk until the onchange room is released by housekeeping.

Square Feet is the standard measure of room size in the United States. Square Meters is used just about everywhere else. One square meter equals 10.76 square feet. Quick and dirty, roughly 11 square feet per square meter. So a room of 330 sq. feet equals 30 square meters. The larger the values, the less accurate this “11:1 method.” The conversion works the other way also. A room of 50 sq meters is 550 square feet using the shortcut (more accurately, 538 square feet).

Suites are different from all-suites. Suites have been available in hotels for generations. Allsuites are a new creation arriving on the scene in the early 1970s. Suites are luxurious upgrades within a hotel; all-suites are a special hotel segment within the lodging industry. Suites are scattered throughout a regular hotel as larger and/or specially appointed rooms. All-suites are specifically designed properties where each room has some attributes of a suite; mainly a parlor area or living room.

27

The presence of parlors generally differentiates suites from regular guest rooms. Both suites and all-suite hotels have parlors attached to the bedroom. With most all-suite properties, the room includes the parlor, though there may be an interior door used to provide privacy to the bedroom.

In many traditional hotels, the parlor can be sold as part of the suite or sold separately as a standalone guestroom (although usually equipped with just a sofa bed).

In traditional hotels, the suite can be a truly impressive room. Many hotel suites have living rooms larger than the entire all-suite accommodation. Other features of hotel suites may include; two or three floors with stairs and even dedicated elevators, dining room and kitchen, work-out room, even a swimming pool. Some properties boast suites which encompass 10,000 or more square feet! Hotel suites are frequently named, either generically (e.g. Presidential Suite or Honeymoon Suite), or in honor of notable personages (e.g. The Elvis Suite or The Woodrow Wilson Suite).

Answer to An Incident in Hotel Management: This incident dealt with lost and found—a young man lost a modestly priced watch while staying at the property on a school-sanctioned trip. This common situation tests every hotel. It tests employee honesty, record-keeping and inventory control, procedures and policies, and follow-up.

That is really what is at issue here: how well did the hotel follow-up with the guest related to the lost watch?

The case leads the reader to wonder if the caller (the young man’s mother) was somehow out of line with her language and aggressive posture. But it may be exasperation from having to call the property three separate times. In an ideal situation, the lost watch would have been found by a housekeeping employee, logged into the housekeeping lost and found storage closet (with a copy to the front desk), and placed into a procedurally-identifiable location. Some hotels log by room number, date found, guest name, etc.

The corresponding telephone call would then have been handled professionally the first time.

And certainly any phone call made to the hotel needs to be addressed and returned in a timely manner. That is where the management failure occurred; “A promise was made to call back, but never fulfilled.”

Answers to End-Of-Chapter Questions: 1. Members of the staff include: Bailey, Assistant Manager Chandler, Herbie, Bellcaptain Earlshore, Tom, Bartender Edwards, Royall, Controller Francis, Christine, Assistant to Trent Graham, Booker, Trash Sifter Jakubiec, Sam, Credit Manager

Lemieux, Andre, Sous Chef McDermott, Peter, Asst. General Manager Ogilvie, T. I., House Detective du Quesnay, Blanche, Housekeeper Royce, Aloysius, Valet to Trent Trent, Warren, Owner of the St. Gregory Vichery, Doc, Chief Engineer 28

The hero, Peter McDermott, is manager of the Trent-owned St. Gregory Hotel.

McDermott is involved in several incidents, including the possible sale of the hotel.

Simultaneously, he investigates several strange happenings involving different guests; a very ill man, a suspicious loss of valuables, and a group of young people in trouble.

Helping him is a girlfriend, Christine Francis. A good portrayal of an operating hotel.

2. The exercise: (1) familiarizes the student with the metric system; (2) helps him/her visualize a guest room; (3) demarcates the size and facilities of a room by Choice Hotels from that of full-service hotels–a 300-square foot room (27.27 square meters) is a good assumption; (4) reinforces bed sizes and types. Understanding the market and reflecting that in the design is the basic purpose of this assignment. Note: using the 11:1 rule, given in the Professional Vocabulary, above, the room size in square meters is 27.27, not 27.88, the more accurate measure that uses 10.76 as the divisor.

3. Reference text page 116. The 370-room Four Seasons Hotel has guest rooms of 600 square feet. Full-service properties in the Four Seasons class may require twice the room square footage, or more, to provide for lobby space, service corridors, elevators, exits, service closets, convention space, offices, restaurants and bars. Thus, each room needs 1,200 square feet (600 + 600). Since the property has 370 rooms, one could estimate the building size at 444,000 square feet (1,200 x 370).

Students may use figures from 500 to 1,000 square feet and still be correct in the concept.

If they add 1,000 square feet for extras, the answer comes to 592,000 square feet. The authors have had students call the hotel for the answer; the reception has been cordial.

Using construction costs of $200 per square foot, the 444,000 - 592,000 square foot building would cost between $88,800,000 and $118,400,000.

4. Specific answers cannot be anticipated, but there should a common theme. Included should be information about the shape of the rooms (probably rectangular); their contents (kinds and number of beds, furnishings, closets and storage spaces); room sizes (ranging from 300-500 square feet); and rates being charged. Of course, rates reflect more than just the room size.

5. Before this exercise is assigned, the instructor may decide to have a session on the interview process, including; the student’s need to make and keep appointments, proper dress and demeanor, and a draft of acceptable questions. The assignment lends itself to a class discussion of job descriptions and to a review of organizational charts and their role in the business organization.

6. One possible answer uses eight persons: six guest-service agents (A, B, C, D, E, and F) covering either the desk or the cashier’s positions (cashier denoted with $). There are three audit agents (G, H, and I), one of which works audit while the other handles the desk and cashiering (denoted with $). Note that three of the positions work just 4 days per week.

29

Many assumptions will be made by students. For example, 4-day shift staff (B and E) could also work one graveyard shift to give them a fifth shift and full-time work.

Another assumption is that graveyard can be handled by one employee who handles all roles.

8am-4pm 4pm-12am 12am-8am

Sunday A $B D $E G $H

Monday A $B D $E G $H

Tuesday A $C D $F G $I

Wednesday Thursday A A $C $C D D $F $F G G $I $I

Friday B $C E $F H $I

Saturday B $C E $F H $I

Answers to Quiz Questions That Follow: 1.

2.

3.

4.

5.

6.

7.

8.

9.

10

False: Mobility of the general managers within an organizations properties or to competitor’s properties accounts for this decline in the long-tenured person embodied as Mine Host.

True True True: Many intermediate management jobs were lost during the downturn of the late 1990s and early into the new millennium. The upturn that started in 2004 has reversed that trend to some degree.

False: Cell-phone usage has all but eliminated telephone revenues. The high prices that hotels were charging certainly contributed to customer avoidance of hotel telephone usage. c e e Concierge floors are special accommodations available at a premium rate or made available to frequent-guest members. a c

Short Answer:

The smallest organization would include: General Manager I Desk Engineering Including & Telephone Grounds

I Housekeeping & Laundry

For the second answer, see Exhibit 3-19 of the text.

30

Accounting

Check-In Check-Out Quiz: Chapter 3 _________________________ Name _________________________ Identification Number

_________________________ Section _________________________ Hour

T/F Questions: Circle either T for True or F for False. (Questions that are partially false should be marked False.)

1. Self services such as self-check-in account for the decline of the position of Mine Host.

T F 2. Public corporations such as Marriott issue stock, which represents ownership, numbering in the hundreds of millions of shares. T F 3. The linen room is the name of the department’s office, not a particular room in the hotel.

T F 4. Hotels have eliminated many middle management positions, which flattens the organizational chart and throws more responsibility on the remaining managers and the employees. T F 5. With all the advances in security-monitoring equipment, the hotel industry has been able to minimize personnel in this department, thus bringing down their fixed costs. T F

Multiple Choice: Circle the one answer that best completes the thought.

6. Group and convention bookings for a fixed number of room nights are forgiven if the event is unexpectedly interrupted by acts of God, which are referenced in the contract as: a. Quid pro quo b. Ex post facto c. Force majeure d. Concierge services e. Either a. or c.; both are often used 7. Room sales: a. Account for most of the industry’s revenue b. Are the industry’s second-most profitable department c. Produce more revenue than food, beverage, and telephone departments combined d. Account for almost 100% of revenue for budget hotel properties e. All of the above are true except b 31

8. Concierge floors are: a. Floors covered by the hotel’s concierge b. Used to room first-time guests for extra attention c. Only accessible by a special elevator key d. Throwbacks to the original intent of the concierge: keeper of the keys e. All of the above except b 9. Today’s beds are longer than their predecessors; that length is called ________ length: a. California b. Japanese c. Hollywood d. Murphy e. None of the above 10. The individual responsible for the full scope of the operation at the unit (hotel) level is generally titled the: a. CFO (chief financial officer) b. CEO (chief executive officer) c. GM (general manager) d. MD (managing director) e. COO (chief operating officer)

Short-Answer: Answer briefly with short paragraphs, phrases, or exhibits.

Describe the organizational chart of a 68-room, economy class hotel, franchised under a major chain’s logo, that has no food and beverage service, not even breakfast.

OR Sketch the floor plan of the same hotel described above.

32

CHAPTER 4 Forecasting Availability and Overbooking Preparing The Lecture: 1. Use the chapter outline (provided on its own page for distribution or overhead use) to structure the week’s work. Better still: Use the Power Point.

2. Aim to develop specific objectives for the students: a. An understanding of the various decisions facing a reservations manager with regard to forecasting the number of rooms available for sale. Explain how the quality of the reservation correlates with the likelihood of no-shows, and how overstays, understays, early arrivals, and cancellations can impact the total rooms available for sale. b. A working knowledge of the overbooking dilemma. Discuss the legal ramifications of overbooking the property, the anti-service issues at stake, and some possible solutions on both a property- and industry-wide basis. Restate a standard overbooking policy including the costs to the hotel and the expectations of the guest.

Discuss this in terms of ethical issues that may arise as it relates to walked rooms. c. An ability to utilize and define basic vocabulary terms and industry jargon specific to the issues of forecasting availability and overbooking reservations. d. The ability to develop a practical working model of both a simple, unadjusted room count and an adjusted room count. Recount the differences in rooms available calculations as developed through these two distinct methods. Explain which method is riskier to the hotel's reputation and which method generates improved profitability. e. An understanding of deterrents for cancellations and early departures (fees) as it plays into amenity creep and the struggle for a competitive advantage. This same argument carries into the pursuit of credit card disputes.

3. Establish lecture goals, which might include: a. Calculate a simple, unadjusted room count. b. Calculate an adjusted room count. c. Restate a standard overbooking policy and the concessions a guest might expect. d. Describe how the quality of the reservation affects the likelihood of a no-show.

What The Chapter Is All About: Chapter 4 begins "The Reservations Process" unit by discussing the forecasting function of the reservations department. Before a new reservation can be accepted, availability must be calculated.

Once a new reservation has been made, it must be tracked and included in aggregate room counts.

The reservations computer tracks room reservations by room type rather than by room number.

Each reservation reduces the remaining rooms available for sale. Although it appears to be a simple 33

one-to-one relationship--one reservation for each hotel room--there is really a great deal of subjectivity. Such issues as overbooking, questionable reservations, unexpected stayovers, and early departures change a simple tracking system into a complex one with numerous managerial decisions. A look back at the property’s historical ratios and percentages helps management forecast overstays, understays, early arrivals, and cancellations. When any of these forecasts prove inaccurate, the hotel faces a potential overbooking situation. The room count is a moving target that should be assessed regularly throughout every business day.

The quality of each reservation affects its likelihood of arrival. Listed in order, nonguaranteed reservations (also known as 6pm reservations) have the highest no-show rate, guaranteed reservations (guaranteed to either a credit card or corporate account) are next in line, and advance deposit reservations have the lowest risk of no-show. By developing historical no-show statistics, a reservations manager may carefully overbook a certain number of rooms to offset projected noshows in each of these three quality categories. Although this is chancy business, many hotels find the potential for additional profitability worth the risk of overbooking.

While hotels have a legal obligation to accommodate their reservations, overbooking situations do occur. Less prevalent today than in year's past, hotels with a reputation for overbooking cast a poor image on the entire industry. With the threat of legislation always looming over the horizon, most chains and reputable independent operators have an established overbooking policy. If a room is unavailable, the hotel will usually "walk" the guest to a comparable property, pay the difference in room rate, the cost of transportation to the other hotel, and one or two telephone calls, as well as offer a formal apology from management. Other solutions to the problem of overbooking include third-party guarantees (whereby the hotel is assured its revenue for a no-show room) and increasing use of advance deposits.

Some Chapter Highlights: The “Forecasting Availability and Overbooking” chapter takes a long look at what is meant by rooms available for sale. It walks the student through an in-text problem explaining the differences to rooms inventory between out-of-order (OOO) rooms and out-of-inventory (OOI) rooms.

The chapter details the logic behind overbooking, and explains why the student should be interested in obtaining the “perfect fill.” Overbooking is the natural consequence of a forecast gone awry. When more rooms are committed than are available, the hotel finds itself with a negative room count, and may need to walk arriving guests to another property. Reservations are legal contracts, and hotels have an obligation to provide accommodations to reserved guests.

Exhibits and in-text discussion focus on the frequency of overbooking and identify some creative remedies for addressing this dilemma.

Of course, no discussion of overbooking would be complete without a thorough look at managing no-shows. No-shows are defined, correlated against the “quality of the reservation,” and addressed as an adjustment to rooms available calculations. Management adjusts room count projections based on many considerations, including: prior experience for that day of the 34

week, the month, or year; weather; community events; historical data; and much more. Other adjustments to rooms available highlighted in the chapter include: early arrivals, cancellations, overstays, and understays.

35

CHAPTER 4 FORECASTING AVAILABILITY AND OVERBOOKING Chapter Outline: FORECASTING AVAILABLE ROOMS The Simple, Unadjusted Room Count Automated Inventory Tracking Systems Components of the Simple Room Count Committed Rooms Adjusted Room Count Defining Rooms Available Out-Of-Order Rooms Out-Of-Inventory Rooms Computing the Number of Stayovers Understays Overstays Computing Today's Reservations No-Shows Cancellations Early Arrivals Adjusting Today's Reservations The Adjusted Result Putting the Room Count to Use Periodic Recounts Adjusting by Reservation Quality OVERBOOKING The Perfect Fill Reservations are Legal Contracts Threat of Legislation State Legislation Whose Fault?

Overbooking Policies Overbooking and the Antiservice Syndrome No-Show Policies Cancellation Policies Minimizing the Overbooking Problem Increasingly Restrictive Policies Early Departure Fees Third-Party Guarantees Trip Insurance Credit Card Disputes Travel Agent Guarantees Advance-Deposit Reservations

36

Professional Vocabulary: Committed Rooms. This number is a combination of the commitment made to incoming reservations as well as those committed to stayovers.

Early Arrivals. Guests who arrive for check-in one or more days in advance of their scheduled check-in date. It is in the hotel’s best interest to accommodate early arrivals since they usually stay for several room nights.

Out-Of-Inventory. Rooms are not always available for sale. Instead, they may be placed either out-of-inventory or out-of-order. A room placed out of inventory is not readily repairable and is never sold as-is. Out-of-inventory (OOI) rooms usually have a major problem requiring a lengthy down-time (e.g. flooded, smoke-damaged, in renovation, or converted into hotel office/storage space). Because of their lengthy downtime, out-of-inventory rooms are removed from the available inventory. As a result, the denominator (rooms available for sale) in an occupancy calculation is reduced by the number of out-of-inventory rooms. The result is that occupancy is artificially bolstered.

Out-Of-Order. A room placed out of order is generally repairable in a matter of minutes or hours (e.g. broken television, noisy air-conditioner, or leaky faucet). Indeed in some cases, out-of-order rooms are sold as-is with a slight "nuisance" discount to the guest. Out-of-order rooms are never sold if they pose a safety risk to the guest. Because the problem is minor in nature, out-of-order rooms are not removed from inventory. As a result, the numerator (rooms sold) and denominator (rooms available for sale) in an occupancy calculation remain unchanged when accounting for OOO rooms.

Overstays. Guests who remain in the hotel one or more days past their originally scheduled checkout date.

Understays. Guests who depart the hotel one or more days before they are scheduled to check-out.

Walks. Hotels facing an overbooking situation may be forced to walk guests they cannot accommodate in-house. Although walking the guest has a terrible anti-service ring to it, in reality it may be a fairly positive experience. The hotel should be prepared for the guest, have management explain the predicament and alternate accommodations, transport the guest directly to the other property, and resolve all billing arrangements in advance. The next day, most properties return the guest to the original hotel.

Whos. Occupied rooms for which the front office has no record due to a reservation not being entered into the PMS intentionally or unintentionally.

37

Answer to An Incident in Hotel Management: This incident asks the questions; what is reasonable, how much research should a hotel perform on behalf of a guest, and when reservation no-show charges should be credited back to the guest.

The first series of questions deals with what is believable. Each item in this incident, taken on its own merit, might be believable. But all the problems with this caller, when taken together, suggests a dishonest guest. When dealing with potentially dishonest guests, the hotel always asks the question; who is this guest to us? In other words, is this guest a regular and reliable customer, or someone who “may” have stayed here once and surely won’t be coming back again.

This distinction identifies how much built-in credibility the guest will be granted and how much research the hotel should perform.

At this point, there are really three options, return the money, research the claim, or suggest the guest request the credit through his/her own credit card company. This third option places the credit card company in the middle and allows the hotel to play the request by the book—if the guest cannot provide a cancellation number, the charge is legitimate and the hotel will keep the revenue.

Some odd questions come to mind; why can’t we look-up the guest’s stay by last name? How did the central reservations office obtain the guest’s credit card number? Why were there two reservations for one date? It just doesn’t add up!

Answers to End-Of-Chapter Questions: 1. Out-of-order (OOO) rooms are generally repairable within a relatively short time. Out-ofinventory (OOI) rooms require a longer repair time. In addition, OOO rooms may be sold asis while OOI rooms are never sold. As such, OOI rooms are removed from available inventory while OOO rooms are not. With out-of-inventory rooms, the denominator (rooms available for sale) in an occupancy calculation is reduced by the number of OOI rooms.

However, with out-of-order rooms, neither the numerator (rooms sold) nor the denominator (rooms available for sale) are changed. The result is that occupancy is artificially bolstered in hotels with OOI rooms.

2. The unadjusted room count is: Rooms available in hotel Occupied last night Due to check out today Equals number of stayovers Today's reservations Total rooms committed for today Rooms available for sale (room count) Occupancy is 686/700 or 98 percent.

38

700 630 260 370 316 686 14 (with ten OOO)

3. No-shows vary by the nature of the group. Business groups, like the business persons who comprise them, have high no-show factors since their plans change at a moment’s notice.

Tour groups, on the other hand, are usually prepaid. Therefore, once the final count for a specific tour group has been guaranteed, the no-show rate is generally low. Convention groups are the big unknown. In many cases, convention groups misrepresent their expected arrivals by exaggerating their numbers during the initial negotiation stage. For a more accurate count, the hotel’s sales department will usually call other hotels that have hosted the group in previous years to get a better feeling for their actual pick-up rate. However, once the convention rooms reservations are guaranteed, the likelihood of no-show is really a factor of the type of convention group. Medical conventions seem to have a higher no-show factor (due to emergencies) than say, a convention of accountants.

If the group reservation were made by the vice-president of engineering, one might expect a relatively low no-show factor. After all, if the vice-president says to be there, most employees will surely attend. Similarly, incentive travel companies and professional convention management companies also have lower no-show factors because they are able to plan for contingencies and are more expert at predicting room counts.

4. The rooms forecast might be used by the housekeeping department to forecast labor usage and schedule rooms maintenance. With regard to the food and beverage departments, the rooms forecast is used both for labor scheduling as well as inventory purchasing, especially of perishable items. The sales department might use the rooms forecast to make last minute attempts to sell low volume dates or invite meeting planners to stay when the house is less than full.

5. Although there are a number of steps a hotel can take to maintain occupancies without risking overbooking, the key ingredient is certainly improved data collection. The hotel front office should make forecasts more frequently in an attempt to keep them extremely current.

In addition, the front office should remain especially alert to last minute fluctuations in occupancy as a result of various outside agencies, like reps, reservation centers, and others.

In an attempt to reduce the no-show factor, the hotel might consider establishing a policy which significantly restricts non-guaranteed reservations. In addition, an estimated time of arrival should be ascertained for all reservations, and various restrictions (advance depositonly, for example) may be placed on late-hour arrivals. The hotel might also consider reducing room rates to walk-in guests after a certain hour.

6. No, we’re already overbooked by 35 rooms. Here’s why: Rooms available in hotel Occupied last night Total forecasted departures today Anticipated stayovers

693 588 211 377

Group reservations Other reservations

250 110 39

377

No-show factor for groups (2 percent) No-show for general reservations (10 percent) Early arrivals expected Todays adjusted reservations 351 Adjusted total of rooms committed Adjusted number of rooms available for sale

- 5 -11 +7 351 728 -35

Answers to Quiz Questions That Follow: 1. False: It is exactly the opposite of what is stated in this question.

2. False: Early arrivals have no impact on today’s reservations. They come from future reservations, like tomorrow or the next day.

3. True: The practice of overbooking ensures that 100% of available rooms will be used, based on analysis of the average number of cancellations and no shows.

4. True 5. False: It is exactly the opposite of what is stated in this question.

6. a.

All other responses are false.

7. e.

Percentages can change due to the influence of any of these factors and even the degree of media coverage concerning them.

8. c.

25 rooms available. Last night 100 occupied less 75 due to depart today leaves 25 stayovers. Add to this 150 reservations. That means 175 rooms committed, leaving 25 available for sale.

9. d.

200 rooms sold divided by rooms available for sale. Rooms available for sale is 300 less 50 rooms OOI. That is 250 available for sale. So, 200 divided by 250 is 80% occupancy.

10. e.

Short Answer: See comment #3 above, it deals with the issue

The answer is we have forecasted occupancy of 78.33%. Here’s why: Rooms available in hotel Occupied last night Total forecasted departures today Anticipated stayovers

300 210 101 109

Reservations No-show factor (10 percent) Cancellations factor (6 percent) Todays adjusted reservations

109

150 - 15 - 9 126

126

Adjusted total of rooms committed Adjusted number of rooms available for sale

235 65

Occupancy is 235 / 300 equals 78.33% 40

Check-In Check-Out Quiz: Chapter 4 _________________________ Name _________________________ Identification Number

_________________________ Section _________________________ Hour

T/F Questions: Circle either T for True or F for False. (Questions that are partially false should be marked False.)

1. Interestingly, out-of-inventory rooms do not affect rooms available for sale (the denominator in an occupancy equation) while out-of-order rooms do affect inventory. T F 2. Early arrivals, like cancellations and no-shows, reduce the number of expected arrivals. T F 3.

Overbooking as a standard procedure for hotels is a given; the real question is “how many rooms should be overbooked?” T F

4. A hotel reservation is essentially a legal contract. But lawsuits against guests for no-shows and lawsuits by guests against hotels for being walked are very rare. T F 5. Interestingly, advance-deposit reservations have the greatest likelihood of no-show.

Nonguaranteed reservations (6 p.m.) generally have the highest rates of arrival. T F

Multiple Choice: Circle the one answer that best completes the thought.

6. Room availability forecasts often allow for adjustments based upon historical data. In regard to these adjustments, which of the following is true: a.

No-shows are guests with reservations (either guaranteed or non-guaranteed) who never arrive b.

Understays are guests who stay at least one night beyond their scheduled departure date c.

Cancellations are treated in much the same way as stayovers d.

Early arrivals are guests who check out at least one day prior to their scheduled departure e.

Answers a, c, and d are true. But b is false because that is the definition for overstays

41

7.

Examples of factors influencing the Adjusted Room Counts: a.

Bed bug infestations b.

Weather c.

Historical events such as 9/11 d.

Group type e.

All of the above

8. Assume that a 200 room hotel sold 50% of its rooms last night. Today, we anticipate that 75 rooms will depart. We hold 60 6pm reservations and 90 guaranteed reservations. There are no advance deposits. What is the forecasted number of rooms available for sale: a.

85 b.

55 c.

25 d.

0 e.

75 9. Assume that a given property has 300 rooms. After accounting for the day's departures and arrivals, 100 rooms remain unsold. Of these 100 rooms available, 50 rooms cannot be sold because they are out-of-inventory. In this case, the forecasted occupancy percentage would be: a.

The forecasted occupancy percentage would be 20% b.

The forecasted occupancy percentage would be 40% c.

The forecasted occupancy percentage would be 60% d.

The forecasted occupancy percentage would be 80% e.

None of the above are the correct occupancy % 10. The one department not affected by the room count projections is: a.

Housekeeping b.

Security c.

Valet service d.

In-room minibars e.

None of the above since all departments are affected

Short-Answer: Answer briefly with short paragraphs, phrases, or exhibits.

On October 6, a 300-room property had occupancy of 70%. What is forecasted occupancy for October 7 if: • 10 rooms are put out-of-order at 9am on October 6 • 150 rooms are on reservation • Registration information indicates 101 rooms will depart today • The hotel as an historical 6% cancellation rate • The hotel as an historical 10% no-show rate

42

CHAPTER 5 Global Reservations Technologies Preparing The Lecture: 1. Use the chapter outline (provided on its own page for distribution or overhead use) to structure the week’s work. Better still: Use the Power Point.

2. Aim to develop specific objectives for the students: • An understanding of the breadth and flow of the global distribution system, including some history of the GDS and the role that airline reservations systems played in its initial development and ongoing success.

• A working knowledge of switch technology and last room availability technology and the ability to explain how they fit together to create seamless connectivity.

• A sense of the vast changing electronic reservations environment, including the growth of on-line reservations bookings, application service providers, and outsourcing reservations. They should understand how the use of “opaque sites” factors into this mix as it relates to brand integrity.

• A practical working model of a yield management system. Including an understanding of the definition of yield, which customer types are rate- and which are date-sensitive, and how airline reservation systems impacted the way in which the hotel industry sells its rooms.

• A realization of the possibilities that mobile apps can bring to the industry in terms of competitive edge. How does this play into amenity creep?

3. Establish lecture goals, which might include: • Identify at least three major advantages to the hospitality industry from the introduction of last room availability, switch technology, and seamless connectivity.

• Detail the history of the global distribution system including the historical roles played by each of its major components.

• Explain yield management and why it has been elevated in its importance.

Calculate yield for a given hotel.

• Explain why contribution margins are used as a performance gauge.

What The Chapter Is All About: Guest reservations are created through a wide-range of possibilities. A reservation may be handled in-house by the hotel's internal reservations department, it may be accepted on behalf of the hotel by the chain's central reservations office, a third-party travel site aggregator may be involved, or an independent travel agent may generate the business.

There are a myriad of available options with regard to how the reservation is communicated to the 43

property. Buzzwords like last room availability, electronic switch technology, and seamless connectivity have brought lodging reservations into the 21st century. Last room availability allows central reservations systems (CRS) to access an individual hotel's reservations data on-line. The inhouse reservations department is now competing real-time with the CRS to sell each room.

Electronic switches (e.g. THISCO) have erased the barriers to communication between onceproprietary central reservations systems. One standardized reservation code can now be used for all systems on the network (Hilton, Choice, and Marriott for example). Hotel web sites, chain web sites, and third-party web sites have a strong hold in the reservations landscape. Mobile apps are now the wave in reservation bookings.

Setting rates and accepting reservations for a specific date is a complex matter of dollars and sense (common sense that is). The reservations department cannot merely look to maximizing occupancy while disregarding the rate the customer is paying. Almost any hotel can fill its rooms if the rate is low enough. Yield management is the science of maximizing both occupancy and rate to obtain the best possible “yield” under a given set of circumstances. We calculate yield by multiplying number of rooms sold times average daily rate.

The theory behind yield management suggests that certain customers are rate-sensitive (leisure guests and tour groups) while others are date-sensitive (corporate guests and conventions). The lead-time with which a reservation is created tells a great deal about the customer making the reservation and the specific motivation for travel. A more through discussion of who makes reservations and the role of group travel is available in Chapter 5.

A relatively new approach to yield management that has proven highly successful is the assignment of a strategic account manager with a regional responsibility to represent the entire chain.

Some Chapter Highlights: The Global Distribution System (GDS) refers to all electronic reservations channels which connect to a hotel’s reservations system. To be part of the GDS, the hotel must first be interfaced to a chain’s central reservations system (or they could subscribe to an independent reservations system).

Connected to the CRS through switch technology are the world’s major airline reservations systems.

And then connected to the airline systems are travel agents and all sorts of third-party inventory aggregators and search engines.

Internet reservations have grown faster than anyone could have guessed. And with 80 percent of all on-line reservations starting from search engine results, hotels sell many (if not most) rooms in a manner which was literally non-existent 15 years ago. As such, the role of the hotel’s web site and the chain’s web site make search engine optimization an area requiring both expertise and substantial marketing resources.

Hotels sell rooms to a number of different types of guests. Historically, these different markets were relatively distinct. The Internet has begun to blur those lines of distinction. This also applies to the target market for mobile apps on smartphone devices. Even as market distinctions co-mingle, the need for yield management is higher than ever 44

The theory behind revenue management suggests that rate-sensitive guests book their rooms far in advance (even a year ahead) to take advantage of limited packages and advanced purchase discounts. Date-sensitive guests make reservations just days (even hours) in advance as business needs dictate immediate travel. Because they book at the last minute, corporate guests generally pay top dollar for rooms while leisure guests--who reserve far in advance--receive sizable early purchase price incentives.

In large, fully automated properties, literally every room sold is examined through a revenue management system before price and availability is quoted. Although manual yield management decisions can be made by any hotel regardless of the availability of sophisticated technology, expert computer systems are proven money-makers. Once programmed with a predetermined set of rules and triggers, an expert computer system can be expected to enhance a hotel's average room rate by several dollars annually. In addition, an expert system releases the reservations manager to perform other tasks and then merely alerts the manager when a given rate on a given date is reaching a critical decision point (rule or trigger).

45

CHAPTER 5 GLOBAL RESERVATIONS TECHNOLOGIES Chapter Outline: GLOBAL DISTRIBUTION A Brief History Seamless Connectivity Last-Room Availability Electronic Switch Technology Application Service Providers Single-Image Inventory Traditional Reservation Channels The Changing Role of the Travel Agent Why Airline Commission Changes?

Changes Still to Come The Hotel/Travel Agent Relationship Travel Agent Commissions Central Reservations Center Outsourcing Call Centers Processing the Call Inhouse Reservations Internet and Web-Based Reservations Search Engine Optimization Hotel Web Sites Chain Web Sites Third-Party Travel Websites Opaque Sites Meta-Search Technology Independent Reservation Services Hotel Representative Services Other Trends in Electronic Reservations Mobile Apps Voice Recognition Mapping Capabilities Guest History Databases AUTOMATED REVENUE MANAGEMENT SYSTEMS The Yield Management Revolution A Brief History of Yield Management Market Demand Corporate Guests Leisure Guests 46

Group Guests Price-Occupancy Mix Revenue per Available Room Contribution Margin Ideal Conditions for Yield Management Tools for Measuring Results PHASER Complete Access Reports Smith Travel Research’s STAR Reports Travel Information Management Services (TIMS) Hotelligence Report Expedia Competitive Price Grid Report Other Reports Automated Yield Management Systems Artificial Intelligence Systems Rules and Triggers Centralized Yield Management Strategic Account Management Yield Management Controls Nests and Hurdles Fenced Rates

47

Professional Vocabulary: Boxed Dates regulate reservation decisions making them an important tool of the department.

Reservations on either side of a boxed day are not permitted to spill into that date. For example, a hotel might box (refuse reservations) June 27th because of heavy arrivals. Then reservations for an earlier day, June 26th, would be restricted to one night only. Arrivals would resume on June 28th.

Closed To Arrival (CTA) is a yield management technique which uses the strength of one date to help fill the previous day or two. If July 4 is going to be a full night, for example, the hotel can close July 4 to arrivals. Guests wishing to stay July 4 would therefore need to arrive on July 3 or July 2.

Fenced Rates are a sales tool of the reservations department. Fenced rates are restrictions that offer options to the guest. Guests are not forced to accept these restrictions but their rate is lowered if they do. Examples include nonrefundable and noncancellable reservations, weekend stays and advanced purchase reservations. Sound familiar? Airlines having been using fenced restrictions for years.

Last Room Availability technology allows real-time access to a hotel's reservation data base.

The chain's CRS is able to access and book rooms on-line, real-time with a given hotel in the chain. In the past, the hotel manually opened and closed availability with the CRO. This process was fraught with human errors. Common mistakes included closing availability with the CRO too early (and never selling the last few rooms) and closing availability with the CRO too late (and overbooking the hotel).

Minimum Length of Stay (MLS) is another yield management technique which uses the strength of a particular date to help fill dates on either side. For example, if August 17 is a very strong date for the hotel, by implementing a 3-night minimum length of stay, the hotel essentially restricts reservations to 3 or more nights. One- and two-night reservations will not be accepted.

The result is higher occupancy on August 15, 16, and 18 than would have resulted if the policy were not in place.

Opaque Sites. Pioneered by Priceline.com, deeply-discounted rooms are offered “brandless” until the final transaction. This allows a hotel to minimize the compromise to their rate integrity but still participate in this competitive price-sensitive online environment.

Regrets is a reference to the denial of a reservation request, for example, from a travel agent to whom the hotel pays a commission, or room-nights lost though reservations and chain requests.

Yield Management maximizes room revenue (number of rooms sold x average daily rate). Yield works because rate-sensitive guests book in advance, taking advantage of packages and advanced-purchase discounts. Rates rise as the hotel fills. Guests whose business requires them to make reservations days or hours in advance find the room supply is limited and room rates are higher. Yield management increases both the number of rooms sold and the average daily rate.

48

Answer to An Incident in Hotel Management: This incident is about communication, or rather, the lack of it. An elderly couple stayed at a hotel because they read via marketing materials that a shuttle served the nearby ballpark. Sadly, once on property, they were led to believe that the only shuttle serving the ballpark was a cityoperated trolley. But in reality, the hotel also offered a complimentary hotel-operated shuttle.

Communication!

Who is to blame. Likely no one. A guest-service agent suggested the couple take the city shuttle. Unless we know this guest-service agent was brand-new to the job and did not realize the hotel operated its own shuttle… unless we know this agent was brand-new, we must believe it was a conversation across the desk which led the guest-service agent to recommend the city trolley.

Imagine the conversation went like this: “It is such a nice day, we thought we might walk, how far is the ballpark?”

“The ballpark is about 1 ½ miles away.”

“Oh, that’s too far. What about a shuttle.”

“You know, you could walk a few blocks, get a bit of fresh air, and then grab the cityoperated trolley for 50 cents right to the ballpark.”

“What a lovely idea. That’s exactly what we will do. Thanks.”

Who is to blame. Likely no one. Does that mean the hotel can’t make the guests feel a little more welcome now that they’ve had this problem, of course not. Why don’t we upgrade them to a nicer room, buy them each a warm drink in the bar, or some other small gesture which will turn this moderately unfortunate incident into a win/win!

Answers to End-Of-Chapter Questions: 1. Yes, technically, this defeats the concept. Since last room availability enables any agency, including the desk, to sell at the highest price, it appears to be the best technique. But a room or two held in an otherwise full house has negligible impact on income even if the rooms are not sold. The rooms might be sold to walk-ins, more likely than a reservation at this late date—of course keeping communication with the CRO or the GDS doesn’t prevent a walk-in sale. The saved rooms might go to important customers to build goodwill. By holding back, the manager injects a human element into the machine-made decision.

2. Channeling calls through a CRS reduces in-house volume, but broadens the market reach of every hotel, chain affiliated or not. Technology extends this reach even further because travelers utilize computers to make reservations from homes and offices. Smaller chains and start-up chains face significant investment if they wish to compete with major players in the global distribution system. Smaller chains must either merge with larger chains, subscribe to independent reservations systems, partner with other small chains to share the large investment, or create new and unique methods for reaching customers.

49

3. Every reservation system involves costs that need to be recovered. In-house res systems are not free. Third-party distribution systems have their own costs. Even the hotel’s own central reservation center charges the property for every room sold. Travel agent commissions (typically 10% or room sales) are still another cost. Travel agents complain that hotels quote them higher rates in order to recover that cost. Recovering different costs helps account for quoting different rates. Differences in rate quotes have begun to close as last-room availability becomes widespread.

4. Every hotel has a break-even point, an amount of dollars needed to pay the bills and generate returns for the owners. (See Chapter 1). This point can be achieved either with heavy volume encouraged by lower rates or by lower volume with higher rates. Each class of hotel has a different formula. Budget properties mean low rates, so they need high occupancies. Upscale resorts are at the other end. They charge – and obtain – higher rates to attract a particular niche in the marketplace. Conversely, they experience higher variable operating costs. They are unable to improve occupancy through discounting, because doing so would destroy the very market segment to which they appeal. Commercial/convention properties juggle many different elements of market and rate to maximize income, which includes public facilities as well as room revenues. With its varied markets, the commercial/convention hotel uses the yield-management system more effectively than do budget or resort properties.

5. Reservation systems aim for a foundation of early sales (occupancy) in order to increase the rate in subsequent sales. Discounting early reservations heavily (but with costly cancellation penalties when possible) creates a basic occupancy. Yield-management decisions can then be made later with a higher degree of certainty. Because unsold rooms are so perishable, rates can be discounted again at the last minute as an incentive to fill up. In between the two discount periods, rooms would be sold at standard rates. For those buyers, the certainty of a given date is more important than a few dollars of rate discount.

6. A list of fenced rate restrictions might include: (1) Pre-paid, non-refundable stays at low rates; (2) Low-priced weekend rates when prepaid; (3) Lower weekend rates with Saturday night stays especially at urban hotels with low weekend occupancy; (4) Other devices designed to maximize occupancies during shoulder periods: specialty packages; tie-ins to local activities; sponsorship of community affairs, etc.

Answers to Quiz Questions That Follow: 1.

2.

3.

4.

False: Hurdle pricing establishes a minimum room rate for each day regardless of room types.

True: Sites such as Priceline.com do not reveal the property until the transaction has been completed.

True False: In spite of its screen size, these devices offer a booming opportunity for a channel of distribution, as is evidenced by early providers such as Choice Hotels’ 50

5.

6.

7.

8.

9.

10.

“Choice Hotels Locator.” The challenge will be to continue to stay at the forefront of this rapidly-evolving mobile environment.

False: Both the idea and the implementation began with the airlines. b THISCO is the Hotel Industry Switching Company a e d Marriott launched this concept in 2007. It has proven very successful as a reorganization of its sales force, centralizing them in regional offices so that they can handle properties up and down the brand, fitting them to the travel needs of the individual account (such as the San Diego Chargers). e

Short Answer: See Exhibit 5-3 for an illustration.

51

Check-In Check-Out Quiz: Chapter 5 _________________________ Name _________________________ Identification Number

_________________________ Section _________________________ Hour

T/F Questions: Circle either T for True or F for False. (Questions that are partially false should be marked False.)

1. Hurdle pricing is the term given to the competitive environment in reservation offices. It requires each reservationist to better his/her record by either the number of reservations taken, or the number of days booked or the average rate of the booking. T F 2. Online sites that offer distressed room inventory at deeply discounted rates are referred to as “opaque” because they make it difficult for the user to know which property being offered. T F 3. The price-occupancy mix is a management decision because the same total rooms revenue (yield) can be achieved by either higher rates and lower occupancy or lower rates and higher occupancy. T F 4. Reservations and room bookings via mobile apps are not a viable channel of distribution because of the limitations of the device’s screen size (smartphones and mobile phones). T

F

5. Yield management was initially introduced by the hotel industry in the late 1960’s. The rapid development of yield management technology, however, is attributed to the airlines because they had the financial resources to implement this capital-intensive investment. T F

Multiple Choice: Circle the one answer that best completes the thought.

6. Which of the following is NOT one of the four global distribution systems (GDS)? a.

Sabre b.

THISCO c.

Galileo d.

Worldspan e.

Amadeus

52

7. Yield managers (also called revenue managers) are responsible for: a.

Increasing room rates as occupancy rises b.

Determining the mix between a properties individual guest rooms and group blocks c.

Department increasing marketing budgets to provide more exposure when occupancy is down d.

Setting the rules and triggers for computer programs involved with their predictions e.

Increasing the staff-to-guest ratio when occupancy is high; decreasing it when occupancy is low 8. Since yield management is based on these unique characteristics it can be a successful strategy: a.

High fixed and low variable costs b.

Seasonality of demand c.

Flexibility of the room supply d.

The potential guests’ overall lack of concern for pricing e.

Both a and b 9. Strategic Account Management refers to: a.

The general manager’s focus on upcoming reservations b.

A corporation’s headquarters assessment of its various lodging properties c.

Front desk staff’s attention to all in-house guest folios d.

One sales manager representing all hotels within an entire chain e.

The night auditor’s oversight of guest folios 10. Central reservation offices (CROs): a.

Can be accessed by dialing toll-free 800 numbers b.

Are sometimes located outside of the United States c.

Charge member hotels a fee for each reservation taken d.

May employ as many as several hundred agents during peak periods e.

All of the above

Short-Answer: Answer briefly with short paragraphs, phrases, or exhibits.

This question requires two brief statements:

Sketch or describe the flow of communication that takes place when a potential guest requests a hotel reservation through any agency that uses the Global Distribution System.

53

CHAPTER 6 Individual Reservations and Group Bookings Preparing The Lecture: 1. Use the chapter outline (provided on its own page for distribution or overhead use) to structure the week’s work. Better still: Use the Power Point.

2. Aim to develop specific objectives for the students: a. A working vocabulary of reservation jargon. b. An appreciation of the mechanics and difficulties of handling prepaid reservations. c. A reinforcement of the role of third parties in the reservation process. d. The impact upselling can have, and the art of doing so.

3. Establish lecture goals, which might include: a. Distinguishing the differences in reservations for groups and single markets. b. Clarifying the differences in the several types of group travel. c. Relating the reservation mechanics of this chapter to the individual and group market identifications of Chapter 2. d. Updating the class on changes taking place in group guarantees and attrition calculations. (Watch the trade press.)

What The Chapter Is All About: All hotels take reservations, but their importance varies with the attributes of the hotel (size, class, and type). Individual reservations are more important to resorts, while group reservations are more important to convention hotels. The mechanics of the recordkeeping differ when reservations originate from different sources.

Chapter 6 examines how reservations are made and how critical information is communicated and tracked. How the reservation is made, and by whom it is made is another component of the chapter. The first-person-maker calls his/her own reservation to the hotel or CRO. Secondperson-makers (secretary, travel agent, etc.) act on another's behalf. Third-person-makers (tour operator, convention coordinator, etc.) often reserve blocks of rooms before the guests have even been identified. Each reservation class is a component in the yield management formula; each with a different weight (see Exhibit 6-14).

Group reservations (conventions, tour-and-travel, incentive, single entities) represent a highly profitable market for many hotels. Hotels solicit the group market, which represents a large portion of the entire lodging industry. Group business is good for profits because it offers economies of scale and because group delegates generally spend more in related services than do individual travelers (see Exhibits 6-10, 6-11, and 6-12).

Just as there are many makers of reservations, there are many takers of reservations.

Reservations may be handled in-house by the hotel's reservations department. They may be 54

accepted on behalf of the hotel by the chain's central reservations office, by a hotel representative, or outsourced to an independent reservation service. More and more, the thirdparty intermediary is an electronic “person.”

The manner in which the reservation is communicated between the makers and takers is constantly changing. Buzzwords (last room availability, electronic switch technology, seamless connectivity – see Chapter 5) have brought lodging reservations into the 21st century. Last room availability allows central reservations systems (CRSs) to access an individual hotel's reservations data on-line. In-house reservation department are now competing real-time with the CRS to sell each room. (Remember: CRSs charge for each reservation taken.) Electronic switches (e.g. THISCO) have erased the barriers to communication between once-proprietary central reservations systems. Voice recognition, personal computer subscription services (e.g.

Prodigy or CompuServe), and even CD-ROM technology, are playing an ever-expanding role in reservations.

Some Chapter Highlights: Convention bookings and tour and travel reservations differ from individual reservations in lead time. First-person-makers and second-person-makers book accommodations a relatively short time before arriving. Third-person-makers have much longer lead times. Tours and single entity groups may act months or even a year earlier. The lead-time with convention reservations is often one-to-five years – sometimes as much as ten years – ahead. Size is another difference (see Exhibit 6-16). When the group is too large to be housed at just one property, the city's convention and visitors' bureau (CVB) steps in. The CVB offers many services besides coordinating additional hotels to house the overflow registration. CVBs are funded by special room taxes (see Exhibit 9-4) or even by municipal budgets. By generating tourism dollars, they return their operating costs to the city many times over.

Room rate quotes are another difference between single travelers and groups. Yield management systems are the major determinants in responding to inquiries from first-person and secondperson makers. Groups are another matter. Group sales (usually 10 rooms is the demarcation) entail other incomes: banquet room rentals; income from banquet sales; no-host bars, audiovisual rentals, etc. Room rates can be lowered when offset by other income sources.

Even then, rates are quoted differently for different groups. Discounted tour-group rates may be negotiated for an entire year, especially if the tours arrive back-to-back. Convention groups are quoted using either spread or run-of-house rates. Spread or sliding rates follow the rack rate for each room, but may be lower or higher than the rack rate. Individual conventioneers book their own rooms, paying more or less for better or standard rooms depending on their own preference.

Some convention groups prefer a run-of-house rate, a single or flat rate where the charge for all rooms is the same. Room assignments are then made equally across all room classes (hence “run-of-house”). Timing is everything—some lucky delegates will receive the nicest rooms available, while others will simply receive standard accommodations.

55

The impact of the economic downturn is reflected in a re-evaluation of revenue sources. Fees such as guarantee fees and cancellation fees are being tried. Attrition fees are being enforced.

Comp room use is being scrutinized. Efforts to elevate perceptions (countering the AIG effect) are being made by sales and marketing departments, esp. of high-end resorts. No stone can be left unturned in the effort to survive the current economic challenge.

56

CHAPTER 6 INDIVIDUAL RESERVATIONS AND GROUP BOOKINGS COMPONENTS OF THE RESERVATION Automated Phone Systems Importance of Training Information Contained in the Reservation Required Fields Arrival and Departure Dates Number of Nights Number of Persons Number of Rooms Required Name Types of Rooms Required Quality of the Reservation Upselling the Reservation Price Corporate Affiliation Quality of the Reservation Optional Reservation Data Estimated Time of Arrival Special Requests Smoking Preference Discounts or Affiliations Address Confirming the Reservation Reservation Information Flow Guest History Databases Centralized Guest History Guarantees and Cancellations Advance Deposits Cancellations Reservation Coding Special Coding Advance Deposits Late Arrivals Corporate Guarantee Travel Agents VIPs Riding Reservation Convention Delegate 57

CONVENTION AND TOUR GROUP BUSINESS The Group Rooms Contribution The Perception Problem Benefits of Group Business Casino Hotels Why Some Hotels Refuse Groups Segments of Group Business Tour Groups Convention Groups The Threat from Discount Travel Sites Expositions and Trade Shows Booking the Convention Adjusting the Room Block Convention and Visitor Bureaus Expanded CVB Services The Housing Bureau Overflow Hotels Negotiating Convention Rates Attrition Hotels Get Serious About Attrition Comp Rooms Rate Quotes Managing the Room Block Competitive Clauses Unidentified Delegates IT Packages Handling Tour Group Reservations

58

Professional Vocabulary: “AIG” Effect references the infamous debacle of 2008 wherein AIG, a major insurance form, sent its corporate officers to a luxury California resort just a week after the U.S. government paid $85 trillion to bail them out of bankruptcy. The effect has been long-lasting for the hotel industry’s convention business, especially for high-end properties. As of September 2011, the St. Regis Monarch Beach resort, home of the “AIG” effect, was reportedly on the market.

Attrition fees are applied when a group cannot fill at an agreed upon percentage of the contracted number of rooms. Attrition fees are compensation to the hotel for the rooms that might have been sold had they not been removed from the market by contract. The opposite of the pick-up rate, it looks at the number of rooms not sold. Given the economic times, attrition policies are more frequently enforced.

The Central Reservations Office (CRO) and The Central Reservations System (CRS) are used interchangeable in today's jargon. In reality, the CRS is the entire computer system, including all of the electronic channels, software, switches, and interfaces. The CRO is the hotel chain's portion of the overall system; the physical site of the chain's reservation office.

Housing Bureaus are divisions or services of Convention and Visitor Bureaus (CVBs). They coordinate individual delegate reservations when large convention groups require more rooms than one hotel can furnish. Delegates request their hotel preference in rank order (1st choice, 2nd choice, and so on). The housing bureau assigns the second or third preference when previous choices are full. It is a critical service that reduces correspondence and expedites the process.

Inclusive Tour (IT) Packages are a hotel's answer to third-party packages. A number of hotel services are combined for one low price. The guest may receive lodging, several meals, a round of golf, cocktails nightly, a massage, anything the hotel offers which is not in great demand at the time. Unlike third-party packages, hotel ITs do not include transportation. Often, the inclusive price is lower than the hotel's rack rate. Hotel ITs compete favorably because breakage accrues to the hotel. IT packages are offered on-and-off as occupancy dictates.

Spread rate, or sliding rate, uses the standard rack rate distribution in place to offer a group a variety of options in booking a room instead of just one rate.

Answer to An Incident in Hotel Management: This incident is about hiring well. An employee who stands around chewing gum and allowing every situation to appear like it is someone else’s problem, well, that’s not hiring well at all!

Much better that the employee is full of energy and a helpful attitude. “Mr. Convention Exhibitor, I will call you in your room in ten minutes with the answer to your lost packages.”

And then actually follow-up on the guest problem. That is who we seek to hire in this industry!!

59

The incident is entirely believable. A guest mailed some packages to the hotel. They arrived early and were sent to housekeeping. Housekeeping did a great job holding the boxes and then returning them to the desk on the day of the guest’s arrival. Sadly, an employee at the front desk did not know the boxes were awaiting the guest. And the employee’s attitude was lazy and uncaring. That was half the problem. The other half of the problem is that whoever accepted those packages from housekeeping should have found the guest’s reservation and added an alert memo stating; “Guest has two boxes held on mail table in back room.” Such a message would blink each time the guest’s reservation or folio was retrieved until the guest was actually handed the packages and the memo was cleared.

The GM has three issues at-hand—deal with the dissatisfied guest; retrain or reassign the employee, Steve; and impress upon the front office staff the procedures associated with accepting packages on behalf of guests (memo to the PMS).

Answers to End-Of-Chapter Questions: 1. As a courtesy and convenience, corporate reservations are permitted to guarantee arrivals against their corporate accounts. However, such reservations are not really “guaranteed” if the hotel is reluctant to charge the no-show for fear of retaliation from the corporate account.

Therefore, the cost and incidence of no-shows should be discussed with the corporate account each year when new rates are negotiated. Better rates can be promised to those accounts that avoid no-shows, or agree to pay for them without protest. If that can be negotiated, preventing no-shows becomes as much the corporation’s responsibility as the hotel’s.

2. Automated reservation systems reduce the number of common, manual errors. For example, computerized systems will not accept reservations that omit certain essential data. In contrast, a manual reservationist might forget to ask the guest’s name, or arrival date, etc. Hotels with guest history databases gain even more efficiency. Frequent guests merely tell the reservationist their names and the dates of arrival. The preferred guest system (see Chapter 8) completes the other fields (address, credit card number, corporate name, room type, and rate preference).

3. Just to cite a few of the areas benefiting from economies of scale associated with group room bookings: Total income from guest room sales, F&B banquet sales, meeting room rentals and audiovisual equipment will benefit.

There may be a potential for further business from the group and/or its individual members.

Has the inquiry come from a meeting planner who holds the potential for other business?

The sales department benefits from the reduced work in booking one large group as opposed to booking numerous smaller visits, as does the reservations department.

The front office, housekeeping, bellservice and uniformed services are able to adjust their labor force based on whether the group is checking in/checking out, or in the slower middle days.

60

4. Groups are quoted spread rates or flat rates. Spread rates seem fairer to the guest, because they choose the accommodations for the amount they wish to spend. A higher rate means a nicer room. Flat rates, which are easier for the house to manage, irritate delegates who see others getting better rooms for the same rate that they are paying for lesser rooms. Hotel sales execs may find the convenience of booking flat rates is offset by a loss of goodwill. In the end, the buyer has the final say.

5. Research on CVBs will generate a lot of information to support the delivery of free convention services using public funds. Nationwide, CVBs support hotels and other merchants who benefit from conventions coming to the community. The most direct return is the increase in revenues generated by lodging taxes. More visitors create more local jobs. Australia has found that one job is created for every 250 domestic visits or 32 international visits. The multiplier of tourist and conventioneer dollars is immense. Some studies show that every tourist dollar multiplies as much as 5 times throughout the community as the hotel and its employees spend their earnings. (Hotels occasionally pay wages in $2 and $50 bills to show the community the impact of the multiplier.)

6. Convention or group guests may slip through the reservations process and be assigned as regular guests rather than as members of the group. Some guests do so purposely. There are benefits in some cases. Very early bookings take advantage of deep, leisure discounts or even IT packages. Both priced at less than the convention rate. Guests who book late in the cycle are disadvantaged. There may be no rooms available to regular guests even though the group room block remains open. Or, the corporate rate may be far higher than the negotiated group rate.

Both situations are costly to the group which loses credit for the unaccounted reservations against its room guarantee.

Answers to Quiz Questions That Follow: 1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

False: While it is more challenging than ever with the use on online booking at discounted rates, it makes it all the more important to offer a broad range of room types and have trained reservationists and front office staff discern the “better” fit for the guest.

False: No such thing True: Such fees to guarantee guest requests are in the experimental phase.

False: Just the opposite, delegates spend more than average guests False Just the opposite, CVBs are expanding services to create tourism dollars for their communities e e. c c c.

Short Answer: Name; arrival date; departure date (or number of nights stayed); rate; number in the party; number of rooms required.

61

Check-In Check-Out Quiz: Chapter 6 _________________________ Name _________________________ Identification Number

_________________________ Section _________________________ Hour

T/F Questions: Circle either T for True or F for False. (Questions that are partially false should be marked False.)

1. With the broad use of online reservation bookings, the need for upselling is not as important as it once was. T F 2. Under pressure from anti-terrorist groups, the federal government’s Office of Homeland Security has required the hotel industry to standardize all reservation-codes across the industry. This allows for easy identification of travelers. T F 3. Guarantee fees are used to guarantee certain guest requests, such as reserving a non-smoking room. T F 4. Many hotels choose to stay away from convention business because convention delegates generally spend less per day than other guest types. T F 5. Pressure to balance municipal budgets has forced Convention and Visitor Bureaus (CVBs) to limit their cooperation with lodging industry partners and reduce overall services to citywide convention groups. T F

Multiple Choice: Circle the one answer that best completes the thought.

6. It is standard procedure to offer rate discounts to: a.

Senior citizens b.

AAA members c.

AARP members d.

Uniformed personnel, military and even firefighters and police e.

All of the above

62

7. In order to retain some sense of a personalized service when confirming a reservation, hoteliers as a whole do not provide confirmation numbers: a.

Over the phone b.

Via e-mail c.

By a letter sent by mail d.

On postcards e.

None of these since all are used to confirm reservations 8. In the context of this chapter, special coding is NOT used for the following types of reservations: a.

Travel agent bookings b.

VIPs c.

Walk-ins d.

Group affiliations e.

Corporate guarantees 9. If members of a convention group are offered a range of rates, the rate quote is said to be: a.

Flat rate b.

Rack rate c.

Spread or sliding rate d.

Run-of-house rate e.

All of the above except d 10. Reservations requiring cash deposits have: a.

Generally replaced credit-card deposits as a means of saving commissions b.

Wider use among commercial/business properties than roadside motor inns c.

Never been popular with hotels d.

Been required from travel agencies since airlines have stopped paying them commissions e.

None of the above

Short-Answer: Answer briefly with short paragraphs, phrases, or exhibits.

You have been asked to construct a computer program for taking telephone reservations; but capacity is limited. You must hold to the 6 most important components of a reservation. List them.

63

CHAPTER 7 Managing Guest Services Preparing The Lecture: 1. Use the chapter outline (provided on its own page for distribution or overhead use) to structure the week’s work. Better still: Use the Power Point.

2. Aim to develop specific objectives for the students: 1. An understanding of complaint management; from prevention to alternative solutions.

2. A sensitivity to and an awareness of the rights of the disabled (guests in the hotel as well as employees in the work place) under the Americans with Disabilities Act. 3. A skepticism about standard operating procedures and the ability to ask (at the proper time); “Who knows Why?” about hotel rules designed for the convenience of the hotel at the expense of guest comfort and satisfaction.

4. A talent for delivering guest service on a personal level, while setting standards and measuring costs on a company level. How complaints are handled is an important component of guest service.

3. Establish lecture goals, which might include: • Discussion of Total Quality Management from an implementation (practical) standpoint.

• Listing achievable quality guarantees for the rooms departments; front desk, bell department, etc.

• An understanding of why components of TQM include soft goods (bed coverings) quality and bathroom cleanliness.

• Role playing a supervisor’s response to a fictional, but structured complaint.

• Asking handicapped students to discuss problems related to architectural and operating features.

What The Chapter Is All About: Modern service organizations are structured around guest service (Chapter 7) more than they are according to the lines of command (Chapter 3). By rights, the contents of Chapters 3 and 7 could have been merged (they weren’t, because the resulting chapter would have been too long). If desirable for class discussion, Chapter 7 can be viewed as an extension of organizational structure.

The trauma of reorganization in the lodging industry (during the 1980's and 1990's), as well as increasing competition for occupancy and travel dollars has re-awakened the importance of guest service. In today’s market, fiscal responsibility and profitability follow a strong guest service orientation.

64

The reduction of certain hotel positions (chiefly in the middle manager ranks—See Chapter 3 discussion) has also re-emphasized the need for exemplary guest service. Reducing midmanagement ranks while increasing guest service seems contradictory. It could be, unless the hotel’s focus is to shift the responsibility for guest service from the eliminated jobs to those staff positions which still remain. To these mostly line-level employees, now entrusted with guest care, comes the authority (empowerment) to make decisions on behalf of the guests. Quality Management (QM), Quality Assurance (QA), or Total Quality Management (TQM), under whatever name, has taken root in the lodging industry. The high turnover rate of employees is counter-productive to the implementation of TQM so efforts should be made to improve retention.

Quality management (QM) initially found entry into America’s management systems through heavy industries (manufacturing, automobiles, etc.) who copied the successful concepts from Japanese management practices. America’s service industries (lodging industry included) copied QM from heavy industry by adapting standard functions such as employee empowerment, quality circles, and quality control to their own special needs. Lodging's focus on QM was highlighted when the Ritz-Carlton chain won the prestigious Malcolm Baldridge award for national excellence.

Quality in manufacturing is not the same as quality in service delivery. Quality control (QC) in manufacturing aims to minimize production errors. Those that slip through are caught by line inspectors. QC in manufactured goods comes before the customer buys the product. But production and delivery are simultaneous in the hotel business. The nose-to-nose encounter between the employee/deliverer of the product and the guest/recipient intensifies whatever production mistakes are made. When a supervisor is added to the equation, a complex human relations triangle of guest-employee-supervisor emerges. Training discipline, communication, apology, and remedy are compounded in the interchange that results.

No process is error-free. Good employees, careful training, and alert supervision notwithstanding, mistakes are made and complaints are lodged. QM proceeds on two fronts.

Using a variety of guest and employee input, trouble areas are highlighted and repaired before the fact. It is this attention to error discovery, followed by immediate remedy, which reduces production problems and ultimately guest complaints. Strong communication answers the question, “Who knows Why?” Reducing is not eliminating. The next step, preparing for the eventual complaint, is equally necessary. Management anticipates that legitimate complaints will materialize and so authority is delegated; remedies are outlined; and response plans are formulated. At this point, the hotel is positioned to convert complaints into opportunities for renewed satisfaction and guest loyalty.

65

Some Chapter Highlights: “A Brief History of Quality Management” is the correct heading for opening this chapter.

Quality Management (QM) was formulated for the lodging industry some 25 years ago; though the very essence of QM is the essence of the lodging industry, itself. QM's ingredients are easily found in the art of hospitality. Indeed, "hospitality" and "hotel" have the same root word, hospitium (L). Unfortunately, two decades of dire circumstances were visited on the industry before it saw the need to return to its origins.

Next, the chapter asks, “What Is Quality Management?” In the authors' view, “Quality management is an attitude that has every employee acting like a concierge and thinking like a manager.” To the buyer of the service (the guest), it is one thing. To the deliverer of the service (the hotel through its employee), it is something else. The “Buyer’s View” rests on expectations created by a variety of communications. Some are subtle, like architecture and design; some overt, like direct advertising; and some in between, like word-of-mouth recommendations. The difference between what the guest actually experiences compared to their expectations is one simple definition of quality management. Nowhere is the impact of this expectation more evident than in the experience of disabled persons. The 2010 updates to the ADA continue to champion an improved experience for this guest segment.

“The Seller’s View,” another definition, structures the hotel organization to deliver service at the highest level of guest expectations. This flows from an operational philosophy that inscribes the entire staff with a service culture; one that emanates from all employees, starting with the general manager. This culture moves the standard of service from just the guest to also include service to co-workers and third-parties (e.g. vendors) alike. Sustaining such a profile demands leadership from management and a willingness of operative employees to assume responsible.

Accomplishing both begins with better employee selection, continuous training, careful coaching, and adequate reward.

In the struggle for TQM, it must be understood that complaints often slip through the cracks.

Management should provide an atmosphere for guests and associates alike to offer their comments and suggestions before reaching the complaint stage. Complaints and how they are handled have a serious impact on the hotel’s bottom line.

66

CHAPTER 7 MANAGING GUEST SERVICES Chapter Outline: TOTAL QUALITY MANAGEMENT (TQM) Total Quality Management in Innkeeping Examples of Quality Management The Real Components of TQM Renovations Bedding Linens and Pillows The Public Relations of Bedding Cleanliness An Old Enemy has Checked In Noise, Temperature and Darkness Total Quality Management Defined The Buyer’s View The Seller’s View Leadership Empowerment The Employee Diversity and Turnover Selecting and Retaining the Right Employee Labor Unions Training The Authors’ View CUSTOMER RELATIONS MANAGEMENT (CRM) Customer Relations Denied Who Knows Why? Measuring Guest Services Controlling Quality Controlling Quality Through Inspection Controlling Quality Through Guarantees Americans with Disabilities Act Specific Requirements Signage Complaints How Much Do Complaints Cost?

Still Another Calculation Identifying the Complaint Preventing the Complaint: Early Warning 67

Preventing the Complaint: Comment Cards Handling the Face-to-Face Complaint Preparing for Complaints Responding to Complaints

By Listening In a Proper Venue

By Making A Record With A Settlement

By Asking the Guest

68

Professional Vocabulary: Complaint handling is the measure of a hotel's ability to manage guest service. Complaints are expected, and management plans a whole series of theoretical responses. Therefore, the hotel's response to the guest's concerns is a very good measure of its commitment to QA. In that response to the complaining guest, one can see the results of proper employee recruiting, training, empowerment, and commitment.

Iceberg effect relates complaints to the 90% of an iceberg's mass that lies below the surface.

Guest dissatisfaction is like an iceberg; the few who actually complain represent many more guests who choose not to verbally show themselves. No can say for certain that 90% of complaints are unspoken. Studies do suggest that relatively few guests voice their irritation or seek relief. It appears that more depart disgruntled than seek satisfaction through some form of restitution.

Quality assurance (QA) gives special attention to every complaint, knowing that below it floats a multitude of unvoiced concerns. QA is the starting point for managing complaints. Searching out the cause may uncover numerous other problems hidden below the surface.

Peer-group hiring is one practice used to strengthen TQM in the hiring process. Applicants are interviewed by the associates with whom they will work. If management allows the time this requires from the employees’ other work duties and the extra time it adds to the hiring process, its ROI is worth it since it usually results in better retention rates.

Quality Control is employed by many businesses to assure employee compliance with procedures, standards, and levels of service. Employee circles and on-site inspections by anonymous secret or mystery shoppers provide feedback and evaluation. Management must have this information to perform is review function.

Quality Guarantees (QGs) are just that, guarantees! The hotel guarantees performance of a certain function within fixed parameters, frequently time measurements. Examples might include; "No charge for room service if not delivered within 20 minutes;" or “The guestroom night is free if maintenance does not respond to your room problem within 30 minutes.” QGs reinforce both the guest's and the staff's perception of quality. They enable guests to measure the mettle of the staff and management. Guarantees should not precede the implementation of a guest-service program. Rather than being the forerunners of quality control, guarantees are its achievement, the result of a functioning quality program that has accomplished its goals.

Answer to An Incident in Hotel Management: This incident addresses several issues; delegation of authority, industry quality guarantees, and minimally reasonable guest satisfaction standards. A potentially important guest requested a complimentary rate because of the lack of hot water experienced on two separate occasions during his visit.

69

Possibly the most important aspect of this case, which may be easily overlooked, is that this guest is from the nearby business park—revenue which the hotel is working diligently (and at great expense) to develop. No guest should be left standing at the front desk for 15 minutes awaiting discussion with management; this guest least of all. Delegation of authority would allow certain common guest complaints to be handled by shift leaders, supervisors, or other midlevel employees. The hotel manager even mentioned; “I have told other guests the situation is not covered.”

That brings the discussion to the other two issues at hand; industry quality guarantees, and minimally reasonable guest satisfaction standard. Many industry operators have experimented with guest satisfaction guarantees. They have asked the question; do such guarantees generate more business and more goodwill than they cost the operation? And in many instances, the answer has been no. All-encompassing guarantees are not as prevalent today as a decade ago. In addition, such guarantees generally require the guest give the front office a chance to rectify the problem. The guest must call down and explain the problem, giving the hotel an opportunity to correct it, before the satisfaction guarantee would be honored.

Whether the guest called and complained previously, or not, the hotel knew it had a hot water problem. A hot shower is a minimally reasonable guest satisfaction standard. If there were indeed something wrong with hot water, as management alludes to with their; “It’s an act of God,” then the guest is absolutely within his rights to ask for satisfaction. Whether it is a free roomnight for this visit, a complimentary room for the next visit (that gets him returning and gives us a chance to improve his satisfaction), a room upgrade next time, or a free breakfast this morning, is up to negotiation between parties. By the way, to blame a broken hot water system on an act of God is ridiculous!

Answers to End-Of-Chapter Questions: 1. The range of student answers will be broad. One example for housekeeping might be: Source DIRECTED TO: Guest-service Agent Linen Room Guest Questionnaire INITIATED BY: Ass’t Manager

Issue

Room #

Date & Time

No towels Request for service Room Attendant Surly

1250 1251 1254

4:00 p.m. 3/8 3:28 p.m. 3/9 Drop Box 3/9

Seems as if room is 1260 always last to get service

Comment: Floor attendant at 1250-1264 needs help.

70

10:20 a.m.

3/10

2. The guarantees must not be too broadly brushed! The student is to understand that the guarantee must be measurable if it is to withstand a guest’s challenges that the promise was not delivered. Examples might include: • Car will be delivered to the front entry within 12 minutes of the request, whether by telephone or in person, or a free car wash will be provided that day. Call extension 3333 to report our failure to meet the commitment.

• Laundry left by noon on one day will be returned by noon the next day and laundry left by 8:00 a.m. on one day will be returned by 5:00 p.m. the same day or laundry charges will be waived. Call extension 3333 to report our failure to meet the commitment.

• Guests will find towels by the pool (beach, spa) during the hours of operation (8am to 8pm) or breakfast the following day will be provided at no charge.

Call extension 3333 to report our failure to meet the commitment.

3. The student should make a list of the number of contacts that might occur with a conventioneer. Exhibit 7-7 would be a good beginning. Since the assignment is a fullservice, convention hotel, there will be additional guest-employee contacts. These might include room service; use of the concierge, spa and/or massage services; convention services manager, food servers, set-up crews, security and bartenders in the convention areas; and hotel security. Easily 6-10 more moments of truth to add to the ten of Exhibit 7-7. Therefore, 15 eyeball-to-eyeball contacts times 630 rooms equals 9,450 daily moments of truth times the occupancy, say 80% = 7,500 or so per day. As such, a typical month might be 225,000 moments of truth!!

4. The student can use the outline from the overhead or the text to start his or her list.

Included should be the following: • Listening, really listening • Meeting in a proper setting, a venue which is not too public • Note taking, carefully done to provide a record if the situation grows beyond the immediacy of the event (remember, some complaints turn into law suits) and to show care and attention to the guest • Resolving the complaint with a settlement that keeps values in perspective • Including the guest within the resolution if the guest proves to be a reasonable person • And taking steps to remedy whatever situation caused the problem initially.

5. ADA requirements will focus on accessibility and intent. Among the list of recommendations to the architects are the following: a.

Ramps with hand rails b.

Signage c.

Special handicapped rooms d.

Roll-in showers e.

Elevator accessibility to all mezzanine, banquet and meeting floors f.

Lights as well as ringing telephones or emergency bells g.

Menus and elevator buttons in Braille 75

h. i. j.

Proper height of viewports, towel bars, and drinking fountains Curb cuts in sidewalks Outlets to charge wheelchairs.

6. Operating areas of the hotel can develop cross-departmental incentives to encourage guests to complete comment cards. Many good ideas should be developed. Free in-room film for completing a comment card for the coffee shop; free gourmet room dessert for completing a card in the guest room; appetizer by the pool for completing a card in the bar; upgrade for completing a card at check in; free drink at the bar for completing a card on the hotel’s TV channel. Limited only by imagination.

Answers to Quiz Questions That Follow: 1.

2.

3.

4.

False True True False: The opposite is certainly the truth, but a “quality” establishment would foster a strong TQM philosophy all the time. Such practices and cultures cannot be put into effect on a moment’s notice.

5.

False: Employees should never be redressed in front of the guest. In most circumstances, employee error is an opportunity for management to re-train and re-direct (not terminate).

6. e 7. e 8 d 9. a 10. c Housekeeping is reluctant to use any chemicals on bedding, but DDT was banned in the 1970’s.

Short Answer: No single answer to this open-ended question. Weigh the grade more on the second half of the question because it takes more thought and understanding.

76

Check-In Check-Out Quiz: Chapter 7 _________________________ Name _________________________ Identification Number

_________________________ Section _________________________ Hour

T/F Questions: Circle either T for True or F for False. (Questions that are partially false should be marked False.)

1. Unionized hotel workers are concentrated in the Prairie States (think Iowa and Nebraska) and the Southeast (think Alabama and the Carolinas). . T F 2. A “road warrior” is a frequent, business traveler who sleeps away from home a great deal and battles the challenges of regular travel. T F 3. The authors define total quality management or customer service management as an attitude that has every employee acting like a concierge and thinking like a manager. T F 4. Quality Management gains greater attention only during economic upswings because improved occupancy provides the resources to spend on this expensive extra. T F 5. Angry guests can be mollified if the employee who caused the problem is disciplined or, in serious situations, even discharged in front of the complainer. T F

Multiple Choice: Circle the one answer that best completes the thought.

6. The ADA: a.

Is a federal law dealing with Advanced Drug Addiction in employees b.

Refers to any state law that deals with adverse drug addiction c.

Requires employers to give 48 hour notice before drug testing d.

Places drug addiction under most health-insurance programs e.

None of the above; the ADA is not drug-related legislation 7. TQM (Total Quality Management): a.

Overlooks mistakes made by employees b.

Avoids the costs of technical training by hiring only skilled employees c.

Forbids discipline by supervisors d.

Does away with review and evaluation e.

None of the above

77

8. When guest and employee meet “eyeball to eyeball,” there’s an opportunity for service to shine through. That opportunity has been called a: a.

Quality circle b.

Who-knows-why? c.

Quality guarantee d.

Moment of truth e.

None of the above 9. Which hotel chain has won two Malcolm Baldrige Awards for quality? a.

Ritz-Carlton b.

Hyatt c.

Four Seasons d.

Hilton e.

None of the above 10. Bedbugs are a very costly concern to the hotel industry. Current methods of eradication that are NOT effective are: a.

Destruction of furniture and bedding b.

Bedbug-sniffing dogs c.

Use of DDT on the bedding d.

Training to housekeeping staff to learn detection e.

Vacuum cleaning of the bedding once a week

Short-Answer: Answer briefly with short paragraphs, phrases, or exhibits.

Identify one complaint that guests will frequently register with the guest-service agent at the front desk, and offer a best-practice response that management has prepared in anticipation of the complaint.

78

CHAPTER 8 Arrival, Registration, Assignment, and Rooming Preparing The Lecture: 1. Use the chapter outline (provided on its own page for distribution or overhead use) to structure the week’s work. Better still: Use the Power Point.

2. Aim to develop specific objectives for the students: • An ability to walk through the R’s developed in the chapter’s theme, including; Reception (while remaining sensitive to the service expectations of Chapter 7); Registration (while incorporating reservation data from Chapters 4-6) and Rooming (while considering the impact of yield management as developed in Chapters 4-6).

• A continuing concentration on building professional vocabulary.

• A “Who Knows Why?” approach (Chapter 7) to registration lines including the advantages/costs of self-registration and lobby kiosks.

• The significance of “Moments of Truth” as it relates to the all-important Check-in sequence.

3. Establish lecture goals, which might include: • Detailing the steps taken by the guest-service agent in making a room selection for those guests with, and those without, an advance reservation.

• Extending the power of improving the guest Check-in hour by accommodating early arrivals and waiting lines.

• Enumerating the positions and duties of staff with whom the guest may have registration and/or rooming encounters at different types of hotel properties.

• Emphasizing the service responsibilities that each employee delivers during those encounters.

• Reviewing the contents of the registration card and some of its marketing and legal implications, including the expanding “Points of Agreement.”

• Suggesting methods for remembering guest names.

• Soliciting class reaction to question #4 of chapter-end problems.

• Introducing the concept of “upgrades” (not upselling) and its strategic use as a marketing tool at the moment of reservation – and then at the time of registration.

What The Chapter Is All About: Chapter 8 follows the flow of the guest from arrival through room occupancy. That pattern differs with both the type and the quality of each hotel. In limited-service properties, the guest may meet just one front-office employee (guest-service agent). In full-service hotels, the guest experiences numerous encounters, perhaps beginning at the airport arrival, to valet parking attendants, to doorpersons, to bellpersons and eventually to guest-service agents.

79

In the full-service scenario, many things happen in tandem at the time of registration. A registration card is printed and presented. A room assignment is made. A hotel account (or folio) is opened. Information is communicated (e.g. method of payment, membership in the preferred guest program, etc.) and questions are answered. Finally, a bellperson is summoned and the guest is roomed.

All of these “touch points” can generate Moments of Truth. Because so many encounters and transactions occur in a relatively few minutes, accomplishing these steps smoothly and simultaneously requires training and preparation. Making the room assignment, for example, requires knowledge of both the accommodations requested and the facilities available. The property management system (PMS) helps with both; it provides the reservation information and the room availability. Assignment discretion is left to the guest-service agent, who may elect to upgrade the guest to more expensive accommodations. Usually, guest service agents are trained first to attempt an upsell of the guest. This is also a moment to wield the power of upgrades.

Information that appears on the registration card may already be in the PMS, placed there at the time of the original reservation. By signing the card, the guest verifies a number of issues, including; the date of departure, the method of payment, accuracy of the guest’s name and address, and acceptance of the daily rate. More subtle information makes the registration (reg) card an official document containing legal disclaimers and assumptions of responsibility for charges incurred (Points of Agreement).

Once registered, the guest is greeted by a bellperson, who sometimes develops a close, professional relationship with the guest, but always plays a key role in enhancing the guest’s experience. In addition to physically escorting and rooming the guest, the bellperson promotes hotel facilities, handles luggage, and checks the operation of various elements in the room, including; the key, television, air-conditioner, and lights. The bellperson acts as final room inspector, verifying overall cleanliness and supplies (hangers, toilet tissue, towels, etc.).

Although the registration process is an important component of the guest experience, many hotels have successfully introduced self-check-in terminals. Located in the lobbies of the world's finest hotels, self-check-in terminals are not viewed as a reduction in service. Instead, they offer sophisticated travelers a quick and simple solution to long queues waiting at the front desk.

Some Chapter Highlights: During registration, guest-service agents wear a number of hats. They’re hosts, meeting and greeting the arriving patron. They’re salespersons, selling (upselling) and merchandising guest rooms and hotel services. They’re credit managers, validating guest identification documents and establishing charge privileges. They’re jugglers, matching available room accommodations with the guest’s needs and expectations. They’re bookkeepers, recording and accounting for an assortment of transactions.

Most registration functions are now performed by the property management system (PMS).

More than just an accounting system, today’s PMS’s prompt the guest service agent to greet the guest, to suggestively upsell, to obtain credit information, to verify name and address, and 80

assorted other steps along the registration process. Indeed, at check-out, the PMS will even suggest that the guest service agent ask about reserving future guest stays. Self-check-in terminals use the same methodology by prompting the guest with similar queries; “Would you like a mini-suite accommodation for another $65,” “Please swipe your credit card in the reader below,” “Is there anything else you need at this time,” etc. Research shows that many hotels actually experience a higher rate of upselling through impersonal self-check-in terminals than through personal selling by clerks, because the computer terminal poses options without making the guest feel self-conscious or embarrassed.

Walk-ins impact the bottom line and are an important tier in the yield management system. Their reception, including the lobby and greeting by guest-service agents, plays into booking the room.

Handling early arrivals should be addressed in standard procedures. Waiting lines and the impact on the check-in experience should be scrutinized, using queuing theories being tested in the industry. With self-check-in services (including kiosks) continuing to gain a foothold, it has become a perceived perk by the frequent-guest population to by-pass front desk registration – a win-win in the efforts to battle line frustration. Innovative solutions are worth the effort in this arena.

Guests recognize that the level of service reflects the class of hotel. Level of service shouldn’t be confused with a level of courtesy, which should be the same hotel to hotel. Budget properties offer little or no service aside from the desk, while on the other side of the spectrum, full-service properties offer numerous guest-employee interactions (i.e. moments of truth from Chapter 7).

Economic and societal pressures have made hoteliers more sensitive to environmental issues.

What has been a truism elsewhere in the world is being embraced by North American innkeepers. (One of the authors operated an Australian hotel which won a national conservation award.) Green hotels have brought about operational savings, particularly in energy and water usage. Green features have become talking point for the bellperson, where applicable (see Exhibit 8-21). The greening of hotels, in a meaningful way, has improved the perception of the industry as well as developed a viable market in eco-tourism.

81

CHAPTER 8 FROM ARRIVAL TO ROOMING Chapter Outline: GREETED ON ARRIVAL Moments of Truth Valet Attendant The Doorperson REGISTRATION Walk-Ins Registered, Not Assigned (RNA) Early Arrivals The Check-in Hour Waiting Lines Better Lines Through Queuing Theory Arrival Population Service Population Queue Discipline Service Discipline Creative Solutions Better Lines Through Innovation Self-Check-In Kiosks The Registration Card Release of Registration Information Contents of the Card Name and Address Number in the Party Room Number Date of Departure Rate Agent’s Identification Folio Number Disclaimer of Liability Points of Agreement ASSIGNMENT No-Smoking Rooms Pets The Assignment Process Blocking the Room Choosing—Selling—the Room Algorithms and Property Management Systems 82

Upgrades VIPs Did Not Stay Establishing Credit and Identity ROOMING THE GUEST The Uniformed Services Rotation of Fronts Group Luggage and Other Income Rooming Slips Arriving at the Room Green Hotels Ecotourism Some Specifics

83

Professional Vocabulary: Algorithms are "if-then" statements used by computer programs to make decisions involving lists of information; room assignments are a great example. Without algorithms, the rooms available display would always appear in numeric order. Computer algorithms rearrange the display of available rooms based on moment-by-moment changes entered into the system. The new list may display rooms randomly, or display higher floor rooms first, or utilize other criteria established by management, such as room rates or exposure, which helps control energy costs.

Faffing. A British term for “dithering and fussing” gaining popular use in the U.S. A faffer works steadily and gets nothing done. The term can apply to a worker or a guest. So how quickly does agent A process the average guest as compared to his co-workers? The guest faffers by fumbling with purse or wallet, papers and credit-cards before leaving the area to the next in line.

Front is the next bellperson to room a registering guest. The bell staff rotates positions so that each member gets the opportunity to be front, and to earn a tip thereby. The front position is the most desirable one in the prescribed sequence.

Once a front has been completed, the bellperson returns to the back of the line and becomes a “last.” The last performs duties that do not generate gratuities including hotel errands and lobby cleanup. The bell captain is responsible for tracking the fronts and returning the bellperson to the lineup if the last loses a turn at being front. Otherwise, the crew moves in sequence through the ranks. The mobility of uniformed services staff requires careful record keeping to protect the members from unfounded suspicions.

Porte-cochère. French for coach gate. A covered drive-through on hotel property, not part of the public thoroughfare, that accommodates arrivals out of traffic and under shelter. Whether an establishment has a porte-cochère or not and if so, what happens in this area (whether or not the guest is greeted as they get out of their vehicle, are helped with their bags, etc.) is an indicator of a hotel’s class.

Upgrade is either a verb or a noun. Guest-service agents sometimes assign guests to rooms with higher rates at no extra charge. Upgrades are made for various reasons including the simple fact that no other rooms are available. Many corporate hotels routinely upgrade corporate guests when the hotel is not filled. This is a wonderful treat provided the guest understands this benefit is only offered when occupancy is low. VIPs and convention executives are also routinely upgraded.

Upgrading should not be confused with upselling. Upgrading provides a nicer room at no additional charge to the guest. Upselling gets the guest to agree to pay for better accommodations.

84

Answer to An Incident in Hotel Management: Guests aren’t always honest. And this incident highlights two of the most common deceptions; dogs brought into hotel rooms undercover and unregistered “extra” guests. In both cases, the hotel has the right to charge the guest added fees. The amount of those fees is subject to discussion.

Many of today’s hotels do not charge for a second person in the hotel room. At these properties, the room sets the rate, not the number of guests. Budget and economy hotels commonly do charge for each additional guest, primarily because they provide a complimentary breakfast and because there are few other sources of revenue aside from the room.

As for secretly bringing a dog into the room, the guest deserves no concessions. Hotels choose to restrict pets for a number of reasons; they are messy, leave hair on carpet and furniture, scratch and destroy case goods, defecate on landscaping, and can be disturbing to nearby guests.

In addition, housekeeping cannot adequately clean-up after the pet so subsequent guests do not suffer allergic reactions. A proper deep-cleaning, after the pet was in the room, can cost several hundred dollars—this guest is getting off easily at $50!

Other hotels in town likely do allow pets, and a respectful guest would have made alternate arrangements. An additional option would be a pet hotel, operating in many communities, which houses the pet overnight and provides meals, walks, and sleeping arrangements.

Answers to End-Of-Chapter Questions: 1. Sequence of events could be as follows. The faculty member must be flexible here!

1. (l) Preblocking rooms 2. (e) Valet parking 3. (m) Doorperson 4. (r) Room status report 5. (o) Guest queue 6. (h) Obtaining guest info 7. (j) Upgrading/up-selling 8. (a) Room selection –OR– 9. (c) RNA 10. (g) Room assignment 11 (b) Guest Credit 12. (s) AAA discount 13. (p) Guest signature 14. (t) Pet deposit 15. (q) Check-our reminder 16. (i). Rooming slip 17. (f) Rotation of fronts 18. (d) Bellperson 19. (k) Rooming the guest 20. (n) Ice bucket filled 2. Neither the security nor service level in the hotel requires personal details. Basic information has sufficed until now. Historically, hotels have furnished authorities with guest personal information and arrival/departure dates only on court order. Changes required by The Patriot Act are yet to be clarified.

Personal information (birth dates, for example) might be found on applications for preferred guest programs. Guests need not furnish such information. There might even be justification for knowing the maiden name of a guest’s mother in order to secure valuables in the front-desk safe but most likely not and, with in-room safes, certainly not.

85

Knowing the guests’ destination after check-out might help in marketing the chain, but most guests would question such an inquiry.

3. Management might alter the sequence that rooms appear in order to save energy; assigning the sunny side in winter; the shady side in summer. Wear and tear on room furnishings can be balanced by rotating use. The display sequence can subtly nudge clerks toward assigning higher priced rooms. Certain wings or floors are best for group assignments, or as a means of restricting new arrivals away from locations scheduled for renovation or maintenance.

4. A good question for class discussion. See what interaction is generated in class when two students role-play the scenario. Remember, the rooms manager is new to the position.

We can assume the bellcaptain has been with the hotel for years. The discussion might revolve around old school (bellcaptains historically kept such commissions and may or may not have shared them with others on the bell staff) versus new school (the hotel is the primary source of these commissions since hotel guests buy commissionable services, therefore, the hotel should receive the commissions).

Next, change the debate by adding a compensation issue. Assume the bellcaptain was salaried, with medical and retirement plans as opposed to being an hourly employee with a pay scale just slightly above other members of the staff.

5. Upgrading regular guests is a means of saying, “thank-you.” Upgrades are given during slow periods when such rooms are readily available. The guest-service agent must emphasize this special arrangement so the corporate guest understands it is not standard procedure and the room type is not normally included in the corporate rate. If properly explained each time the upgrade is given, corporate guests should not expect a similar room type with each stay. A poor job of explaining will cause misunderstandings and undermine the benefits of the policy.

6. It’s just for fun! Of course, the host is not able to lodge ten men in nine rooms! The poem counts the second traveler in room “A” twice; both as traveler number two and as traveler number ten. The tenth traveler, therefore, is never counted.

Answers to Quiz Questions That Follow: 1.

2.

3.

False. Hotels do make that type of assignment, but it expedites baggage delivery.

False. The innkeepers’ liability is greatly limited by state statutes.

False. Algorithms are a method of programming a computer, and may be used in assigning room numbers.

4.

False. Self-service-check-in is viewed as a special accommodation rather than a reduction in service. Seasoned travelers see it as a perk of their frequent-guest program. Not only does selfregistration save line-waiting time, it is faster than a manual check-in.

86

5.

6.

7.

8.

9 10.

True. Ecotourism development is seen by many as an oxymoron, a case of “Be careful what you ask for.” As with any development, it becomes a matter of extent and balance, and sometimes a positive answer to “What might have been otherwise?” c. d. e The student will most likely make this choice, connecting it with LEED, Leadership in Energy and Environmental Design, an appropriate response. d. c

Short Answer: See the text and prepare your answer sheet by itemizing the myriad possible answers.

87

Check-In Check-Out Quiz: Chapter 8 _________________________ Name _________________________ Identification Number

_________________________ Section _________________________ Hour

T/F Questions: Circle either T for True or F for False. (Questions that are partially false should be marked False.)

1. Most baggage mix-ups and delays come from assigning tour groups to one floor and one block of rooms, as so many hotels do. T F 2. Under state laws, innkeepers (hotel owners and managers) are responsible for the full value of lost valuables once the arrival has met the legal criteria of “guest;” that is, once checked in and established credit. T F 3. Algorithms are some of the newest in-room amenities being added by top-of-the-line hotel properties (Ritz-Carlton, Four Seasons, etc.). T F 4. Expecting more service, guests in the frequent-guest programs always go to the desk upon arrival rather than to the computer bank for self-registration. T F 5.

There’s both truth and discomfort in this popular saying: “Eco-tourism is successful so long as it doesn’t succeed,” meaning success will destroy the location. T F

Multiple Choice: Circle the one answer that best completes the thought.

6. Queue discipline: a.

Is administered to employees who ignore standing instructions b.

Deals with rules for merchants who sell the hotel housekeeping supplies c.

Refers to the behavior exhibited by guests waiting in line d.

Is a financial penalty levied on managers who miss targeted goals e.

None of the above 7. A hotel has 100% occupancy last night. Yet the guest-service agent prepares to actually room a new arrival even before the first check-out the following day because…? a.

It was a DNS b.

One room was a sleep-out c.

The ADR was miscalculated d.

There were pre-paid, no-show reservations last night e.

It cannot not be done; the guest-service agent is mistaken 88

8. More than ever before, innkeepers are striving to meet the environmental measures of: a.

LED-ED b.

AH&LA c.

HSMA d.

OSHA e.

None of these references have anything to do with the subject 9.

“Front” refers to the: a.

Desk – the front-of-the-house b.

Property – usually the guest’s first view of the building’s front c.

Registration line – the next guest waiting to be registered d.

Bell staff – the next bellperson designated to room a guest e.

All of the above, except b

10. Assigning a guest better accommodations at no increase in rate is: a.

Upselling b.

Upping it c.

Upgrading d.

Up-assigning e.

All of the above are commonly used expressions

Short-Answer: Answer briefly with short paragraphs, phrases, or exhibits.

List 3 or more steps management might take to speed up waiting lines that sometimes form as guests attempt to check-in.

89

CHAPTER 9 The Role of the Room Rate Preparing The Lecture: 1. Use the chapter outline (provided on its own page for distribution or overhead use) to structure the week’s work. Better still: Use the Power Point.

2. Aim to develop specific objectives for the students: • A recognition of the undercurrents and market factors which cause room rates to rise and fall.

• A recitation of reasons why achieving full rack rate during economic downturns is a virtual impossibility.

• A sense of the impact on the hotel’s average daily rate from generally accepted industry practices like discounting, dynamic pricing, and wholesaling.

• A willingness to dismiss extreme price cutting, like that which occurred during the 1999-2003 industry downturn, as a tool for managing room rates.

• An ability to calculate and understand three common rate formulas including; the Building Cost Rate, the Hubbart Room Rate Formula, and the Ideal Average Room Rate Formula.

• An appreciation for the potential increase in average daily rate from a front office staff well trained in the art of upselling.

3. Establish lecture goals, which might include: • A clear understanding of the concept of elasticity how it relates to the difference between increased occupancy vs. increased revenues.

• Describing the variety of discounts and the circumstances of their use, relating each to particular hotel types as covered in Chapters 1 and 2.

• Illustrating calculations and in-class exercises for each of the rate-setting formulas (Building Cost Rate, Hubbart Room Rate, and Ideal Average Room Rate) while also explaining the weaknesses of each and the purposes under which they would actually be used.

• Highlighting insights gained from comparing the theoretical number of the Ideal Average Room Rate against actual statistics.

• Demonstrating why higher priced room categories cost the hotel little more in variable expenses, but return substantially more in profitability.

90

What The Chapter Is All About: The rack rate is the retail price of a room. Few guests actually pay that rate because yield management systems are in place throughout the industry. Government employees, seniors, military, and even employees are among those offered special prices when occupancy is low.

Hotels charge full rate when occupancy nears a full house. Since 80% -100% occupancy is the normal threshold for limiting discounts, and the industry average is closer to just 69%, most guests are able to take advantage of the industry’s numerous discounts.

Determining the rate is as much an economic calculation as it is a marketing decision. From an economic standpoint, the room rate needs to be high enough to cover costs and earn a return on investment (the Hubbart Room Rate Formula). From a marketing view, the rate needs to be low enough to compete with other hotels in the region. An evaluation of the demand in terms of its elasticity is important to consider as well. Recent efforts to boost sales through rate cutting have turned out to be so counter-productive that some resort communities have outlawed these price wars!

Another tact to leave room rates as is but boost revenue is the add-on-to-the-folio concept. Fees such as resort fees, resulted in the Federal Trade Commission’s involvement, mandating that mandatory fees be disclosed at the time of the reservation and optional fees be agreed to (opt-in) at check-in. Experimentation with fees continues in an effort to boost the bottom line.

No matter how rates are calculated, the selling job comes down to the staff. A well-formulated room rate policy requires conscientious training of reservations and front-office personnel.

Armed with good knowledge of the hotel's product as well as a repertoire of reasons why guests should spend extra dollars for upgraded accommodations, the team works wonders selling up the ADR. The process gains strong momentum when a sales incentive system is in place.

Time as a factor in rates is scrutinized. The detail of the number of hours of occupancy can reflect on charges to the folio, esp. in the case of American-plan hotels. Experimentation with 24-hour stay pricing, based on actual check-in time, is favorable to certain market segments (airline travelers) and boosts the bottom line since they are based on full rack rate. Day rates fall into this discussion as well.

The Hubbart Room Rate Formula is a theoretical rate calculation. It requires several mathematical computations that flow easily from “given” information. One must project annual expenses and profits for all departments and then forecast the hotel's annual occupancy rate.

Although the formula requires a great many a priori assumptions, this approach is the foundation for all budgeting and revenue projections used in the industry.

The Ideal Average Room Rate is another hypothetical yardstick that purports to measure actual room rate performance. The ideal rate suggests that all price tiers in the hotel (suites and standards alike) are sold with equal weight. By comparing actual performance against the ideal theoretical rate, the success in upselling more expensive rooms, as well as the appropriateness of the rate structure for that marketplace, can be determined.

91

The Building Cost Rate formula is the simplest method of looking at rates. It states that the average daily rate room rate should equal $1 for every $1,000 of construction costs. This approach provides a quick glimpse at approximate room rate requirements. Although far from accurate, this rule-of-thumb is widely quoted among even the most sophisticated hoteliers.

Some Chapter Highlights: Not all fluctuations from rack rate are discounts. There are circumstances when room rates are priced above the published rack rate. Included here are double/multiple occupancy rates, high season or special event premium periods, and negotiated long term rates that incorporate inflationary surcharges. Sometimes an association intentionally negotiates higher than rack rates for convention delegates to pay and then benefits from a rebate the hotel provides to the association.

As many municipalities have learned the hard way, room taxes (lodging taxes or bed taxes) are part of the overall consideration for groups as they contemplate where to bring their convention.

Cities across the nation have lost important convention business when planners have become aware of the high lodging taxes levied. Many cities charging 15% to 20% bed taxes have begun to rethink the risks of lost business against the gains of exorbitant taxes. Room taxes are also an issue with online travel agencies whose taxes are based on rooms bought at wholesale. Typically, the OTAs pocket the difference in taxes when the room is sold to the consumer at a higher price.

Lawsuits between municipalities and these companies have had no consistent outcome.

Double occupancy is so favored by casino hotels—more seats on casino stools—that they historically charged the same for one or two guests in the room. This spilled over to traditional hotels. Today, mid- and upper-scale properties generally do not levy an incremental charge for a second occupant in the room. The hotel’s major fixed costs (taxes, debt service, and depreciation) are met by the first occupant. Subsequent guests in the same room add little to variable operational costs, so the spread between single and double rates has been narrowing.

As the economic downturn continues to pressure the industry, there is a spur of creativity in room rates. Experimentation with 24-hour Stay Rates, Day Rates (including partial-day-rates), and Incentive Rates yield varying success. Management gives more focus to incentives for upselling as well as scrutiny of the trends generated by room rate formulas, adding into the mix the wisdom of their experience. The saying goes, “Necessity is the Mother of Invention” and such innovative responses can make for exciting times.

92

CHAPTER 9 THE ROLE OF THE ROOM RATE Chapter Outline: ROOM RATES AND THE ECONOMY Supply and Demand Competition Elasticity Rate Cutting ADDITIONAL FACTORS IN RATE Surcharges Room Taxes Room Taxes Impact Demand Room Taxes and Online Travel Companies Resort Fees and Other Hidden Charges Discounts From the Rack Rack Rates Government Per Diems Special Cases: Seniors, Military and Others Employee Courtesy Rates Auctioning Double Occupancy Commercial and Corporate Rates Negotiated Rates and Dynamic Pricing Comps and Fam Trips Seasonal and Weather-Related Rates Other Discounts Off the Rack TIME AS A FACTOR IN RATES Arrival Time Departure Time The 24-Hour Stay Day Rates Incentive Rates The American Plan Day DETERMINING THE “PROPER” ROOM RATE The Hubbart Room Rate Formula Shortcomings of the Formula Square Foot Calculations The Building Cost Room Rate Formula 93

The Renovation Cost Rate The Ideal Average Room Rate Rate Categories Upselling Incentives to Upselling

94

Professional Vocabulary: American Plan Day is a recordkeeping issue, not a type of plan. Guests who use the American Plan expect to eat three meals per day. That requires tracking each guest’s arrival and departure times to record the number of meals taken each day. Some arrivals consume fewer meals, some additional meals. Credit for meals missed and charges for extras taken is a source of guest unhappiness. Actually, AP hotels have all but disappeared. All-inclusive properties have no limits on eating or drinking and have no need, therefore, to identify an all-inclusive day.

Discounting reduces the retail price (the rack rate) of a room in order to stimulate demand.

Widespread discounting, which the industry experienced in the late 1990s and early 2000s, hurts the overall industry. Little, if any, new demand (occupancy) is ever created by sharp reductions in prices. Rather, guests shop one property after another searching for ever more favorable rates.

Although the discounting property may experience a short-term surge in occupancy, the phenomenon is temporary. Other hotels reciprocate and rates are reduced across the spectrum.

Industry occupancies remain low and everyone suffers.

Dynamic Pricing, a discount off the hotel’s best-available rate for corporate bookings, was a response to the economic downtown of 2008. Favored more by businesses in secondary cites in smaller companies, the challenge in reflecting these agreed-to rates in the several GDS’ controlling rates as well as monitoring them on the corporate side make its continued use questionable.

Ideal Average Room Rate refers to the approach that a hotel should sell a targeted percentage of rooms from each class instead of filling from the bottom up. (For calculation of this rate, see Exhibit 9-16.) If the actual average rate is off (lower in most cases), then this serves as an indicator to management that the rate structure may be off, the front desk may need to improve their upselling, or even a lack of contrast between rate categories.

Incentive rates, like many ideas that are tested, went nowhere. The plan: Give a rate rebate to guests who checked-out early. There was nothing to be gained so long as occupancy was low.

Moreover, the bookkeeping was a frightening confusion. Look for a renewal, perhaps with modifications, if occupancy ever moves up to the 85% range.

Rate auctions are a phenomenon of the technology era. Third-party Internet travel sites, similar to the well-known Priceline.com, are able to communicate with millions of potential buyers via the net. Some of whom are willing to chance destinations or willing to waive specific locations in order to buy travel inexpensively. These shoppers bid in real on-line auctions, where, as is often the case with traditional live auctions, some bids are rejected because they’re below the opening floor limit.

95

Answer to An Incident in Hotel Management: The needs of the guest and the needs of the business do not always align. This incident illustrates a situation where management made a business decision which provided a level of dissatisfaction to the guest. The guest wanted to stay until 9 p.m. on a half-day rate.

Management did not believe it could clean and re-sell the room at that late hour.

What is unknown to the reader of this incident is the exchange between the manager on duty (MOD) and the guest. The first step would have been for the MOD to sympathize with the couple’s family emergency and explain why a 9 p.m. check-out would be difficult for the hotel to accommodate. Next, the MOD would have offered other solutions which might have satisfied the guests’ request: • “Since we will not be able to clean and re-sell the room at 9 p.m., one option would be to charge you the full nightly rate and allow you to stay in the room as long as you needed.

If you depart at 9 p.m., fine. If the flight is substantially delayed, you will have a place to relax with no time-limit until check-out hour tomorrow morning.”

• “It is currently 3 p.m. We allow courtesy late-check-outs until 2 p.m. with no added charge. However, in light of your situation, I could allow you to use the room until 6pm at no added charge. At that time, we could make you comfortable in the lobby or shuttle you to the airport.”

• “If you are not inclined to accept either of the above options, possibly we could hold your luggage with the bell department until 9 p.m. In that way, you could visit downtown, have a meal and a walk, and return to us by 9 p.m. to retrieve your luggage and get a shuttle ride to the airport.”

The best way to handle the complaint letter is to never allow it to reach that stage. This is why there is a thorough discussion above. Assuming the steps listed above were addressed by the MOD, the response to the complaint letter is that the hotel tried everything within our power to satisfy the guests’ request. And we certainly hope all is well with their 7-month-old child.

Answers to End-Of-Chapter Questions: 1. Obviously, the front-office staff’s performance is superior and their training on the mark.

Their sales consistently outperform the ideal average room rate. Additionally, it appears that guests are affluent and willing to pay additional dollars to secure nicer accommodations. Both facts give management a great deal of leeway in decision making. Among other moves, management might weigh a salary raise or bonus scheme for the guest-service agents and their manager. Closer to point would be a study of the hotel’s accommodations against other players in the marketplace. Such a study might suggest a raise in rates across the entire rack. Renovating rooms might be another move.

The property’s standard, less expensive rooms could be upgraded to command a higher price.

2.

Up-selling the respective guest might involves the following dialogues: 96

a.

To the executive; “Bet you’re exhausted from your long travel day. Perhaps you would relax better in one of our executive parlor rooms which come equipped with a California king bed on a private, very quiet, concierge-level floor.” b.

To the mother of three; “I hate to see you and the children crowded into a standard room. Perhaps a two-room suite would be more appropriate. There would be a private bedroom for the adults. The children would be in their own room right next door. Shall I see if I have one available near the pool?” c.

To the two gentlemen from the bus tour; “Although the bus tour has reserved standard double doubles, I would be happy to apply a credit from the prepaid room to a far larger accommodation. Our two-bedroom suites have two private bedrooms and two baths with a common living room. If I apply a credit from your prepaid tour room, there would be just $40 each for the much larger accommodation. Shall I see if I have one close to the rest of the group?” d.

To the female executive; “Considering the length of your stay, I’d like to suggest a larger and more comfortable room. Our corporate concierge rooms offer larger accommodations, a private concierge who can provide for dry cleaning and other personal services, complimentary newspaper and a social hour each evening.

This wonderful upgrade is just an additional $45 per night.”

3.

This question asks the students to look inward to their own level of ethical awareness, so no specific answers are correct. However, here are some thoughts: a.

Rack rate is charged when no discount is requested. If the guest fails to mention a discount the rate charged is the rate initially quoted by reservations. b.

Agree that a special Saturday rate is available. Explain that this is a weekendonly rate and not available during midweek. Also volunteer an upgrade at no extra charge for the guest’s next visit. Thank the guest for coming and make the appropriate adjustment to the folio. c.

Explain that the guest has received a discount across seven nights which totals to a better value than if five of the nights were at normal rack rate and the two weekend nights were discounted. Offer to do the math for the guest if so desired. d.

For a fourth scenario, imagine a guest with a special discounted 21-day package (extended stay) who is checking out after just 4 nights. The daily rate on the folio reflects pro rata the 21-day discount.

4. Rate discounting is designed to increase occupancy by appealing to price-sensitive (elastic) guests. If the resulting increase in occupancy raises total revenue from increased room demand and business in other departments, both parties have gained. The guest has paid less for the room and the hotel’s total profits have edged up.

Rate cutting generates new business for one property only by luring customers away from another property. It appears to achieve the same benefit as discounting. However, rate cutting functions in an inelastic market. It is aimed at customers already committed to rooms somewhere (across the street or down the road). Discounting is aimed at creating new customers, not just recycling existing customers to the market.

5. Compute the Hubbart Room Rate Formula as follows: 97

Nonappropriated expenses Nonoperating expenses Interest on debt ($25,000,000 x 14%) Return on investment ($9,000,000 x 16%) Total Expenses Income from all other departments Total expenses to be covered by room sales

NB:

$1,200,000 $ 510,000 $3,500,000 $1,440,000 $6,650,000 $3,200,000 $3,450,000

Number of rooms to be sold is 563 x 71% x 365 days equals 145,901 room nights.

Hubbart Room Rate is $3,450,000 divided by 145,901 equals a rate of $23.65.

--------------------------------------------------------------Faculty member: You will need to tell the class beforehand: a. That the sum of the land and the FF&E ($3,000,000 + $6,000,000 = $9,000,000) is suppose to represent the equity investment (the building has been financed by the loan). b. That the answer is not realistic, that the values have been set to keep the mathematics simple.

6. The Building Cost Room Rate Formula excludes FF&E: Land plus building, but not including furniture and equipment, equals $28,000,000 Divided by 563 rooms, cost of construction is $49,734 per average room.

Divided by $1,000 standard rule-of-thumb equals $49.73 for average room rate.

Answers to Quiz Questions That Follow: 1.

2.

3.

4.

5.

6.

7.

8.

9 10.

True True False: Federal per diem is set by the General Services Administration. State and local governments set their own rates. These rates have nothing to do with the AH&LA. False: Ideal room rates are a reflection of class, not the lowest tier rates. The average of a percentage across all classes is calculated and set as the “ideal.”

False: Dynamic pricing refers to rates set with a corporation in advance that are a discount off the hotel’s best-available rates. c b All the others refer to charges for less-than-overnight stays. e e d

Short Answer: See Exhibit 9-13, page 353.

98

Check-In Check-Out Quiz: Chapter 9 _________________________ Name _________________________ Identification Number

_________________________ Section _________________________ Hour

T/F Questions: Circle either T for True or F for False. (Questions that are partially false should be marked False.)

1.

Just as operating costs dictate a minimum room rate that the hotel needs to charge, so competition sets a maximum that can be achieved. T F

2.

Increases in lodging taxes impact on the elasticity of room demand just as if the rate, itself, had been increased. T F

3.

Per diem room rates are those established by the American Hotel & Lodging Association (AH&LA) for each major U.S. city, but all cities in the nation cannot be covered (generally those with populations under 50,000). T F

4.

The Ideal Average Room Rate is the average of the rates for the lowest tier of rooms in a hotel. T F

5.

Dynamic pricing allows the front desk to change the cost of the room upon check-in when the situation calls for it. T F

Multiple Choice: Circle the one answer that best completes the thought.

6.

Elasticity is a change in: a.

Supply resulting from a change in rate b.

Rate resulting from a change in supply c.

Demand resulting from a change in rate d.

Rate resulting from a change in demand e.

None of the above

7.

Which of the following is out-of-place with the rest of the set? a.

Day rate b.

Shoulder rate c.

Use rate d.

Part-day rate e.

None of the above; that is they are all synonyms 99

8.

Among the surprising surcharges that some hotels have added to their room rates are: a.

Energy premiums b.

In-room coffee c.

Early departure (before the date specified by the reservation) fees d.

Complimentary newspaper fees e.

All of the above

9.

The Building Cost (Room) Rate: a.

Is simply a rule-of-thumb, a frequently quoted yardstick for room rates b.

Works out to be $1 per $1,000 in construction costs c.

Includes land improvements (landscaping, for example) as part of building costs d.

Translates into rate distinctions for suites, standard rooms, and usually “view” rooms e.

All of the above except d

10.

Regarding room rates: a.

New York City has the world’s highest ADR b.

Upselling produces its most dramatic effects on sold-out days c.

Resort hotels have used incentive rates successfully to get leisure guests to check out early d.

Conventions are often charged the same for single or double occupancy e.

All of the above

Short-Answer: Answer briefly with short paragraphs, phrases, or exhibits.

Sketch or explain why one guest who stays in the hotel between 5 and 7 hours pays the same room rate as another guest who spends between 15 and 20 hours.

100

CHAPTER 10 Billing the Guest Folio Preparing The Lecture: 1. Use the chapter outline (provided on its own page for distribution or overhead use) to structure the week’s work. Better still: Use the Power Point.

2. Aim to develop specific objectives for the students: • A working knowledge of front-office recordkeeping whether or not the students have an accounting background.

• A view of the customer as an account receivable in support to, but not in conflict with, a view of the customer as a guest.

• An ability to enunciate policies and implement procedures dealing with allowances by blending the issues raised in Chapter 7 (guest service and complaint management) with the accounting issues raised in this chapter.

• An understanding of the differences between ledgers, Transient Ledger vs. City Ledger, with a more thorough understanding of the components of the Transient Ledger (the City Ledger is scrutinized in Chapter 11).

3. Establish lecture goals, which might include: • Explaining the meaning, context, and counterbalancing of each debit entry (and each corresponding and offsetting credit entry) posted to the guest folio.

• Revisiting the electronic interfaces which enable distant operating departments to interact with the front office, the central point of guest records and accounting.

Include a discussion of food and beverage point-of-sale terminals, electronic locking systems, call accounting systems, in-room minibar and video systems, etc. Virtually any department which posts charges to the guest folio.

• Tracing transfers (transfer credits and offsetting transfer debits) from the front-office transient ledger folio to the city ledger, when payment is made by credit card. And tracing city-ledger transfers to the front office transient ledger folio when accounting for advanced deposits.

What The Chapter Is All About: Students who aspire to responsible management jobs must have an understanding of hotel accounting. This chapter sets the foundation by explaining the front office’s role in billing and collecting.

The chapter employs an unusual approach. Its design accommodates equally well students with an understanding of accounting and those with no knowledge of the subject. For both, it provides a good grounding in the billing terminology and procedures of the hotel’s front office.

For students with knowledge of accounting, Chapter 10 illustrates the application of basic principles to the specifics of the front office, the transient ledger, and the individual guest folio.

101

That discussion is set apart in special blocked areas within the reading material. Doing so enables the non-accounting student to follow the discussion without being overwhelmed with debit and credit terminology.

Accounts receivable—customers who owe a business for purchases made but not yet paid for— are treated alike industry to industry. Hotel accounts receivable add one additional change; there are two types to be tracked. Registered guests, or transient guests, are one type. These are guests currently in-house. They are buying and enjoying hotel services (rooms, food, beverage, laundry, telephone, etc.). The second type, city ledger guests (sometimes known simply as city guests), also owe the hotel for services received, except city guests are not currently registered.

The primary city ledger discussion follows in the next chapter, Chapter 11.

Posting is a procedure by which accounting transactions are recorded on the guest folio.

Transactions are posted to the folio. Prior to property management systems, all posting was done by hand from receipts delivered to the desk from all hotel departments. With an interfaced property management system (PMS), distant departments communicate electronically with the front office. Physical folios are no longer necessary; rather, the guest account is stored in system memory. Many hotels, however, still print a daily record of the transient ledger (in other words, they print every guest folio in-house) to serve as a fail-safe, in case the PMS corrupts during the day and guest account data is lost or unavailable for a period of time.

Some Chapter Highlights: Each sale from every department is recorded as both a debit and a credit. Generally, the guest’s folio is debited and the department’s income is credited. The front desk only deals with those records for which the guest elects to charge his/her room folio. Transactions in assorted departments for which the guest (or non-guest) chooses to pay cash or credit card are not recorded by the front office, but rather are handled internally by that respective department.

Every transaction event has two equal parts. Chapter 10 concentrates on the sale of charged services. A sale in a hotel department (say the restaurant) for which the guest wishes to charge his/her room folio is debited to the transient ledger. Specifically, the guest’s room folio is debited the restaurant charge. This essentially increases the amount the guest owes the hotel, because the transient ledger room folio is an account receivable.

Every business reconciles the sum of individual accounts receivable to total receivable sales.

Some businesses reconcile annually, some quarterly, some monthly. The hotel business reconciles nightly, the night audit. Each night, the auditor uses the property management system to verify that department room charges were properly recorded on the transient ledger.

What was once a tedious, error-prone procedure (before the PMS) now requires less labor and produces fewer mistakes. The results of the night audit, called the D report or transcript, has several uses. It helps structure the Daily Report to Management, submitted in the morning following the night audit, and it forms the basis of entries into the hotel accounting system.

From the night audit comes a running balance of accounts receivable, charge sales by departments, cash collected and advanced, and room taxes.

102

CHAPTER 10 BILLING THE GUEST FOLIO Chapter Outline: WHAT THE CHAPTER IS ALL ABOUT The Sale and Record Keeping of Services Preparing the Folio Recording (Accounting) for Each Transaction ACCOUNTS RECEIVABLE Types of Accounts Receivable (A/R) The Ledgers Professional Lingo: The Transient Ledger Professional Lingo: The City Ledger What Is and Isn’t Accounted For The Folio: The Individual Account Receivable Location and Filing of Folios Number of Folios The Folio: The Group Account Receivable Master Accounts How Master Accounts Are Structured Single-Entity Groups Convention Groups Tour Groups Split Billing Casino Comps Preferred-guest Programs Understanding Charges and Credits Assets Sales or Incomes POSTING TO THE FOLIO (THE ACCOUNT RECEIVABLE) Overview of the Billing Procedure Preparing the Folio Presenting the Bill Communicating the Charges Before the Age of Electronics With Electronic Systems Recording Charges to Accounts Receivable Understanding the Line of Posting Reference Numbers Posting Room Charges 103

Sales Taxes Recording Credits to The Folio Three Methods of Settling Accounts Settling with Allowances Comp Allowances Allowance for Poor Service Allowance to Correct Errors Extended-stay Allowances Recording the Allowance Settling with Transfers Folio Transfer of Registered Guest to Registered Guest Transfer of Folios to the City Ledger: Credit Card Transfer of Folios to the City Ledger: Direct Master Accounts Coupons Skippers Transfer From the City Ledger To the Guest Ledger

104

Professional Vocabulary: Allowance is a reduction of the debt owed by an account receivable. These rebates are applied after the fact. The reasons for giving one are many (comps, housekeeping issues, problems with room service, etc.), but the presence of them should be a red flag to management for review.

City Ledger. Hotel city ledger bills or accounts act quite similar to any retailer; sent monthly for payment. Transient ledger guests are usually real persons; city ledger guests are usually not; credit-card companies, travel agencies, airlines, businesses and associations comprise the bulk of the city ledger. If a transient guest pays the folios with a credit card, the transient folio balance is actually shifted (transferred) from the transient ledger to the city ledger, where payment from the credit card company will be forthcoming.

Debit and Credit Rules are emphasized by the authors. Having student learn the rules by rote will hasten their understanding when the light finally dawns.

Increases in assets (cash and accounts receivable) are made with debits.

Decreases in assets (cash and accounts receivable) are made with credits.

Increases in incomes (sales of rooms, food, beverage, etc.) are made with credits.

Decreases in incomes (allowances for sales of rooms, food, beverage, etc.) are made with debits.

Increases in liabilities (taxes payable and advanced deposits) are made with credits.

Decreases in liabilities (taxes payable and advanced deposits) are made with debits.

Master Account. The front-office folio specifically for group charges and credit. After a check for creditworthiness is done, direct billing is set up with the contact person responsible for payment. Master account authority indicates specific individuals authorized to make charges to the master account. The payment date is usually 30 days after receipt of invoice. Payment of master account at check-out can provide discounts off the final bill. Split billing between the master folio and an individual guest is referred to as the A folio and B folio respectively.

Transient Ledger. Ledgers are groupings of accounts. There are many ledgers. At the front desk, it’s a grouping of registered guest folios (also called guest accounts or bills) or folios) called; the transient ledger. The transient ledger is maintained by the front office staff and resides electronically on the property management system. By design, the guest folio must be ready for presentation whenever the guest asks to view it.

Sales, Revenue and Income are used interchangeably by the authors. Whatever distinctions that may exist are ignored here in order to keep accounting terminology simple and manageable.

105

Answer to An Incident in Hotel Management: Guests sometimes damage hotel rooms. Other times they steal hotel property. A signature on the registration card affirms the guest’s commitment to repay the hotel for all charges incurred.

In some cases, guests are charged for missing towels (see “Incident” Chapter 1). But in more substantial cases, guests can cause substantial damage to the hotel room. Certain rock and roll stars are notorious for damaging hotel rooms, to the point that many hotels will not rent to them, whether they pay for damages or not!

Minimum age restrictions are common means by which hotels say “No” to under-aged guests.

But there are ways around that roadblock—Dad comes in and registers and then hands the key to junior. Whether or not the father hid his daughter’s age is not the issue.

The $1,300 charge is legitimate. Because the father is a regular friend of the property and the GM, it will be easy for the GM to make a light joke and move-on to other subjects. If the father wants to press the issue, the GM might wish to escort him to the room to see on-going repairs, or share with him a copy of the maintenance/security report.

Answers to End-Of-Chapter Questions: 1. a. Debit and credit are the ying and yang of accounting. Each accounting event requires balance between the two. Sometimes debits increase values (receivables and cash) and sometimes they decrease values (payables and incomes). Similarly, credits increase payables and incomes and decrease receivables and cash. b. Master accounts are folios of a special type. They accumulate front-office charges for nonpersons, such as conventions, associations and corporate functions. Split accounts are charges split (divided) between a master account and an individual’s personal account. c. “A” folio and “B” folio refer to the issue above, split folios. “A” folios are the master accounts; “B” folios the personal accounts. d. Transient guests are registered and their folios are maintained by the front desk in the PMS. City guests are not registered in the hotel. City guests are most often nonpersons. e. Charges increase the amount owed by accounts receivable and payments decrease it.

106

2. ^^^^^^^^^^^^^^^^^^^^^^^^^^^ 1000 NOAH VAIL ROTTEN PUMPKIN POND MASSACHUSETTS, 01266 1-800-555-5555

A Vallen Corporation Property HI-JINKS HOTEL ^^^^^^^^^^^^^^^^^^^^^^^^^^^

RES# 43 RLG 1234 ACCT#5941 NAME: ADDRESS:

Mr. and Mrs. Jones & Family IN 6-03 OUT 6-06 21 Craig Drive RATE 125 ROOM 1233 Hampshireville, IL 65065 ====================================================================

DATE DESCRIPTION ROOM REF. CHARGES CREDITS BALANCE _____________________________________________________________________________ 06/03 DEPOSIT 1233 51-1 200.00 200.00 06/03 ROOM 1233 18-1 125.00 75.00 06/03 ROOM TAX 1233 18-2 6.25 68.75 06/04 COFFEE SHOP 1233 38-1 12.90 55.85 – 06/04 LUNCHEON 1233 38-4 310.00 254.15 06/04 TELEPHONE 1233 43-3 8.00 262.15 06/04 ALLOWANCE 1233 50-1 25.00 237.15 06/04 ROOM 1233 18-1 37.50 274.65 06/04 ROOM TAX 1233 18-2 1.88 276.53 06/04 AM EX 33333 1223 51-4 276.53 -0....If you were a Vallen Associate member, you would have earned 277 Club Membership Points.

TRANSFER TO CITY LEDGER I agree that my liability for this bill is not waived, and agree to be personally liable if the indicated person, association or company fails to pay any part of these charges. ____________________________________ Signature For Reservations: 1-617-555-5555

Fax: 1-617-555-5554

107

E-mail: vallen@hotel.com

108

4. a. No allowance granted; the situation is not within the hotel’s control. Apologies and understanding are profusely offered b. No allowance granted; there is no evidence of the guest’s claim. Moreover, the morningcall system is automated and the guest should have used it. Sympathy is extended. c. Would consider an allowance for the $15 difference in rate times the number of guests nights. First, examine the rate shown on the rooming slip. The decision to grant the allowance or not will depend on the rate shown there. If the rate shown is $15 less, grant the allowance. If the rate is as shown on the folio—and it will most likely be so—do not grant the allowance. The guest has the responsibility of notifying the desk of the discrepancy at that time. All bets are off if the guest is a regular customer with a fixed rate or a VIP preferred guest. d. No allowance is needed. The guest looked at the rooming slip and notified the desk. The change would be made before the night audit posting. The actual posting would then be accurate and no allowance would be needed.

5. a. After the claim has been verified, post a $60 credit transfer to the account of the departing guest and a $60 debit transfer (not a beverage charge because the beverage was yesterday’s income, not today’s) to the account of the guest still registered. b. Today’s beverage charge has already been recorded as beverage income, the entry is the same as 5a. Some may prefer to grant an allowance to the wrongfully charged guest and repost the charge as a beverage item to the correct folio. c. Since the other guest has departed the transfer credit is the same as “a,” but the transfer debit is to the city ledger. If the guest who left has a credit-card folio in the city ledger, the debit transfer is added to it and the bill is increased. If not, a new city account is opened and the $60 transferred to it and billed to the guest directly. d. No issue: the deposit is transferred now. Debit: City Ledger/ Advance Deposits/Guest Name. Credit: Guest Ledger/Accounts Receivable/Guest Folio (name) e. The guest needs to have the deposit refunded, send the money back. Debit: City Ledger/ Advance Deposits/Guest Name. Credit: Cash.

6.

a. Hotels pays quarterly tax: Debit: Taxes Payable: Popcorn Indiana 8,925.00 Credit: Cash 8,925.00 b. Payment from credit-card company: Debit: Cash 1,000.00 Credit: City ledger/Accounts Receivable/Diners 1,000.00 c. Same as “b” but fees reduce the check’s value: Debit: Cash 960.00 Debit: Fees 40.00 Credit: City ledger/Accounts Receivable/Diners 1,000.00 d. Preferred guest program (PGP) reimbursement: Debit: Cash 1,500.00 Debit: Room Allowances, PGP 4,000.00 Credit: Accounts Receivable/Parent Hotel Company PGP 5,500.00 109

Answers to Quiz Questions That Follow: 1.

2.

False: Neither of these statements are true.

False: It makes no difference whether the buyer is a registered guest. There is no debt, hence no account receivable.

3. False: For example, only one folio would be used for a husband and wife.

4. True 5. True: His personal charges while staying in the room would be posted to his B folio.

6. b 7. b 8. e 9. c 10. b Short Answer: Text pages XXX and XXX contrast the two systems.

110

Check-In Check-Out Quiz: Chapter 10 _________________________ Name _________________________ Identification Number

_________________________ Section _________________________ Hour

T/F Questions: Circle either T for True or F for False. (Questions that are partially false should be marked False.)

1. Typically, city-ledger guests are billed immediately; transient ledger guests are billed in 10-day cycles. T F 2. A registered guest who pays cash for drinks in the bar becomes a city-ledger guest.

T

F

3. There is one folio for each person (guest) staying in the hotel.

T

F

4. Hotels offer numerous services that increase the balance of a guest folio, but there are only three methods of settling (paying) for those services; they are cash (or cash equivalents, like a company check or traveler’s check), allowances, and transfers (as when a guest uses a credit card and transfers the balance to the City Ledger). T F 5. Room charges for a convention’s manager would be posted most likely to the

convention’s A folio.

T

F

Multiple Choice: Circle the one answer that best completes the thought.

6. An example of an asset is: a.

Taxes collected and due to be paid to a municipal government b.

Accounts receivable due from guests c.

Room sales d.

Beverage allowances e.

All of the above depending on the circumstances 7. A skipper is a (an): a.

Nickname given to the hotel GM b.

Guest who leaves without paying his bill c.

Guest who charges bar drinks to the room folio d.

American-plan guest who skips one or more meals that have been prepaid e.

Both a and d 111

8. Which of the following would most likely be a city-ledger guest? a.

VISA card b.

Trade association c.

Bridal party d.

Wholesaler/group mover e.

All of the above 9. The distribution of charges between a master account and a guest’s personal account is called: a.

Credit accounting b.

Direct billing c.

Split folios d.

Comp allowances e.

None of the above 10. Allowances are: a.

Awarded guest-service agents who achieve certain goals b.

Reductions in the amount owed on a folio c.

Admissions to private parties on the banquet floor d.

The identifying numbers of the hotel’s accounting system e.

All of these when used in different contexts

Short-Answer: Answer briefly with short paragraphs, phrases, or exhibits.

Describe the two procedural differences in getting a bar charge to the front-office folio if: 1. The hotel has a property management system with an interface to the bar’s POS 2. Or, the hotel does not have a property management system.

112

CHAPTER 11 Cash or Credit (The City Ledger) Preparing The Lecture: 1. Use the chapter outline (provided on its own page for distribution or overhead use) to structure the week’s work. Better still: Use the Power Point.

2. Aim to develop specific objectives for the students: • An ability to reconcile a theoretical cash drawer, including the components of the calculation; Net Receipts, Over/Short, Deposit and Due Back.

• An awareness of the impact of currency exchange rates and the use of Dynamic Currency Conversion (DCC) software.

• An understanding of the value of money and the costs associated with poor money management.

• An ability to differentiate cash transactions at the desk from cash transactions in other hotel departments.

• An understanding of the role of credit as an essential lubricant to business and commerce, and particularly, its purpose in developing hotel business.

• A realization that credit policy is a management function that requires knowledge of both marketing and finance to be well executed.

• A clear view of the processes between group marketing (Chapters 2 and 6), group billing (Chapter 10), and credit issues.

• An appreciation of how and why love-hate relationships develop between travel agencies and other third parties and their hotel “partners.”

3. Establish lecture goals, which might include: • Emphasizing the variety of scams and con games that prey on hotelkeepers.

• Examining the various means that cash flows into and out of a cashier’s drawer and the impact on reconciling the drawer at shift’s end.

• Reviewing the circumstances and mechanics by which transient accounts become city accounts.

• Outlining when and why hotel credit managers extend (or withhold) credit to one particular association or group and not to another.

• Explaining why credit policy is dynamic, changing over time, as a function of short-and long-term occupancy levels, the local market, and even the national economy.

• Recounting the steps that cashiers should follow to deter counterfeiting.

What The Chapter Is All About: The flow of cash receipts and disbursements and the appropriate records thereof is discussed at length. Cash grows less and less important in the daily activities of the hotel’s cashiers and personal checks are rarely accepted. It has been supplanted by credit cards. Still, cash remains 113

legal tender. It is readily accepted at all the hotel’s outlets including its front desk, restaurants, bars, newsstands, and gift shops. Nevertheless, guests who fail to tender a credit card at check in are treated as paid-in-advance registrations.

The chapter tries to impress the importance and responsibilities of cashier’s banks and their daily reconciliations. Front-office cashiers (the positions often double as guest-service agents) accept cash as one method for settling the guest folio. Credit-card transfers and allowances are the other two methods.

Front-office cashiers perform one cash service that other departmental cashiers do not. Under special, but limited circumstances, front-office cashier’s advance, that is loan, cash to guests.

This they do by paying other persons for services rendered to the hotel’s guests. “Outside” agencies (services not provided within the hotel) such as postal carriers, florists, or laundry/dry cleaners may deliver to an absent guest. Typically, the desk will advance small sums (paid-outs) on the guest’s pre-approval and charge that amount to the folio. Depending on their leases, lobby concessionaires either accept advances or collect at month’s end from direct folio postings.

Paid-outs of this type need to be included in the cash reconciliation.

Because the front desk is always staffed, it acts sometimes as a temporary general cashier, accepting cash deposits from other departments. This temporary depository accommodates the work schedules of the accounting department and of the general cashier.

All of this cash flow can create a shortage of the proper change (small bills and coin) in the cashier’s bank so that they have need of a due bank which brings their cash to a usable level for the next shift.

Credit as a business decision is not unique to the lodging industry. As with other industries, the lodging industry and its individual properties make credit decisions daily. Credit is accepted by the hotel from its purveyors and extended by the hotel to its customers. Chapter 11 deals with the receivable side, the lending side of credit, not with the payable side of buying on credit or of outright borrowing.

The kinds and amounts of credit extended depend on the type and class of hotel. Just about everyone accepts personal credit cards and their spin-offs: debit cards, company cards, co-branded cards, and travel cards. Single guests using personal credit cards are a safe credit risk for the hotel operation because the credit-card companies generally stand behind these transactions. Still, management must remain alert even to common credit cards. Credit-card fraud has become a major, global industry. Hotels and other merchants partner with the credit-card companies to reduce the incidence of fraud. Fraud drives up merchant credit card transaction fees, interest rates, and related bank charges. Credit management requires sensitivity to the various scams that bad-card passers have invented. Chapter 11 includes a list of do’s and don’t’s to be employed.

Large hotel properties extend another type of credit; open credit. Associations, wholesalers, conventions and trade shows, and banquet hosts are the recipients of open credit. Unlike the relative safety of credit cards, open credit is based on the worthiness of the individual client or organization.

Creditworthiness can be obtained from national agencies for most customers. Actual credit 114

experiences can be checked by inquiry to previous headquarter hotels and city convention bureaus.

Extending credit to nonbusiness groups such as proms, political parties, and charity dinners is commonly viewed as the riskiest form of developing sales.

Chapter 11 broadens the accounting discussion of Chapter 10, which dealt only with the credit-card settlement of guests’ front-office folios. Here we enlarge on additional from-to transfers, introducing travel agency accounts, trade advertising accounts (due bills), and others.

The final segment of Chapter 11 discusses the management of cash and credit as it applies to fraud detection (cash and checks) as well as managing credit at the level of employing collection agencies. Hoteliers must be vigilant all the way down to the front office staff in order to minimize the large potential losses to the operation’s bottom line in its handling of cash and the city ledger.

Some Chapter Highlights: Cash and cash equivalents (personal, corporate, and traveler’s checks) are less desirable forms of payment than credit cards and direct billing, which leave options for rectifying errors. Cash mistakes are usually uncorrectable. Criminals and opportunists know that hotel cashiers are an especially easy target because they handle cash less frequently than their counterparts in other retail environments. Management must train hotel cashiers to identify counterfeit currency and to implement check-cashing safeguards.

Front-office cashiers are the accountants of the desk. They maintain the records of registered guests. With property management systems, the job of the front office cashier has changed substantially—generally it has become easier and more accurate. Today’s front office cashiers are as much ambassadors of service as they are accountants.

Front-office cashiers, as well as cashiers in other departments, need banks, small bills and coins with which to make change. Daily, these banks are reconciled (balanced) and the day’s net receipts (cash received less cash paid out) are turned-in and eventually deposited. The bank is retained for another day. Errors are uncovered during the turn-in reconciliation. Mistakes in making change result in a turn-in that is either over or short.

Inadequate attention has been given to employee tips. Tips are added to credit-card charges and the totals processed through the credit-card system. The cost of accepting credit cards is high, determined as a percentage of charges. Tips that are paid to employees are included in these merchant costs. Hotels that advance employee tips against future credit-card reimbursement are bearing significant costs on behalf of the employee; some $2 - $5 for every $100 in charged tips.

This might prove to be a bargaining chip in negotiating labor-management contracts.

The city ledger is similar to the accounts receivable of other businesses. It is a record of debts owed to the hotel by persons; some real persons and some legal entities. The front office is more attuned to the guest ledger, the transient ledger, which are accounts receivable currently registered. In decades past, the city ledger was comprised of small receivables, many of them local; hence “city” ledger. Today it has far fewer accounts but requires more credit management because the values are 115

very large. The dollar growth in the city ledger is testimony to the widespread use and acceptance of credit, especially credit cards, which make up the vast bulk of the modern city ledger.

Credit is a flexible tool for managing sales and marketing. Refusing credit guarantees an absolute minimum of bad debts. It also means losing business that might otherwise contribute to the bottom line. Therefore, credit decisions are never simply “yes, grant the credit” or “no, withhold the credit.” The decision is made along a continuum that changes with both the profitability of the hotel and the economic environment of the time. Similarly, the amount of competition, the strength of the hotel’s balance sheet, the season of the year, and the prevailing rate of interest all bear on the decision. One hotel may turn away a risky credit client, while a competitor down the road will accept the same customer. New hotels anxious for sales may extend credit to questionable buyers, but turn them down later when the operation has become established. Of course, the history of payments (or nonpayments) made by such a customer will play a critical role in the hotel’s final decision. Credit management gives weight to the cost-benefit balance, paying judicious attention to the ability of the client and to the circumstances facing the hotel.

Managing cash and credit within the establishment has to be pervasive throughout the organization. Management must establish policies and guidelines for its backend accounting staff. They must also train hotel cashiers to post transactions accurately, to identify counterfeit currency, and to implement check cashing safeguards (see Exhibit 11-18). As with most challenges in hotel management, prevention is the best recourse to mitigating loss.

116

CHAPTER 11 CASH OR CREDIT (THE CITY LEDGER) Chapter Outline: CASH Cash Paid Outs Tips to Employees Cost to the Hotel: Float Cost to the Hotel: Discount Fees Cost to the Hotel: Uncollectible Accounts Cash Loans Third-Party Sources Automatic Teller Machines (ATMs) Paid-Outs to Concessionaires Refunds at Check Out House Expenses Cash Receipts House Receipts The Cashier’s Daily Report The Bank Net Receipts Over or Short The Turn-In Due Back Refunding the Due Back Refunding House Vouchers Other Related Issues Tour Package Coupons Foreign Currency Automated Currency Conversion Systems Example from the Land of Nod CREDIT AND THE CITY LEDGER Review of the City Ledger Credit Cards Kinds of Credit Cards How the System Works Fees Other Cards Debit Cards Smart Cards Still Other Cards 117

OTHER CITY-LEDGER CATEGORIES Master Accounts Groups, Packages and Company-Sponsored Functions Individual City-Ledger Receivables The Original City-Ledger Accounts Travel Agencies (T/As) Banquet Charges Late Charges E-folios Delinquent Accounts Executive Accounts Due Bills Rationale for Due Bills Processing the Due Bills Frequent- (Preferred-) Guest Programs (Loyalty Programs) MANAGING CASH AND CREDIT Managing Cash Counterfeit Currency Detection Devices Managing Checks Three Quickies Simple Deterrents Traveler’s Checks Managing Credit A Cost/Benefit Decision Collecting, Billing and Chasing At the Desk Minimizing Chargebacks

118

Professional Vocabulary: Chargebacks are credit-card charges that the credit-card company disallows. Beyond hefty fees levied for the reversal, these losses are even greater in cases of cash advances, e.g. for tips paid out.

Resolution should be a top priority. The credit manager should see chargebacks as temporary delays, not as final decisions. The hotel must act within thirty days or forfeit the opportunity to appeal.

Preventative measures should be taken, such as installing POS terminals. Accounting staff or front office agents should have a procedural list to follow. Studies indicate that the hotel’s failure to act or respond to the credit card company’s chargeback is the major reason for nonpayment. The response may require very little action, such as pointing out that the card was fraudulent (which makes the credit-card company responsible), or that the guest was a no-show reservation guaranteed by the card.

Due Bank, also known as due back, exchange, or u-owe-me, is the sum of money needed to return the cashier’s front-office bank to its starting balance. The mathematical value of the due bank is the starting bank less the cash in the drawer. At day’s end, the bank may have an insufficient amount of small bills and coins with which to start the next day. Requesting a due bank means that the turn-in is larger than the required net receipts ± over or short. The largerthan-needed turn-in includes checks, vouchers, large bills, even casino chips, none of which can be used for change the next day.

Due Bills evidence a trade between the hotel and a second party. The hotel swaps its empty rooms for goods or services. Originally devised as a means to get free advertising (that’s why due bills are sometimes called trade advertising contracts), due bills are traded today for almost anything: lamps, bedding, carpet, whatever. Both parties trade at retail value but deliver the product at cost. The manufacturer then has the right to use the room or sell the due bill on the open market (e.g. eBay).

Due bills are popular during dips in the business cycle when cash is short and empty rooms are plentiful.

Merchant Discount Fees. Credit card companies including Visa, MasterCard and American Express charge merchant/hotels a processing fee. The rate of the fee is negotiable (ranging roughly from 1% to 5%), based largely on volume and the level of credit-card automation available at the hotel. Competition among rival banks in these times gives an advantage to even the small operator in negotiating a rate.

Petty Cash Funds are used for small cash disbursements. General cashiers usually handle petty cash, but some hotels use the front-office cashier’s bank as the drawn upon fund. Petty (small) expenditures that require cash from the drawer are supported by signed vouchers. In balancing, the front-office cashier counts the vouchers as if they were cash. Once the total of these vouchers reaches some predetermined sum, the general cashier reimburses the front office cashier for the face value of the vouchers.

119

Smart Cards, also called chip cards or digital cash, are coming of age. Miniature computers almost indistinguishable from standard credit cards, they serve as identification, electronic door keys, medical and insurance records, and more. While the strongest argument against them has been standardization and concern over privacy, these issues are being addressed. By the time the technology is perfected, it will most likely demonstrate itself through the ubiquitous smartphone.

Answer to An Incident in Hotel Management: A sold-out hotel, a late-arriving guest, and a dispute over the reservation’s status make for a sticky situation. Not an unusual occurrence; late arrivals with no rooms available are all too common in this industry. Were rooms available, we would have registered the guest using a different credit card and dealt with the “problem” the next day. But when the whole town is sold-out, what can be done? At least the guest appears somewhat reasonable, with comments like; “I need a room. Have [the other hotel 18 miles away] hold the space.”

How could this situation have been avoided? If the hotel instantaneously charged the credit card for one night’s rate at the time the guest was on the telephone making the reservation, the hotel could have immediately alerted the guest that his card was either inaccurate or declined. He would have then had 9 weeks to make other arrangements. But if the hotel took the reservation and then tried to charge the card later only to have it declined or inaccurate, the hotel had some level of obligation. They should have contacted the guest in whichever manner he made his reservation—a phone call, an e-mail, etc.—and let the guest know that the reservation was denied awaiting another method of guarantee. This is the courteous manner for handling the decline, though the hotel was under no obligation to take that extra step.

At this point, nothing can be resolved. Make a reservation at another hotel (18 miles away), make note of the dispute in the front office log book, and alert the reservations manager of a forthcoming guest complaint.

Answers to End-Of-Chapter Questions: 1. The procedures depend on the credit relationship between the travel agency and the hotel. a. If the credit relationship is solid, either one of two arrangements will work. Assuming the agency collects from the guest and issues the guest a coupon as evidence of the reservation: 1). That coupon is accepted by the desk, whether or not the agency prepays the hotel before the guest’s arrival. If prepaid, the agency has taken its commission in advance; if not, it remits the net (rate minus commission) after the guest departs. Or, 2). If the travel agent makes the reservation but does not receive payment, the hotel will accept the reservation and request a credit card from the arriving guest. After the guest departs, the hotel will mail the agent’s commission. If the guest is a “no-show,” the hotel will look to the agency for settlement.

120

b. If there is no credit relationship, indeed, the hotel may never have heard of this agency, the agency must prepay before the guest’s arrival. The commission would be taken and the net prepaid. Then the hotel accepts the guest’s coupon. If the agency does not prepay, and if there is no credit relationship, the guest’s coupon will be refused and the guest will need a personal credit card. The hotel will mail the agent’s commission after the guest leaves. The guest and the agency will need to settle their own issues.

2. U.S. hotels have all but ignored foreign exchange as a profit center, though overseas hotels operate the service quite successfully. Domestic hotels not wanting to be in the foreign funds “business” still may decide to accept foreign funds as a guest courtesy or service. Whatever the motivation, the service can still be profitable. Profit comes from paying less U.S. dollars per unit of foreign currency than the bank’s official rate; that which the bank pays the hotel.

In this example, #51.50 of foreign value equals $1. The #2,000 is worth $38.83 (2,000 divided by 51.50). Therefore, the cashier collects $209.83 ($171 + $38.83 equivalent) in settlement of the $206.20 account. The cashier needs to return change of $3.63 ($209.83 $206.20). It’s unimportant whether the guest has more U.S. currency or not.

3. The use of speedy check-out has coincided with the advent of the credit card and almost every guest uses a credit card. The system depends on the guest’s confidence that the folio is accurate.

And its accuracy may be verified on the TV screen in-room. The guest authorizes payment by credit card via of one of the speedy check-out procedures (drop box or television). For the guests’ records, a copy of the folio is left under the guest-room door the previous night, or mailed as soon as the system processes the charges. Expect guests to print their own copy as hotel rooms get more wired. The hotel forwards those charges to the credit-card company as it does when the guest stands at the cashier’s desk to settle.

4. It is not likely that the F&B manager will support the idea. F&B would argue that the small savings in dollars—“not small,” interjects the controller—that the small savings in dollars, continues the F&B manager, would come at a very high cost in employee morale. Perhaps a 56% increase in menu prices could be used as an offset instead. The rooms manager would not be adamant either way. However, if tips are paid at the desk, guest-service agents would be required to do the math and to face the anger of the F&B employee and do so in the public lobby. In which case, the rooms manager might also object.

5. Tourists who come to the U.S. and spend foreign funds in the U.S. produce an export, similar to the export of U.S. electronics or airplanes sold abroad. Conversely, American residents spending greenbacks overseas worsen the trade gap. Their expenditures are similar to other foreign imports such as perfumes and autos. A weak dollar encourages foreign tourists to the USA and discourages Americans from going abroad. The opposite holds true when U.S. currency is strong.

121

Answers to Quiz Questions That Follow: 1. True 2. True: In terms of yield management, just as room rates are increased during peak seasons, hotels turn travel agents away to minimize the loss due to their commissions.

Hotels in this vantage point can afford to turn the business away as they will have high occupancies otherwise.

3. True 4. True 5. False 6. c 7. a 8. e 9. e 10. e Short Answer: 1 N =$0.20. Therefore, 1000 N = $200. An additional $20 must be paid.

122

Check-In Check-Out Quiz: Chapter 11 _________________________ Name _________________________ Identification Number

_________________________ Section _________________________ Hour

T/F Questions: Circle either T for True or F for False. (Questions that are partially false should be marked False.)

1. If a hotel has DCC (Dynamic Currency Conversion) system, folios can be calculated and presented in a foreign currency even if payment is still made in dollars. T F 2. It makes sense that commissionable business, such as travel-agency bookings, is turned away during peak occupancies. T F 3. Terminology gets confusing because the word “floor” is applied to the maximum amount of credit, not to the minimum amount of credit. T F 4. Assume a sales manager had to choose between extending credit to a risky client for a cocktail reception and banquet or a corresponding dollar amount in hotel room sales. All things equal, it would be better to choose the hotel room sales, because food and beverage sales have a lower profit margin and cost the hotel more per dollar of revenue than room sales. T F 5. Acting in their role of host, innkeepers (hotels) are expected to – and do – cash personal checks and make emergency loans to guests. T F

Multiple Choice: Circle the one answer that best completes the thought.

6. “Float” refers to the: a.

Swimming pool gadget that adds chemicals b.

Fee that foreign-money exchangers charge c.

Time between the extension of credit and its payment d.

Period between a room on change and a room that’s ready e.

All of these because the term is used differently throughout the hotel

123

7. Cash received minus cash paid-out is: a.

Net cash receipts b.

Drop c.

Cash short d.

Starting bank e.

None of the above 8. Due bank is also called: a.

Difference returnable b.

Due bill c.

You-owe-me d.

Exchange e.

All of the above except b 9. Trade advertising contacts are also called: a.

Trade-outs b Reciprocal trade agreements c.

Out-trades d.

Due Bills e.

All of the above except c 10. Split folios are used by/for: a.

Casino high-rollers b.

Due-bill holders c.

Frequent-guest members cashing in points d.

Tour group members e.

All of the above

Short-Answer: Answer briefly with short paragraphs, phrases, or exhibits.

Explain to a foreign guest (and show your work) how the $220 folio balance will be settled at check-out if she tenders a 1,000 noddles (N) currency, which the hotel accepts at par value (N1 = $0.20).

124

CHAPTER 12 The Night Audit Preparing The Lecture: 1. Use the chapter outline (provided on its own page for distribution or overhead use) to structure the week’s work. Better still: Use the Power Point.

2. Aim to develop specific objectives for the students: • An ability to recite without error the formulas associated with basic rooms statistics that are reviewed here and were first cited in Chapter 1.

• An appreciation for the importance of the housekeeper’s report to management of the front desk.

• An understanding of the connection between the rooms management reports of this chapter and the rooms forecasts discussed in Chapter 4.

3. Establish lecture goals, which might include: • Integrating the billing procedures of Chapter 10 with the credit-card contents of Chapter 11 to ensure a better understanding of Chapter 12's night audit.

• Explaining the perpetual inventory of accounts receivable by analogy to peas in the store room.

• Linking (for the accounting-knowledgeable student) the values derived from the night audit to the accounting entries in the journals.

What The Chapter Is All About: The night audit, hereafter referenced as the audit, closes the hotel’s day and balances its books.

Property Management Systems (PMS) and their associated interfaces with other departmental systems have altered the machinery and the approach to the audit, but not its purpose. It still reconciles the guests’ folios, preparing them for check out at any time. It structures the basic accounting entries that deal with accounts receivable charge sales and simultaneously maintains a cumulative balance of those receivables. It closes the hotel’s official day, an important point for a business that operates 24/7/365. Through a variety of reports, the audit helps management interpret operations, prepare for problems, and forecast needs. Students must not lose sight of the audit’s purpose and contribution as a management tool even as they concentrate on the discussion of the audit’s mechanics. Explaining these purposes and functions is what the chapter is all about.

PMS Systems are ubiquitous. Widespread availability, inexpensive interfaces with other operational technology, and good dependability have meant widespread PMS adoptions over the past two decades. Nevertheless, as a failsafe, there is a place for pencil-and-paper folios and a hand-prepared transcript. Faced with a crashed PMS, many experienced night auditors would be hard-pressed to create a hand-audit! That’s why the authors have, once again, continued to include some aspects of a hand-audit in this 9th edition of Check-In Check-Out. 125

The hand-prepared audit makes sense from a pedagogical viewpoint as well. Students better understand the pencil-and-paper audit, because they can trace the origins of various charges and credits. Critical to an understanding of the audit process is a foundational awareness of how each number is created via numerous transactions throughout the day.

The audit follows a prescribed routine designed to (1) update guest folios; (2) balance and close records for the day; and (3) prepare and distribute reports. One such report, the Night Auditor’s Report to the Manager, includes a perpetual inventory of the accounts receivable. Understanding this report is simplified when the concept is compared to bottles at the bar or peas in the storeroom.

Some Chapter Highlights: Posting room charges for the room night is the night auditor’s job, but there are exceptions.

Cashiers must step in when the posting takes place during the day as happens when: (1) It’s a day-rate guest; (2) The guest remains long after the check-out hour and additional charges are levied; (3) A charge is made for damages or theft from the room; or (4) The hotel has adopted the extraordinary position of charging for failure to remain the entire reservation period.

The closeout hour, when the 24-hour day’s operation is arbitrarily divided into two different days, is not the same hotel to hotel. Properties with numerous food and beverage outlets, room service, and night clubs delay the day’s closing to coincide with the decline in business volume and folio postings. A small operation may close down as early as the start of the night auditor’s shift. In fact, there is no requirement that the audit must be done at night. Hiring night coverage on the desk and leaving the audit to some other time of day is fine so long as the folios are current and accurate when guests begin departing early in the morning.

Zip-Out Check Out has gained a stronghold in the industry and is a convenience to the guest.

Assuming all charges are posted to the folio by the time of checkout (circumstances above notwithstanding), then an express check-out is a win-win since the front office demand is lessened as well.

With the copious amounts of reports possible from today’s PMS, Exception reports, reporting only things outside the norm, are a valuable time saver to hotel management. Room status reports remain an essential tool for communication with the front desk. Reverse housekeeper reports—from the desk to the linen room—aid the housekeeper in scheduling staff, especially when that report is combined with reservations forecasts.

126

CHAPTER 12 THE NIGHT AUDIT Chapter Outline: THE AUDITOR AND THE AUDIT The Night Auditor Work Shift General Duties Overview of the Audit Reconciling Accounts Receivable The Closeout Hour Posting Room Charges Posting Room Charges Manually Manual System Errors Posting Room Charges Electronically Room Charges Not Posted During the Night Audit Revenue Verification RECONCILING USING A PROPERTY MANAGEMENT SYSTEM Interfacing Different Systems Turnkey Systems Verifying Basic Data Closing Routine Zip-Out Check Out PMS Posting Errors Reports from the Night Audit Exception Reports Downtime Reports Credit Reports Reservation Reports Rooms Management Reports Room Status Reports Accounts Receivable Reports Reports to the Manager Room Count, House Count, and Room Income Room Statistics The Housekeeper’s Report

127

Professional Vocabulary: Closeout Hour refers to the hour chosen to close out the day’s folio. This is usually done in the early morning hours when activity in a folio is the least frequent. It is also a reflection of the operating hours for the lounges, restaurants, and room service. The choice of time is important to a smooth check-out process as well since the folio needs to reflect an up-to-date billing for departing guests.

Exception Reports alert management to special conditions that need immediate action. Attention is focused on situations that exceed given standards. If special conditions were not highlighted, entire reports would need to be prepared, read, and interpreted before management could see the one or two accounts which fall outside the normally accepted parameters. Two examples of exception reports exemplify their value: (1) a list of guests whose folios exceed a given amount; (2) a list of room comps or special rates that have been granted and why.

HITIS is an acronym for Hospitality Information Technology Integration Standards. In order to address hardware and software compatibility issues posed by the numerous technology vendors selling wares to the lodging industry, HITIS was formed. A consortium of large hospitality companies; including Bass (Holiday Inn) and Microsoft working in conjunction with the AH&LA, HITIS was established to develop integration standards for vendors and customers alike.

Turnkey Systems are simply standardized systems that can be installed and operated with a minimum of both effort and cost. Because many hotels function in basically the same manner, standardized hardware and software systems make sense for generic properties. Turnkey systems get their name from being so easy to use; the hotel simply needs to “turn on the key.”

Today’s turnkey systems incorporate the latest in touch-screen technology as a means to continually improve the user (hotel staff) interface.

Room Count, House Count, and Room Income can be maintained in a running balance similar to the “perpetual inventory” of accounts receivable. The cumulative balance of tracking arrivals, departures and room charges (by numbers, persons and dollars), provides additional proof of each day’s room statistics. The desk’s computations are struck independently from this perpetual inventory calculation. The proof obtained aids the income audit. The mathematics is the same as for all inventory calculations: Rooms Persons $ Opening balance (yesterday’s closing balance) _____ _______ ______ + Arrivals _____ _______ ______ – Departures _____ _______ ______ . ± Changes = Today’s closing balance (tomorrow’s open) Sleep-outs are rooms with baggage but no overnight guests and an item of note on the Housekeeper’s report. The circumstances under which this may happen could include early arrivals or day rate rooms (see Chapter 9).

128

Answer to An Incident in Hotel Management: There is simply no excuse for sleeping on the job. Yet it occurs all too often among night audit staff in the wee hours of the morning. The auditor’s head weaves, her eyes close, and she falls asleep on the computer screen. Moments later, she awakens and continues her work. No problem if the transgression goes unnoticed. If a guest awakens her, it might get reported, and she could be issued a disciplinary warning.

It is another matter altogether, when the auditor turns out the lobby lights and makes himself a bed on the couch. That deliberate nap will likely be considered a termination offense in the light of morning. The guest has every right to be upset; no security patrolling the hallways to minimize party noise, no one answering the front desk telephone call after call, and an unprofessional auditor asleep on the sofa. What if this had been a real emergency?

Answers to End-Of-Chapter Questions: 1. The three Downtime Reports are: The Folio Balance Report, The Guest-List Report, and the Room Status Report.

The Folio Balance Report (Exhibit 12-3) lists in room number sequence yesterday’s closing folio balances. Amounts due from departing guests can be easily determined, although they are only accurate to the moment the report was run. Today’s breakfast charges are not included, for example.

The Guest List Report is an alphabetized list of guests and their room numbers. It would be used by telephone operators, and for mail and general guest identification and location purposes.

The Room-Status Report identifies rooms that are vacant, out-of-order, on change, and occupied.

It is only accurate to the moment the report was run. It is essentially a room count sheet, illustrated in Exhibit 12-13.

2. ===================================================================== ^^^^^^^^^^^^^^^^^^^^^^^^^^ 1000 NOAH VAIL ROTTEN PUMPKIN POND MASSACHUSETTS, 01266 1-800-555-5555

A Vallen Corporation Property HI-JINKS HOTEL ^^^^^^^^^^^^^^^^^^^^^^^^^^^

RES#43 RLG1234 ACCT#5941 129

NAME:

Mr. and Mrs. Jones & Family

IN: 6-03 OUT: 6-06

ADDRESS

21 Craig Drive RATE: 125 ROOM: 1233 Hampshireville, IL 65065 ==================================================================== DATE DESCRIPTION ROOM REF. CHARGES CREDITS BALANCE _____________________________________________________________________________ 01/08 ROOM 1233 51-1 (a) 72.00 72.00 01/08 TAX 1233 51-2 (b) 3.60 75.60 01/08 ROOM 1233 51-1 (c) 72.00 147.60 01/08 TAX 1233 51-2 (d) 3.60 151.20 01/09 VISA 1233 51-2 (e) 151.10 -0===================================================================== Who does the posting? For items (a) through (d), room and tax are posted by the night auditor: The night of the 7th at 4:30a.m. in the morning the posting actually appears as the 8th due to the closeout hour for the 7th. As for item (e), settlement is made by the cashier on duty at 10:00 a.m. on January 9th. ===================================================================== 3.

Percentage of Occupancy: Percentage of Double Occupancy: Average Daily Rate: Revenue Per Available Room:

440 ÷ 600 (440 + 160) = 73.3% 60 (500 - 440) ÷ 440 = 13.6% $32,330 ÷ 440 = $73.48 $32,330 ÷ 600 (440 + 160) = $53.88

4. a. Guests who arrive today will have no opening balance: • From Exhibit 12-3, arrivals are: Rooms 3304; 3110; and 6133.

• From Exhibit 12-12, arrivals are: Room 1824. b. Guests who have advanced deposits will have no opening balances, they just arrived today, but will have credit transfers reflecting the shift of the deposit from the city to the transient ledger: • From Exhibit 12-3, a guest with an advanced deposit is Room 3110.

• From Exhibit 12-12, no guests qualify. c. Guests who checked out today will have no closing balance and in the case of Exhibit 12-12 will be seen under the “Departure” listing: • From Exhibit 12-3, no guests who checked out today.

• From Exhibit 12-12, guests who checked out today are: Rooms 1616; 1649; 1824; and 1600.

130

d. Guests who used credit cards at check out: None can be specifically identified under transfer credits. e. Guests who had amounts due from the hotel: From Exhibit 12-3; Room 3110.

From Exhibit 12-12; Room 1824.

5. Reservation fees are paid by the hotel to the CRO or other booking agencies. Such fees do not appear anywhere on the guest’s folios and hence no place in the audit. The fees are negotiated in a range of $4 - $10 per room night. Exhibit 2-15 offers examples of franchise reservation fees.

6. The transcript is not in balance. Note that debit and credit transfers are not in agreement by $0.45. That value is evenly divisible by 9, suggesting that the error might be a transposition, $395.50 written as $395.05.

The rate of the room tax is 8%: $725.76 ÷ $ 9,072 = .08.

Answers to Quiz Questions That Follow: 1.

2.

3.

4.

5.

True True True False: No such thing.

False: While these are valid concerns, security of the software is at a level that has provided enough confidence to move to Web-based delivery of HITIS systems.

6. e 7. e 8. d 9. b 10. e Short Answer: See text pages 513 - 528.

131

Check-In Check-Out Quiz: Chapter 12 _________________________ Name _________________________ Identification Number

_________________________ Section _________________________ Hour

T/F Questions: Circle either T for True or F for False. (Questions that are partially false should be marked False.)

1. Room sales are always accounts receivable sales, whereas sales in the dining room could be accounts receivable sales, cash sales or credit-card sales. T F 2. A hotel system may have some departments charge guests using manual (pencil-andpaper) vouchers even while the balance of the hotel operates with a computerized property management system. T F 3. The night audit reconciles the hotel’s accounts receivable nightly whereas most other business types do that monthly or even less frequently. T F 4. Several court cases are now pending because the night audit, which ends the hotel’s accounting day, conflicts with its legal definition: A hotel is required to be open 24/7/365. T F 5. The Hospitality Information Technology Integration System (HITIS) is such a critical function of the hotel operation with guest-sensitive information that it can never move to a Web-based interface. T F

Multiple Choice: Circle the one answer that best completes the thought.

6. Late charges are reduced dramatically when POS terminals are used in the dining room because they: a.

Identify guests who have already checked out, preventing new charges from being made. b.

Flag paid-in-advance guests who are not permitted to charge c.

Alert cashiers to balances that exceed allowable credit limits d.

Record charges instantaneously rather than waiting for a runner to take the voucher to the desk e.

All of the above

132

7. Charges for room and tax are posted by the night auditor except charges or fees for: a.

Late check out b.

Day rate use c.

Use rate use d.

Failure to stay through the reservation commitment e.

All of the above 8. An “Allowance Report” is an example of a (an): a.

Reservation Report b.

Room Status Report c.

Registration Report d.

Exception Report e.

None of the above 9. Which of the following class of reports would be the most helpful to the yield manager for forecasting and setting rates? a.

Exception reports b.

Reservation reports c.

Credit reports d.

Downtime reports e.

Both a and d 10. The Daily Report to the Manager: a.

Is just another name for The Night Auditor’s Report to the Manager b.

Has limited value because it reports cash sales only c.

Is prepared by the Income Auditor d.

Becomes the basis for entries into hotel’s journals e.

Both c and d

Short-Answer: Answer briefly with short paragraphs, phrases, or exhibits.

List 3 reports within any one class of reports. For example, one item under Exception Reports might be: A Comp Report. (Note: Your response may not use “Comp Report,” because it was shown in the question itself.)

133

CHAPTER 13 Hotel Technology Preparing The Lecture: 1. Use the chapter outline (provided on its own page for distribution or overhead use) to structure the week’s work. Better still: Use the Power Point.

2. Aim to develop specific objectives for the students: • An appreciation of the differences among various locking systems: traditional mortise locks, mechanical, electronic, biometric, RFID, and the various options for key cards, including smart cards.

• Discuss the implications of the new player in the field: smart phones and the reach their applications may have through the entire check in to check out experience.

• A skill-set in identifying and understanding the attributes of various energy management and climate control systems, including PTAC’s.

• An acceptance of the rapid obsolescence seen with telephone-related installations.

• Exploring technology as it relates to minibars, inroom safes, communication systems, and inroom entertainment systems.

3. Establish lecture goals, which might include: • Evaluating the likely direction of the lodging industry’s telephone services and revenues in light of the rapidly changing history of telecommunications. Include here the likelihood of voice-over-Internet protocol (VoIP) becoming the leading technology and/or the implications of smart phone use to usurp all guest personal communications needs.

• Discussing functions within the hotel that would benefit from technological advances.

List all the areas that are already interfaced from the guestroom to the entire property.

Ask students the question: is automation always the right answer? Why or why not?

• Reviewing “other” technologies present in hotels today. Explain why certain technologies (biometric locks and smart cards, for example) are slow to catch-on.

• Listing the issues management should address when determining whether automation is appropriate for a particular application. Include thoughts like: will the new technology enhance revenue streams? will it improve guest satisfaction? will it reduce costs (labor) or increase accuracy? has such an interface or automation been performed successfully at other hotels?

What The Chapter Is All About: Automation and electronics came to lodging slowly because some early experiences were widely publicized disasters. As applications became more common, two positive developments emerged: prices fell and installations became increasingly reliable. Once the technology was established, large lodging companies moved quickly. This chapter is about where the industry has been technologically and where it is going.

134

There are a myriad of options for access to a guest’s room. The spectrum of these is explored here and in some cases, the pros and cons of their use.

Guest-operated interfaces are growing more important as guests become technologically savvy.

These interfaces take on three distinct roles: they save the guest time (as with self-check-in and self-check-out terminals), they give control to the guest of their personal space (heat, air conditioning, communication options (e.g., level of Internet access)), or they provide guest entertainment (as with in-room entertainment and minibar systems).

The increased use of personal computers while traveling to access the Internet has pushed the offerings to not only include wired and Wi-Fi access, but tiered bandwith and cloud computing options as well. The availability of Voice over Internet protocol (VoIP) is moving forward. The possibilities that smart phone applications could offer is just starting to reveal itself in areas of communication, guestroom access, check in, check out, payment mechanisms, and even within the meeting industry experience.

A push of a button operates the room lights and sound systems, changes the room status to Do Not Disturb, and even adjusts the air conditioners and entertainment systems.

The property management system (PMS) is the heart of the hotel’s technology. Today’s PMS is the central clearinghouse with which all other electronic applications must communicate. The PMS interfaces with other critical systems such as energy management, call accounting, and electronic locking. The PMS, with its multitude of interfaces provides data and reports to management, tracks the movement of employees in housekeeping and bells; monitors inventories; and expedites purchasing. Standardization of systems through the HITIS and HTNG initiatives and efforts of the OpenTravel Alliance (OTA) as it applies to lodging will continue to make software and hardware more effective for the hotel industry.

Some Chapter Highlights: In the past several decades, the telephone department has changed from a cost center, to a valuable revenue source, and back to a cost center! Dramatic developments in personal cell phones, including smart phones and the capabilities available through the multitude of applications for the device, have altered the purpose, profit, and services of the hotel’s telephone department. Management will need to evaluate new methods of communication in hopes of recovering costs and generating new revenues. The arena of options in Internet access may provide that opportunity as a revenue stream.

Electronic locking systems (ELSs) are one of the innovations which have proved a win for all concerned. Guests reap the benefits of greatly enhanced personal security. Not only does each keycard provide a new code to the lock and invalidate the old guest’s keycard, but many systems provide an assortment of other features. The energy management system (PTAC’s, HVAC and lighting) may be tied to guestroom occupancy demonstrated with a valid keycard. RFID locks open automatically when the guest is nearby, providing convenience when hands are loaded with 135

packages or luggage. Challenges with smart cards are being addressed and their use is on the rise.

In addition to guest security and savings over traditional locks, hard-wired electronic locking systems provide another unique cost savings. Energy management systems can be interfaced through the hard wiring of the ELS. Temperature in guest rooms can be adjusted, lights and television sets turned off, and telephones disconnected automatically at departure—no more unaccounted for calls by employees! Critical savings all in a period of ever-rising energy costs.

Not to be downplayed is the importance of technological advances in the fire safety systems of properties. Much has been learned in light of past tragedies and improvements made in wet and dry pipe suppression sprinkler systems.

Advancements continue in guest room conveniences such as minibars (both for the guest and for the management of its contents), safes, and entertainment systems. Amenity creep continues to play its part as hoteliers rise to the technological challenges of rooming their guests.

136

CHAPTER 13 HOTEL TECHNOLOGY Chapter Outline: TECHNOLOGY IN THE GUEST ROOM: HISTORICAL VIEW A Look Back Costs and Benefits TECHNOLOGY IN THE ROOM: THE NEW GENERATION Locking Systems Traditional Mortise Locks Mechanical Locking Systems Electronic Locking Systems (ELS) Hard-Wired Systems Microprocessor-Based Systems One-Way Communication Systems Two-Way Communication Systems Key Cards Magnetic Stripe Cards Memory Cards Smart Cards RFID Cards Radio Frequency Identification (RFID) RFID Locks Other RFID Uses Biometric Locking Systems Smart Phone Applications Guestroom Lock Applications Other Hospitality Industry Smartphone Applications Other Airline Conveniences Hotel Check-In Upselling and Suggestive Selling Tap to Pay Mobile Apps for the Meetings Industry Proximity-Based Promotion Apps Energy Management and Climate Control Systems PTAC’s Network-Controlled Energy Management Systems Keycard Control Systems Motion Detection Systems Infra-Red Heat Detection Systems “True” Detection Systems 137

Fire-Safety Systems Fire-Suppression Sprinkler Systems Wet Pipe Systems Dry Pipe Systems Minibars Traditional (Nonautomated) Minibars Semiautomated Systems Microprocessor-Based Automated Systems Inroom Safes Credit Card Access PIN-Based Entry Biometric Safes COMMUNICATION SYSTEMS A Brief History of Hotel Telephone Service Internet Access Dial-Up Access High Speed Hard-Wired Access High Speed Wireless Access Tiered Bandwidth Cloud Computing Future of Hotel Telephones Voice-Over-Internet Protocol (VoIP) Emergency 911 Calls Wake-Up Systems Manual Wake-Up Systems Semiautomatic Systems Fully Automated and Interactive TV-Based Wake-Up Systems Voice Mail Where’s My Phone?

OTHER TECHNOLOGIES Inroom Entertainment Systems Property-by-Property Custom Programming Streaming on Demand At the Desk Standardization: From HITIS and Beyond

138

Professional Vocabulary: Biometrics take advantage of the unique differences in human beings with respect to fingerprints and eyes (primarily the iris). Many businesses have invested in this seemingly fool-proof technology as a means of allowing access to authorized individuals whose irises or fingerprints have been documented. This technology has potential application in the lodging industry, though it may never get past the significant risk perceived by the guest, who is hesitant to provide a front desk employee with such personal and sensitive data.

Degradation is the decline in speed of the PMS (or any system), when additional applications are interfaced to the original system. Slower operation by the host PMS must be evaluated as an offset to the gains from new installations.

Fail-safe is a device, system, or practice that is employed whenever all or part of the hotel’s electronics fail. With locking systems, for example, a fail-safe key card works just as a regular electronic key even if the electricity and/or computer that programs the keycards should fail. It takes over the key hierarchy, replacing previously used keycards and acting just as if it were the next key in the sequence. In turn, the fail-safe key is disabled when the system’s power returns .

Fail-safe for guest folios is usually little more than a nightly hard-copy report.

OTA, OpenTravel Alliance (http://www.opentravel.org/) is to the travel industry what HITIS and HTNG are to the lodging industry specifically. OTA is “passionate about solving the problems inherent with connecting multiple systems within the complex travel distribution arena.” They hope to do so by creating specifications for the exchange of information among providers including airlines, car rental firms, hotels, cruise lines, railways, leisure suppliers, service providers, tour operators, travel agencies, solutions providers, technology companies and distributors.

Synergy is the action of separate agencies which, when taken together, produce a total effect greater than the sum of their individual efforts. Synergy becomes an issue when two systems are interfaced. It’s a question that management needs to consider. If the end result from the interface of several systems is greater efficiency or information, then the resulting synergy is a plus in the decision-making process.

Tap to Pay is an upcoming payment solution utilizing the Near Field Communication (NFC) of a smartphone. The actual approval from the customer does not come necessarily via a tap to the device; it can also be a wave of it within a few inches of the payment terminal. The normal concerns of standardization and security of the user’s information exist, but each is being mitigated to move this to an acceptable means of payment in the coming years.

Telephony, telephone service via the Internet, is the latest development in the dynamic area of communications. Internet protocol (IP) telephony promises cost savings to the hotels that wire for it. The mixed scene in telephone usage and telephone income demands some resolute changes, some major shifts. One well respected observer has predicted that Voice-Over-Internet protocol (VoIP, or IP telephony) telephone access will be as common an upgrade in hotel rooms within five years as television sets are today. Issues regarding VoIP and 911 calls still need to be resolved.

139

Answer to An Incident in Hotel Management: This incident reveals several flaws in the rooming-a-guest process. The Japanese couple never should have been left in the room without being shown all the nuances of the room controls. In addition, clear, illustration-based instructions should have been easily found in the room to reinforce what was explained to them, offered in multi-language format.

Another unanswered question is whether or not the energy management system and its response to controls were operating properly. Could the system be overridden until maintenance can repair it the next day? Of course, without the guest coming in the middle of the night to ask for help, (which would have made it their 3rd time being inconvenienced), a possible malfunction was not a consideration in this scenario.

Since they do not speak English, it is unlikely they will complain to management the next day, but the damage from the word-of-mouth recounting of their troubled stay may come back to haunt management later.

Answers to End-Of-Chapter Questions: 1. Any of the Federal Communication Commission’s recent pronouncements will satisfy this answer. Newspapers report changes almost daily. Among them: The decisions involved in the Telecom Act of 1996, the first major overhaul in 52 years. Local number portability (a consumer issue) was the highlight of 2003. In 2004, a decision to NOT regulate VoIP was made. There have several auctions of public airwaves to wireless companies. Going back in time, one can cite several historic decisions: a. The breakup of Ma Bell, which culminated in 1985 and opened telephone service to competition. b. The privatization of telephones, which gave personal ownership to (hotel and home) telephones and switchboards, previously leased from their former owner, AT&T. 2. The question is a no-brainer. Software that is not compatible produces a great deal of downtown with the corresponding loss of customer goodwill and revenue. Investing in interface software development for systems which are not supported by HITIS is both expensive and foolish. Buying compatible equipment under HITIS standards will enhance service, save management time, and ultimately money.

A disadvantage would be the initial start-up cost of new systems, including installation and training of employees and management. This must be considered in the RFP when the move is made. Much of the industry has already pushed through this process, so upgrades are now to be considered. The timing for the expenditures of an upgrade is not always optimum for the establishment since they do not control releases in the software and hardware internally.

3. No one complains about profits made in dining rooms and bars. Telephone services are entitled to earn a similar markup. As explained in the text, long-distance calls through VoIP 140

(which use existing Internet services), add virtually no cost to the hotel. The guest can make calls locally or internationally for no cost to the hotel! However, there are costs associated with the delivery of Internet access (monthly ISP fees, maintenance of networking system (hardware and software), so a surcharge is reasonable. The question then becomes, how much? As VoIP continues to evolve, this answer will settle into a range acceptable to the hotel guest and equitable to the bottom line.

4. Many of these abbreviations have come and gone as the telephone industry has changed: a. HOBIC: Hotel Outward Bound Information Center—the telephone company’s longdistance lines. b. WATS: Wide Area Transmission (or Telephone) Service—quantity discounts for telephone usage that expedited the 800-toll-free numbers. c. PMS: Property Management System—integrated hardware and software that manages the hotel’s guest accounting and other various interfaced systems. d. FCC: Federal Communications Commission—agency that overseas the nation’s telecommunications. e. ELS: Electronic Locking Systems—both hardwired and micro-fitted. f. OCC: Other Common Carriers—referenced AT&T’s initial competitors. g. AT&T: American Telephone & Telegraph—telephone company, nicknamed Ma Bell. h. PBX: Private Branch Exchange—the telephone switchboard. i. RFID: Radio-Frequency Identification Device uses radio waves to transfer data from an electronic tag. j. POS: Point of Sale (Terminal)—electronic “cash register” interfaced to the PMS. k. CAS: Call Accounting System—software that interfaces the hotel and the telephone carrier (AT&T, for example). l. AH&LA: American Hotel & Lodging Association—national professional association whose members are state hotel associations. m. PPC: Premium Priced Calls—telephone calls charged at per minute fees, 900-calls for example. n. VoIP: Voice-Over-Internet Protocol—sending telephone calls over the Internet. o. HVAC: Heating, Ventilation, and Air Conditioning—technology of indoor environmental comfort using one of three approaches: centrally controlled systems, individually controlled systems, or network controlled systems. p. PTAC: Packaged Terminal Air Conditioners—individually controlled air conditioner units which may or may not include heating. Comfort levels can be customized to the individual’s needs. q. Tap to Pay: Contactless payment using a smart phone– tapping a mobile device to pay for goods. Near Field Communication (NFC) technology is at work here. r. Bandwidth: A range within a band of frequencies or wavelengths. Also, the amount of data that can be transmitted in a fixed amount of time. For digital devices, the bandwidth is usually expressed in bits per second (bps) or bytes per second. s. Smart Cards: Card resembling a credit card in size and shape, but it has an inside, usually containing an embedded microprocessor. The microprocessor is under a 141

gold contact pad on one side of the card. The smart card contains volatile memory that can store personal identification, electronic cash, PGP data, and medical emergency information.

5. Imaginative answers can be expected based on the widespread availability of: • Smart cards that operate many hotel and nonhotel devices and services.

• The bed might be a horizontal curtain of air that is activated when needed. Otherwise the room appears that much larger.

• Vacuuming will be done by an automat.

• One wall will be a huge screen for the modern “television,” which will screen shows, allow for interactive games, and in-room gambling.

• Food and beverage service will entail more self-service by using electronic servers and automatic food dispensers.

Let your imagination go!

Answers to Quiz Questions That Follow: 1. True 2. False: They are biometric electronic locking systems.

3. False: With the rapid advancement of technology and the constant need to impress a guest with a room more technologically advanced than their own home (and their competitor’s amenities), the hotel industry is struggling to keep up the “Wow” factor in their establishments..

4. False: While called “Tap to Pay,” the actual transaction is most times completed by a simple wave of the device at the payment terminal.

5. True 6. e 7. e 8. d 9. e 10. b Short Answer: Answers might include: • Amount of synergistic gain (or loss) • A cost-benefit analysis • The degree of degradation • Availability of fail-safe devices • More…

142

Check-In Check-Out Quiz: Chapter 13 _________________________ Name _________________________ Identification Number

_________________________ Section _________________________ Hour

T/F Questions: Circle either T for True or F for False. (Questions that are partially false should be marked False.)

1. Telephone departments have had an historical cycle: First heavily regulated, then deregulated, and now in competition with other communication products (cell phones for example). The result is that today’s hotels earn little revenue from the telephone department, and in many properties it is a cost center. T F 2. Electronic Locking Systems (ELS) which use the guest’s iris or fingerprint as the code for opening the lock are known as RFID electronic locking systems. T F 3. Hotels rooms are designed to provide the best of the product they supply – a good night’s sleep on a comfortable bed in a clean environment. As such, they do not focus on providing state-of-the-art technology in the room. T F 4. Tap to Pay refers to a smart phone application that simply requires a tap of the device to the payment terminal to record and accept a guest charge. T F 5. Some energy management systems (EMS) are so sophisticated that they actually save energy by adjusting the temperature automatically when the room is unoccupied. T

Multiple Choice: Circle the one answer that best completes the thought.

6. In terms of keycards, which of the following is NOT a real type of keycard used with today’s electronic locking systems: a.

Magnetic stripe cards b.

Memory cards c.

Smart cards d.

RFID tags e.

All of the above are real keycard types

143

F

7. Proximity-based apps do not include: a.

Coupons offered while outside a retail establishment b.

Announcements of programs starting within walking distance c.

Casino games and events d.

Guestroom access e.

None of the above 8. Which federal agency regulates the nation’s telecommunication industry? a.

FICA b.

OSHA c.

FDA d.

FCC e.

None of the above 9. Which of the following services are available at some hotels on the in-room television screen? a.

Guest folio b.

Room-service menu c.

Weather reports and airport times d.

Personal messages e.

All of the above 10. A hard-wired ELS can be upgraded to include: a.

Removal of room-service trays b.

Energy control of the guest room c.

Clearing of smoke from no-smoking rooms d.

Cooking capabilities (but only in all-suite facilities) e.

None of the above

Short-Answer: Answer briefly with short paragraphs, phrases, or exhibits.

List and describe two factors that management should weigh before buying and installing a new interface to its Property Management System.

144

UNIT AND FINAL EXAMINATIONS Five Separate Unit Examinations and One Final Examination Plus BONUS Supplemental “Pick and Choose” Questions UNIT EXAMINATIONS: •

•

•

Unit Exams I through III are comprised of three chapters; Units IV and V encompass two chapters each. Many of the questions are duplicates. Some are copies of the text’s endof-the-chapter questions and some are duplicates of the questions that appear in each chapter of this Instructor’s Manual. o This repetitive technique is used by many instructors to see how well the class is absorbing the text and lecture materials. o In some cases the answers have been switched: True becoming False, for example. Similarly, some multiple choice questions have been rearranged.

Sometimes the language has been changed; occasionally new items have been inserted. The basic question remains. o Additional questions have been added to round out the number and assure consistency in exam size and time to complete.

The unit exams have 32 True/False (T/F) questions valued at 1.5 point each (48 points in total), 22 Multiple Choice (MC) questions valued at 2.0 points each (44 points in total) and 8 points in short essay answers to reach the 100 point value of each unit exam.

Estimated time for each exam: 40 minutes, which allows time in a one-hour class for pre-class organization and extra time at the end for slower students.

FINAL EXAMINATION: •

• •

Designed for a 2-hour time slot. Because many of us never get through the book, questions pertaining to Chapters 12 and 13 have been placed at the end of the True/False sequence, starting with question number 80. This allows the instructors to delete them if they desire.

Unlike the Unit Examinations, questions in the Final Examination are largely new, not iterations of previous questions from the text or Instructor’s Manual.

The Final examination has 100 True/False questions valued at 0.5 points each (50 points), 35 Multiple Choice questions valued at 1 point each and 15 Matching questions valued at 1 point each. Total value is 100 points.

145

BONUS SUPPLEMENTAL “PICK AND CHOOSE” QUESTIONS: In response to faculty comments from our previous edition(s), the authors have added a number of supplemental true/false and multiple choice questions. In other words, following the quiz and exam sections of the Instructor’s Manual, there is now an inventory of additional questions.

With this edition, all Instructor Manual materials are available on-line through Prentice-Hall.

This affords the faculty member access to editable materials. Change the vocabulary section, eliminate parts of the chapter outline, alter the response to end-of-chapter questions… whatever you wish.

The ability to edit our materials is specifically helpful with quizzes and exams. Not all exam questions work for every faculty member. Now, by downloading the particular quiz on-line, the faculty member can alter, re-word, and edit any and all questions. And by using the supplemental “pick and choose” questions inventory, the faculty member has a resource of extra material from which to choose.

146

ANSWER SHEET FOR UNIT EXAMINATIONS Unit I

Unit II

Unit III

Unit IV

Unit V

TRUE/FALSE 1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

T F F F T T F T F F

F F T F F F F T F T

F F T T F T F T F T

F F F F F T F T T F

F F F F F T T T F F

11.

12.

13.

14.

15.

16.

17.

18.

19.

20.

T T F F F T T F T F

F T F F F F F T T T

F F F F T F T F F F

F T F T F F T T T F

F T F T T F T F F F

21.

22.

23.

24.

25.

26.

27.

28.

29.

30.

T F T F F F T F T F

T F T F T F T F F T

F T T F F T F T F T

T F T T F T T F T F

F F T T F T F T T T

31.

32.

F T

T T

T F

T T

F F

147

ANSWER SHEET II FOR UNIT EXAMINATIONS Unit I

Unit II

Unit III

Unit IV

Unit V

MULTIPLE CHOICE 33.

34.

35.

36.

37.

38.

39.

40.

C D E C C C D D

B E A E E E A D

C C E C A A C E

C B A E D E C A

E E C D E B C E

41.

42.

43.

44.

45.

46.

47.

48.

49.

50.

A D A B D A B A A C

C E A C D B A E E E

A C C C B E E D B E

B B E E E D C D B E

A A E E D A E C B D

51.

52.

53.

54.

C C E D

A A E D

B E D E

B B C E

C D E B

148

ANSWER SHEET III – FINAL EXAMINATION 1. F 2. T 3. T 4. T 5. F

31. F 32. F 33. T 34. F 35. T

61. F 62. T 63. T 64. F 65. F

91. T 92. T 93. T 94. F 95. F

121. C 122. E 123. C 124. B 125. A

6. T 7. F 8. T 9. F 10. T

36. F 37. T 38. F 39. F 40. T

66. F 67. T 68. T 69. T 70. T

96. F 97. T 98. T 99. F 100.F

126. C 127. C 128. A 129. E 130. C

11. T 12. T 13. F 14. F 15. F

41. T 42. T 43. F 44. F 45. T

71. T 72. T 73. T 74. T 75. T

101.A 102.C 103.B 104.D 105.B

131. E 132. E 133. C 134. C 135. A

16. T 17. T 18. T 19. F 20. T

46. T 47. T 48. F 49. T 50. T

76. F 77. F 78. T 79. T 80. T

106.C 107.E 108.A 109.E 110.B

136. Z 137. O 138. E 139. R 140. N

21. T 22. F 23. T 24. T 25. T

51. T 52. T 53. T 54. T 55. T

81. F 82. T 83. F 84. T 85. F

111.B 112.E 113.A 114.C 115.D

141. S 142. Q 143. D 144. F 145. H

26. F 27. T 28. T 29. F 30. F

56. T 57. F 58. T S 59. F 60. T

86. T 87. T 88. T 89. T 90. T

116.C 117.E 118.E 119.A 120.C

146. C 147. B 148. A 149. K 150. I

149

Check-In Check Out Unit I Examination (Chapters 1, 2, and 3) Value 100 Points _________________________

_________________________

Name

Section

_________________________

_________________________

Identification Number

Hour

T/F Questions: Enter either T for True or F for False. (Questions that are partially false should be marked False.) Value 1.5 point each.

1. _____ Hoteliers know that without upselling by desk personnel, “hotels fill from the bottom up.”

2. _____ A frequently used term, “per-key cost,” refers to the expense (cost) of installing guest-room locks in a new hotel building.

3. _____ Because the U.S.A. is a member of the United Nations, it uses the international rating system of stars (****) adopted by the World Tourism Organization.

4. _____ In spite of the economic downturn of the current economy, condos continue to thrive because of their favorable income-tax treatment.

5. _____ Commercial hotels cater chiefly to business travelers on the move and that’s one reason why the term “transient hotel” is also used for this designation.

6. _____ If, as some say, hotels are commodities much like wheat and oil, the buyer/guest will focus on price in preference to brand.

7. _____ Amenity creep is the concern of safety inspectors, whose concern about creeping building structures has kept some new hotels from opening.

8. _____ Boutique hotels generally emphasize “soft” attributes (fashion, for example) whereas traditional hotels generally sell “hard” values (larger sleeping rooms, for example).

9. _____ Hotel planners must pay attention to the differences between “Upstairs Buyers,” who want top accommodations, but pay top prices, and “Downstairs Buyers,” who buy down to less expensive hotels, such as hard budgets.

10._____ Elasticity of the market place refers to the degree that the supply of rooms increases or decreases as room rates (prices) increase or decrease.

11._____ IT (inclusive tour) packages are offered by the hotel at reduced rates to stimulate occupancy during slow periods, e.g., a commercial hotel on the weekend.

12._____ Among all the departments in a full-service hotel, rooms produces both the largest volume of sales and the largest profit per dollar of sale (approximately $0.70 for each $1 sold).

UNIT I - 1

13._____ “Breakage” in tour groups refers to the loss of china and glassware caused by one or more members of the group.

14._____ The actual size of a projected hotel can be determined simply by multiplying the number of guest rooms by the square footage of each room.

15._____ One of the chief advantages of chains is incorporating: One corporation serves the entire chain, saving the necessity and cost of incorporating each hotel property individually.

16._____ A strong national currency, enables businesses (think hotels) of one nation to gain a foothold in the businesses of nations whose currencies are weak.

17._____ Success in the hotel industry reflects, in part, the status of the real estate market.

18._____ Legal definition and regulations by the U.S. Bureau of the Census require properties of 500 rooms or more to be called Hotels; those of 50 rooms or less to be called Motels; and those in between to be called Motor Inns or Motor Hotels.

19.____ Many management contracts require the management company that’s bidding to put up some equity (investment) in order to win the management contract.

20._____ Mass marketing and one-time guests have made the manager’s role of host even more critical today than a generation or two ago.

21._____ Convention contracts should include provisions for force majeure (forz ma-zhoer), an unexpected, disrupted event, previously called an “Act of God.” 22._____ The architectural “footprint” is a production standard that refers to the number of housekeeping employees needed per square foot to maintain lobby cleanliness.

23._____ Hotels have eliminated many middle management positions, which flattens the organizational chart and throws more responsibility on the remaining managers and employees.

24._____ The huge increase in cell-phone use has brought a corresponding revenue increase in the telephone departments, making telephone the fastest growing department percentagewise within the lodging industry.

25._____ In today’s markets, it takes about 50 properties to ensure brand identification..

26._____ The most popular hotel rating guides in the United States are the Mobil Guide, the Michelin Guide and the AH&LA Guide to Hotels.

27._____ America’s late 19th Century hotels were large, splendid edifices, almost like castles, but because they were open to anyone who came, they were called, “Palaces of the people.”

28._____ Because England is close to continental Europe, the English breakfast is much like the Continental Breakfast.

29._____ Casino hotels earn most of their revenue from casino win, assigning a secondary role to room sales, which is the primary earner of traditional hotels.

UNIT I - 2

30._____ Spas are widely available in upscale hotels, but rarely profitable: They’re offer merely as a guest service.

31._____ The separation of powers is a good management principle so the general manager of a hotel should be hired by and report to the company that owns the hotel, not to the company that manages the hotel.

32._____ The AH&MA has been renamed to more closely reflect the variety of industry types. It is now the AH&LA, The American Hotel & Lodging Association.

Multiple Choice: Enter the one answer that best completes the thought. Value 2.0 points each.

33._____ Groups and conventions book a fixed number of room nights, but that number is forgiven if the event is unexpectedly interrupted by acts of God, which are referenced in the contract as: a.

Quid pro quo b.

Ex post facto c.

Force majeure (ma zhoer) d.

Concierge (kon syerzh) e.

Either a or c; both are used 34._____ International brands have been entering the U.S.A.; which of the following is NOT a U.S.-based hotel chain? a.

Sheraton b.

Starwood c.

Marriott d.

Accor e.

None of the above; they are all U.S. firms 35._____ Hotel properties can be: a.

Owned outright b.

Leased c.

Joint ventures d.

Franchised e.

All of the above 36. _____ The title, Hotel Manager: a.

Refers to the F&B manager b.

Is another title given to the GM c.

Is also called the House Manager d.

Would be considered a staff position e.

None of the above 37._____ The individual responsible for the full scope of the operation at the unit (hotel) level is generally titled the: a.

CFO (chief financial officer) b.

CEO (chief executive officer) c.

GM (general manager) d.

MD (managing director) e.

COO (chief operating officer) UNIT I - 3

38._____ Which of the following terms is out-of-place in this set? a.

American plan b.

All-inclusive plan c.

European plan d.

Full pension e.

Conference plan 39._____ The smallest degree of double occupancy would most likely be in: a.

Resort hotels b.

Ski chalets c.

Boutiques d.

Commercial hotels e.

Family-oriented facilities 40._____ A small motor lodge might have a ratio of _________employees per guest room whereas the ratio of a casino/hotel might be _______ employees per guest room. a.

20/100 b.

100/20 c.

2.0/0.5 d.

0.5/2.0 e.

None of these are within range of a reasonable answer 41._____ The important Occupancy Ratio is computed: a.

Number of Rooms Occupied ÷ Number of Rooms Available b.

Number of Rooms Available ÷ Number of Rooms Occupied c.

RevPar x Number of Rooms Double Occupied d.

RevPar x ADR e.

Both c and d since they produce the same mathematical values 42._____ Which type hotel is NOT recognized as a current classification? a.

Extended-Stay Hotel b.

Boutique Hotel c.

Megaresort d.

Eco(logical) Hotel e.

Convention Hotels 43._____ Which lodging company does not own, does not manage, does not lease and does not franchise hotels? a.

Best Western b.

Cendant c.

Hilton. d.

Inter-Continental e.

None of these, each chain does some of each

UNIT I - 4

44._____ Many lodging companies own, manage, lease and/or franchise hotels. Which company only franchises? a.

Best Western b.

Cendant c.

Hilton. d.

Inter-Continental e.

Marriott 45._____ Which factor(s) enable(s) budget hotels to compete so successfully? a.

Staffing the foodservice with nonunion labor b.

Selecting well located, but high-priced locations c.

Using a variety of architectural plans and construction d.

Hiring fewer employees per guest room e.

All of the above although each development may not include all 46._____ Early efforts at “brand-stretching:” a.

Encouraged chains to acquire other companies and brands b.

Created new trade organizations c.

Resulted in a better business cycle d.

Improved the RevPar of mid-scale hotels e.

All of the above except d 47._____ REITs are: a.

Real Estate Insured Treasuries – federal loans to minority business persons if used to develop lodging facilities b.

Real Estate Investment Trusts – methods of financing real estate, often hotels, through shares sold to the public c.

Real Estate Issues Taskforce – watchdog group that monitors environmentally sensitive places (along beach fronts, for example) not supposed to be open to hotel or other businesses d.

The RE[ed] International Treaty, which limits resort developers from using strong currencies in under-developed nations e.

None of the above 48._____ The lodging industry: a.

Has a highly perishable product b.

Experiences low turnover of employees c.

Pays exceptionally high salaries d.

Is treated unfairly under income tax laws e.

Both b and c 49._____ __Number of Rooms Sold____ Number of Rooms Available for Sale a.

Percentage of Occupancy b.

REVPAR c.

Revpar d.

Fractional break-even point e.

Both b and c

=

UNIT I - 5

50._____Boutique Hotels: a.

By definition, are “small hotels” b.

Have not yet attracted the attention of the chains c.

Operate with a higher RevPar than commercial hotels d.

Are almost always grande dames e.

Both c and d 51._____A hotel counts comp rooms as occupied rooms, which results in a (an): a.

Higher percentage of OOI rooms b.

Lower ratio of employees per room c.

Improved percentage of occupancy d.

Change in all of the above values e.

Status quo: no effect on any of the above values 52._____The value of a hotel building is determined by: a.

The assessment of the local (municipal) tax agency b.

The IRS’s (Internal Revenue Service’s) published guidelines for that size hotel c.

A per room value multiplied by the number of rooms in the hotel d.

Daily RevPar multiplied by 365 days per year e.

An approximate average of a, b, and c together 53._____Which of the following is a possible form of hotel ownership? a.

Corporation b.

Partnership c.

Joint Venture d.

Family-owned e.

All of the above 54._____Guests (at a full-service hotel) who seek to buy tickets to the opera might inquire of the:

a. b. c. d. e.

Rooms manager Steward, not stewart Resident manager Concierge All of the above except d

UNIT I - 6

Short Answer Questions: (Value 8 points; 4 points each question.) Show work!

(Note: More information may be GIVEN than is needed.)

1.

Compute the: (Value 1 point each) Percentage of occupancy Percentage of rooms out of order The average daily rate The room size in square meters (approximate estimate) GIVEN:

2.

Square footage of average room Number of rooms in the hotel Number of guests in the hotel Number of occupied rooms today Number of Rooms OOO Room Income Percentage of Double Occupancy

325 1,200 980 810 10 $121,500 33.3

In developing market segments, resorts find teenagers a tough market to appeal to but know they are worth it. Explain why.

UNIT I - 7

Check-In Check-Out UNIT II EXAMINATION (Chapters 4, 5, and 6) Value 100 Points _________________________

_________________________

Name

Section

_________________________

_________________________

Identification Number

Hour

T/F Questions: Enter either T for True or F for False. (Questions that are partially false should be marked False.) Value 1.5 point each.

1. _____The airline industry borrowed both the idea and the technology for CRS from the hotel industry; actually, it was from Holiday Inn. 2._____Last room availability was launched in Washington DC because the city’s hotels received payment from Congress to hold rooms for VIPs until midnight.

3. _____Although U.S. air carriers have stopped paying commissions to travel agencies, hotels have continued paying them the standard 10% commission.

4._____There seems to be no explanation for it, but Central Reservation Centers have seen a large increase in telephone bookings even though many guests now use the Internet to make room reservations.

5._____When making reservations, corporate guests are more rate sensitive and leisure guests more date sensitive.

6. _____Hurdle pricing is the term given to the competitive environment in reservation offices: It requires each reservationist to better (jump the hurdle of) his/her record by increasing either the number of reservations taken, or the number of days booked, or the average rate of the booking.

7. _____Many small chains and independent properties outsource their reservation offices to travel agents in order to reduce costs, increase the number of reservations, improve the quality of guest service and better the ADR. 8. _____How best to balance the price-occupancy mix is a management call because the same total room revenue can be achieved by either higher rates and lower occupancy or lower rates and higher occupancy.

9. _____Under pressure from anti-terrorist groups, the federal government has created standardized reservation codes, which allow easier identification of travelers.

10._____The airlines, not the hotel industry, created Yield Management Systems.

11._____Callers who cancel their reservation are not given a cancellation number (although the computer creates one) unless the guest has pre-paid the reservation at some earlier date.

12._____ Overbooking as a standard procedure for hotels is a given; the real question is “how many rooms should be overbooked?”.

UNIT II - 1

13._____Meeting planners and convention groups are no longer responsible for attrition (fewer room nights booked than contracted for) because of the Room Attrition Act of 2002.

14._____If Flat Rates are offered to convention delegates, each delegate is offered a choice of rooms with corresponding differences in room rates.

15._____Hotel reservations are legal contracts, which is why law suits by hotels against guests for noshows and law suits by guests against hotels for failing to honor their reservations are growing in number and dollar settlements.

16._____Many hotels ignore the convention market because convention delegates spend so much less per day than do other guest types.

17._____Pressure on municipal budgets has forced Convention and Visitor Bureaus to curtail services to citywide convention groups and reduce cooperation with the lodging industry.

18._____Out-of-order rooms may be sold under limited circumstances provided the guest is forewarned about the condition; usually a reduced rate is given.

19._____Rising occupancy rates will enable hotels to increase their use of hurdle pricing (or nesting) as a means of boosting the ADR. 20._____”Fenced rates” are reduced rates with certain restrictions; no cancellation allowed, for example.

21._____ Online sites that offer distressed room inventory at deeply discounted rates are referred to as “opaque” because they make it difficult for the user to know which property being offered.

22._____Forecasting rooms available with an adjusted room count will always result in taking more reservations than would be done when forecasting with unadjusted values.

23._____Technically, it is possible for a hotel to record a full house (100% occupancy) and still have empty rooms that night.

24._____Understays and overstays have the same impact on room-availability forecasts; both increase the number of rooms available for sale.

25._____Economist speak about the “multiplier,” the rate with which tourist dollars spread across a community providing benefits to residents not directly servicing the guests.

26._____ Reservations and room bookings via mobile apps are not a viable channel of distribution because of the limitations of the device’s screen size (smartphones and mobile phones).

27._____Room count forecasts are prepared by the reservations department and used by the front desk and by other departments (housekeeping, room service, coffee shop) to forecast labor needs.

28._____ With the broad use of online reservation bookings, the need for upselling is not as important as it once was “Boxed dates” are one of the most common amenity used by hoteliers to welcome arriving guests.

UNIT II - 2

29._____Triggers are rules at Central Reservation Offices that are implemented (triggered) whenever a reservationist becomes so overloaded as to need a rest period.

30._____ Guarantee fees are used to guarantee certain guest requests, such as reserving a non-smoking room.

31._____With the mapping capabilities of Global Distribution Systems, reservationist can direct callers to the chain’s hotel closet to the guest’s destination even if the Central Reservation Office is hundreds of miles away.

32._____A forward-looking person can imagine the time when reservationists are just computers with voice-recognition capabilities.

Multiple Choice: Enter the one answer that best completes the thought. Value 2.0 points each.

33._____Which of the following is NOT one of the four global distribution systems (GDS)? a.

Sabre b.

THISCO c.

Galileo d.

Worldspan e.

Amadeus 34._____ PHASER, TravelCLICK, and Smith Travel Research’s STAR are examples of: a.

Voice recognition systems b.

Mapping capabilities now available on GDS c.

Computer interfaces between the desk and the marketing department d.

Reservation outsourcing acronyms e.

Tools for measuring yield management results 35._____SMERF is an acronym for: a.

Social, Military, Educational, Religious and Fraternal group business b.

One of the GDS’s, global distribution systems c.

AT&T’s voice recognition system d.

An Internet travel site that Travelocity has opened e.

None of the above 36._____The one department not affected by the room count projections is: a.

Housekeeping b.

Security c.

Valet service d.

In-room minibars e.

None of the above since all departments are affected

37._____Central reservation offices (CROs): a.

Can be accessed by dialing toll-free 800 numbers b.

Are sometimes located outside of the United States c.

Charge member hotels a fee for each reservation taken d.

May employ as many as several hundred agents during peak periods e.

All of the above UNIT II - 3

38._____It is standard procedure to offer rate discounts to: a.

Senior citizens b.

AAA members c.

AARP members d..

Uniformed personnel, military and even firefighters and police e.

All of the above 39.____Yield managers (also called revenue managers) are responsible for: a.

Increasing room rates as occupancy rises b.

Determining the mix between a properties individual guest rooms and group blocks c.

Department increasing marketing budgets to provide more exposure when occupancy is down d.

Setting the rules and triggers for computer programs involved with their predictions e.

Increasing the staff-to-guest ratio when occupancy is high; decreasing it when occupancy is low 40._____Tour groups are: a.

Assigned rooms throughout the hotel to minimize noise and baggage handling on floors b.

Not a component of yield-management considerations c.

Part of a hotel’s IT package d.

Quoted rates as per person double occupancy (shares-with) e.

All of the above 41._____If members of a convention group are offered a range of rates, the rate quote is said to be: a.

Flat rate b.

Rack rate c.

Spread or sliding rate d.

Run-of-the-house rate e.

All of the above except d 42._____In order to retain some sense of a personalized service when confirming a reservation, hoteliers as a whole do not provide confirmation numbers: a..

Over the phone b.

Via e-mail c.

By a letter sent by mail d.

On postcards e.

None of these since all are used to confirm reservation 43._____Casino hotels: a.

Know that certain socioeconomic groups will be better for business than other groups b.

Are not permitted by most state gaming authorities to comp rooms c.

Exist in only 5 states of the United States, but are gaining momentum d.

Prefer single occupancy (no one to look over the player’s shoulders) to double occupancy e.

All of the above

UNIT II - 4

44._____In the context of this chapter, special coding is NOT used for the following types of reservations: a.

Travel agent bookings b.

VIPs c.

Walk-ins d.

Group affiliations e.

Corporate guarantees 45._____So far as reservation forecasts are concerned: a.

30-day projections are more accurate than 3-day forecasts b.

Today’s opening room count is the same as tomorrow’s closing count c.

Comp rooms must not be counted as occupied d.

City-wide events and local activities impact on counts e.

All of the above 46._____Early departure fees: a.

Have been enthusiastically accepted by guests who were walked previously because their reserved room is now assured b.

Are an understay penalty that has not achieved wide usage c.

Were started by the credit-card companies after they experienced high chargebacks d.

Generally, do not apply to AAA or AARP reservations e.

All of the above 47._____Overbooking the hotel is: a.

A technique to achieve a full house by offsetting no-shows and errors in forecasting b.

Illegal under the Interstate Commerce Clause of the U.S. Constitution c.

Characteristic of all-suite properties more than of any other hotel type d.

Used chiefly during economic down cycles to offset the loss of regular business e.

Both b and c 48._____Examples of factors influencing the Adjusted Room Counts: a.

Bed bug infestations b.

Weather c.

Historical events such as 9/11 d.

Group type e.

All of the above 49._____Since yield management is based on these unique characteristics it can be a successful strategy: a.

High fixed and low variable costs b.

Seasonality of demand c.

Flexibility of the room supply d.

The potential guests’ overall lack of concern for pricing e.

Both a and b 50._____Convention guests: a.

Spend more on average than other guests b.

Do not spend as much as tour and package guests c.

Are frequently on expense accounts from their employers d.

Must accept the room assigned by the convention planner e.

Both a and c UNIT II - 5

51._____If the hotel is almost empty, well trained reservationists will try to sell callers a: a.

Rack rate b.

Weekend rate c.

A package rate d.

Flat rate e.

None of the above, the right answer has been omitted 52._____If the house is almost full, reservation requests for _____________will be “regretted.” a.

Government employees b.

Double occupancy c.

The convention block d.

Rack rate e.

None of the above – a room sold is a room sold 53._____Predictions for the number of “No-shows” can be improved if consideration is given to the: a.

Weather b.

Nature of the group c.

Heightened degree of national security d.

Distance the guests are coming e.

All of the above 54._____Strategic Account Management refers to: a.

The general manager’s focus on upcoming reservations b.

A corporation’s headquarters assessment of its various lodging properties c.

Front desk staff’s attention to all in-house guest folios d.

One sales manager representing all hotels within an entire chain e.

The night auditor’s oversight of guest folios

UNIT II - 6

Short Answer Questions: (Value 8 points; 4 points each question.) Show work!

(Note: More information may be GIVEN than is needed.)

1. Should the desk accept any more new guests today? (Value 4 points) If yes, explain why; if no, explain why not.

GIVEN:

The hotel has The ADR is Occupancy % last night Reservations due today Recently accepted walk-ins Tour group due to register Other reservations today Double Occupancy Check-outs due today

2. Distinguish between the CRO and the GDS (Value 4 points)

UNIT II - 7

800 rooms $88.88 80% 80 rooms 8 rooms; 14 persons 88 rooms; 175 persons 28 rooms 18% 38 rooms

Check-In Check Out UNIT III EXAMINATION (Chapters 7, 8, and 9) Value 100 Points _________________________

_________________________

Name

Section

_________________________

_________________________

Identification Number

Hour

T/F Questions: Enter either T for True or F for False. (Questions that are partially false should be marked False.) Value 1.5 point each.

1. _____ First-class hotels respond to every complaining guest with cash, comps or gifts, no matter how minor the complaint or how small the value of the settlement.

2. _____ The ethnic distribution (Caucasians, Blacks, Asians, etc.) of the lodging industry’s workforce is almost identical to the ethnic distribution of the American population.

3. _____ The authors define total quality management or customer service management as an attitude that has every employee acting like a concierge and thinking like a manager.

4. _____ The best quality guarantee is a specific one that has the hotel promising a specific act to be accomplished within specific guidelines (breakfast in 12 minutes) or else (no charge).

5. _____ For sheets to feel smooth and luxurious, the thread count must be less than 180 (80 threads in one direction; 100 in the other); otherwise they scratch.

6. _____ A Moment-of-Truth occurs when guest and staffer meet eyeball-to-eyeball; the one expecting service and the other delivering it.

7. _____ Because of the possibility of disease, family pets are allowed at only hotels that have been inspected and certified by local health departments as pet-friendly.

8. _____ Apologies are free so the hotel should offer as many as needed to soften a complaint.

9. _____ “Empowerment” is one of the major conflicts of employee-employer relationships: Unions demand it in contracts; management fights against it!

10._____ To be accommodated on a “no-arrivals” day, a guest must have been overnight in the hotel on the previous day.

11._____ As one would expect, RNA (Registered, Not Assigned) becomes more prevalent as the economic cycle dips.

12._____ Q-ing (queuing) is the lodging industry’s professional jargon (term) for a guest who squiggles out of paying for the room by claiming either poor service or injury.

UNIT III - 1

13._____ “Front” is the tem given to the entire desk and reception areas of the hotel; some properties even include the lobby.

14._____ Florida has no state income taxes which helps explain why Tampa and Miami, Florida have the nation’s highest room taxes.

15._____ Heretofore hotels waited for a court order before releasing information about their guests; now – because of the anti-terrorism legislation – it can be done merely by a letter.

16._____ Most hotels scatter tour group assignments to numerous floors throughout the hotel.

17._____ Hotels do not enforce either time very stringently, but when they do, it is the check-out time, not the check-in time, that receives the most attention.

18._____ Algorithms are among the newest amenity that up-to-date hotels are adding to their rooms and services.

19._____ Only guests with light baggage, or no baggage at all, can be required to pay in advance for their accommodations.

20._____ Recognizing the marketing and economic potential, American hotelkeepers have vigorously introduced environmental programs and lobbied for environmental legislation.

21._____ The double room rate has always been twice the single rate; falling occupancies at the start of the new century forced management to reconsider this long-standing approach.

22._____ Local governments that enact high lodging taxes on hotels room should expect to see a decline in tourist demand.

23._____ Per diem room rates are established by federal, state and local governments and apply to government employees traveling on business for those political divisions 24._____ The Ideal Average Room Rate is the average of the rates for the lowest tier of rooms in a hotel..

25._____ It is unethical for hotel managers to telephone their own property to test departmental procedures and the courtesy of their staffs.

26._____ “Discounting” rates is industry-approved because it takes place in an elastic market; “rate cutting” is industry-disapproved because it takes place in an inelastic market.

27._____ Dynamic pricing allows the front desk to change the cost of the room upon check-in when the situation calls for it..

28._____ High-demand days (New Year’s eve; Super Bowl, etc.) can be stretched to high-demand weekends or even 3-day affairs by requiring a minimum stay and refusing one-night reservations.

29._____ Buying a good mattress, which has an 8-10 life, is poor management; better to buy a less expensive mattress and replace it more frequently.

UNIT III - 2

30._____ Two men sharing one room as part of a company seminar would need two registration cards; a married couple with children taking a three-bedroom suite would require just one registration card.

31._____ Baggage-in/Baggage-out refers to the automatic charge that hotels levy on tour group baggage.

32._____ Room rates have failed to keep up with inflation causing a fundamental industry problem.

Multiple Choice: Enter the one answer that best completes the thought.

33._____A duvet is a: a.

Name given to the recently introduced job of sleep concierge b.

Second head in a “heavenly” shower c.

Washable cover that replaces the traditional bedspread d.

Specially shaped bed pillow e.

None of the above, “duvet” is a food term 34._____A “road warrior” is someone: a.

Caught in a traffic jam b.

In military uniform asking for a discounted rate c.

Who sleeps away from home a great deal and battles the annoyances of travel d.

Secretly carrying out a shopping audit for the hotel e.

Both a and b depending on whether it is civilian or military slang 35._____TQM (Total Quality Management): a.

Overlooks mistakes made by employees b.

Avoids the costs of technical training by hiring only skilled employees c.

Forbids discipline by supervisors d.

Does away with review and evaluation e.

None of the above 36._____ Managing for guest service most requires: a.

GMs to re-activate their position as host b.

Ownership to take more participative action c.

Employees to recognize and act on their role d.

Guest to adopt electronic self-services e.

All of these except a 37._____ The concierge floor is also called the: a.

Club floor b.

Businesswoman’s floor c.

Upscale floor (but only by the staff; not known to the guests) d.

Queue-less floor e.

Both b and d

UNIT III - 3

38._____The one-time American Hotel & Motel Association (AH&MA) is now called the: a.

American Hotel& Lodging Association (AH&LA) b.

American Hotel Association (AHA) c.

American Hotel and Lodging Association (AH&LA) d.

American Hospitality Association (AHA) e.

There has been no change, it is still called the American Hotel & Motel Association 39._____Queue discipline: a.

Is administered to employees who ignore standing instructions b.

Deals with rules for merchants who sell the hotel housekeeping supplies c.

Refers to the behavior exhibited by guests waiting in line d.

Is a financial penalty levied on managers who miss targeted goals e.

None of these 40._____A rooming slip is a means of communication between the: a.

Desk and the bellperson b.

Guest and the housekeeper c.

Bellperson and the guest d.

Desk and the guest e.

All of these except b 41._____RNA is used: a.

When guests arrive early and their rooms are not yet vacated b.

To charge guests who leave earlier than their anticipated departure date c.

If the guest is not satisfied with the hotel’s response to a complaint d.

To indicate a reservation with an assigned res number has been canceled e.

All of the above because the practice is not standardized across the industry 42._____ Electronic check-in terminals: a.

Are talked about a great deal but are not often available b.

Must be located within 100 feet of the computer terminals behind the desk c.

Are more popular with experience travelers than with inexperienced travelers d.

Still lack the personal security that transient hotels should deliver e.

Both a and d 43._____Assigning a guest better accommodations at no increase in rate is: a.

Upselling b.

Upping it c.

Upgrading d.

Up-assigning e.

All of the above; a professional idiom that depends on the section of the country 44._____Elasticity is a change in: a.

Supply resulting from a change in rate b.

Rate resulting from a change in supply c.

Demand resulting from a change in rate d.

Rate resulting from a change in demand e.

Both a and d

UNIT III - 4

45._____Which of the following is out-of-place with the rest of the set? a.

Day rate b.

Shoulder rate c.

Use rate d.

Part-day rate e.

None of the above; that is, they all refer to the same rate 46._____Among the surprising surcharges that some hotels have added to their room rates are: a.

Energy premiums b.

In-room coffee c.

Early departure (before the date specified by the reservation) fees d.

Complimentary newspaper fees e.

All of the above 47._____The Building Cost (Room) Rate: a.

Is simply a rule-of-thumb, a frequently quoted yardstick for room rates b.

Works out to be $1 per $1,000 in construction costs c.

Includes land improvements (landscaping, for example) as part of building costs d.

Translates into larger-sized rooms requiring higher room rates e.

All of the above except d 48._____Regarding room rates: a.

New York City has the world’s highest ADR b.

Upselling produces its most dramatic effects on sold-out days c.

Resort hotels have used incentive rates successfully to get leisure guests to check out early d.

Conventions are often charged the same for single or double occupancy e.

All of the above except a 49._____The iceberg effect of complaints means that: a.

Resolved complaints are costly, but no one knows by how much b.

Many complaints are not voiced and therefore not resolved c.

Management pretends to resolve issues for which there are numerous complaints d.

No one knows how many complaints are resolved by quality guarantees e.

Both a and d 50._____ If registration lines are long and irritating, management should consider doing what? a.

Adding directional signs b.

Increasing the number and character of the staff c.

Creating distractions (clowns, for example) in the lobby d.

Redesigning the physical structure of the front desk e.

All of the above 51._____The ADA is the: a.

Allied Directors of America, an important national convention that every city seeks b.

Americans with Disabilities Act, designed to help the handicapped get around c.

A Damned Angry movement, effort to get employees to be more guest sensitive d.

Articles against Dopey Attitudes, lodging’s industrywide drive to promote TQM e.

None of the above UNIT III - 5

52._____To make “empty minutes” pass quickly for guests waiting in line: a.

Post a sign telling how long before the end is reached b.

Show video clips on an overhead monitor c.

Build a front-desk attraction; a big aquarium for example d.

Have an employee “work” the line e.

All of the above 53._____“The room rate should be high enough to meet fixed and variable expenses and return a fair value to investors” is a statement associated with the: a.

Cost of Renovation rate b.

Rule of Thumb room rate calculation c.

Ideal Average Room Rate computation d.

Hubbart Room Rate Formula e.

All of the above 54._____Comp rates are given to: a.

VIPs b.

Travel agents on fam trips c.

High rollers in casino hotels d.

Other hotel managers e.

All of the above

Short-Answer Questions: (Value 8 points; 4 points each question) Show Work!

(Note: More information may be GIVEN than is needed.)

1.

Compute the anticipated room rate using the Rule-of Thumb, or Building Cost, Rate.

GIVEN:

2.

Number of rooms Average Occupancy Percentage first two years Cost of erecting the building Cost of acquiring the land Legal costs to incorporate Upfront costs to lease furniture and TV’s Landscaping costs Cost of tearing down the old structure

Distinguish between: a. b.

800 60% $64,500,000 $ 8,000,000 $ 500,000 $ 100,000 $ 1,250,000 $ 750,000

(Value 2 points each) Upsell and upgrade Leisure and business markets, in terms of elasticity

UNIT III - 6

Check-In Check-Out UNIT IV EXAMINATION (Chapters 10 and 11) Value 100 Points _________________________

_________________________

Name

Section

_________________________

_________________________

Identification Number

Hour

T/F Questions: Enter either T for True or F for False. (Questions that are partially false should be marked False.) Value 1.5 point each.

1. _____ Split billing is a method of settling charges on a folio by which certain amounts are settled with allowances while other charges are settled with transfers.

2. _____ Guests who arrive late to claim their reservations (each hotel sets its own definition, but usually after 6:00 PM) are called late charges.

3._____ Certain departmental charges (chiefly rooms, food, beverage and telephone sales) may be posted to folios several times each day.

4. _____ Typically, city-ledger guests are billed immediately; transient ledger guests are billed in 10-day cycles.

5. _____ Using point-of-sale terminals in the dining rooms speeds the accumulation of records but at the cost of more frequent late charges than with a pencil-and-paper voucher.

6. _____ If a hotel has DCC (Dynamic Currency Conversion) system, folios can be calculated and presented in a foreign currency even if payment is still made in dollars.

7. _____ There is one folio for each person – not for each room – in the hotel.

8. _____ Hotels offer numerous services that increase the balance of a folio, but there are only three methods of settling (paying) for those services: cash, allowances and transfers.

9._____ Most charges are posted at the departmental location using a POS terminal, but some charges are posted by the front office staff because every department may not have a POS terminal, even though the hotel has a Property Management System.

10._____ Cash is the method most often used by guests to settle their folio accounts; credit cards are the next most used methods; most hotels will not accept checks.

11._____ A strong U.S. currency aids the balance of payments because it deters U.S. citizens from going abroad to spend their money.

12._____ It makes sense that commissionable business, such as travel-agency bookings, is turned away during peak occupancies.

UNIT IV - 1

13._____ Tour-group coupons accepted by the restaurant cashier in payment for the lunches of tour members are accumulated and charged eventually on the individual folios of each guest.

14._____ Hotel cashiers are more likely to lose money from accepting counterfeit bills than they are from being robbed.

15._____ Debit cards have not gained in popularity because the typical user (the average hotel guest) has little or no knowledge of accounting’s debits and credits.

16._____ The city ledger came into being when Visa introduced credit cards, between 1970 and 1980.

17._____ If sales managers must choose in order to finalize some business, they should extend credit against room sales rather than for banquet sales, which have a lower profit margin.

18._____ To improve credit monitoring, walk-in guests are usually flagged with a code identification, including WI (walk-in) and NR (no reservation).

19._____ Room charges for a convention’s manager would be posted most likely to the convention’s A folio.

20._____ A 63-room roadside motel would most likely have no city-ledger.

21._____ Chargebacks, charges returned to the merchant by the credit-card company, are often never collected simply because no one is assigned the task.

22._____ A registered guest who pays cash for drinks in the bar becomes a city-ledger guest.

23._____ Terminology gets confusing because the word “floor” is applied to the maximum amount of credit, not to the minimum amount of credit.

24._____Hotels may fail to press for collection of no-show reservations that have been guaranteed with a credit card because they fear to lose potential customers.

25._____ Cashiers in all departments pay out funds to both guests and employees, who request cash for tips received on signed guest checks.

26._____ Cashiers in all departments compare their actual bank counts to what they should have, which is determined by records, registers and computations, in order to compute over and short.

27._____ Well, bucket, or pit are used in reference to the cashier’s file because they are usually recessed in the desk.

28._____ There are as many city-ledger accounts as there are rooms in the hotel; it makes no difference whether or not the room is occupied.

29._____ A three-day billing pattern is used by most hotels for speedy check outs and banquet charges because prompt billing is one key to reducing bad debts.

30._____ Acting in their role of host, innkeepers (hotels) are expected to – and do – cash personal checks and make emergency loans to guests.

UNIT IV - 2

31._____ Renting the ballroom and providing food and beverage to a pay-as-you-go function based on ticket sales (say, a charitable dinner/dance) is a high credit risk venture for the hotel.

32._____ Allowances are usually granted after the fact, when management can no longer correct the situation that caused the complaint.

Multiple Choice: Enter the one answer that best completes the thought. Value 2.0 points each.

33._____Which position in the hotel would likely NOT be discussed in a chapter dealing with cash? a.

General cashier b.

Night auditor c.

F & B manager d.

Front-office cashier e.

Food servers accepting tips on credit cards 34._____A front-office cashier would most likely pay out cash to a guest who had: a.

A debit balance at the time of check-out b.

A credit balance at the time of check-out c.

Paid for the room in advance d.

Been a previous city-ledger account with the hotel e.

Either a or b depending on the circumstances 35._____Which item is NOT a member of this set? a.

Ledger b.

Turn-in c.

Cashier’s report d.

Over or short e.

Due bank 36._____ Which of the following would most likely be a city-ledger guest? a.

VISA card b.

Trade association c.

Bridal party d.

Wholesaler/group mover e.

All of the above

37._____The “one-two-three steps” for detecting worthless checks are: a.

1.Verify room number; 2. Use a “MoneyChecker;” 3. Ask manager if uncertain b.

1.Collect the fee; 2. Employ cameras; 3. Ask for a fingerprint c.

Ask: 1. Is the routing code on the bottom of the check; 2. Are the check’s sides smooth; 3. Is the amount in even numbers d.

Check for: 1. Perforation; 2. The Federal Reserve district number; 3. Magnetic ink on the routing code e.

The authors offer no “one-two-three steps” for detecting worthless checks 38._____Credit-card transactions cost the merchant/hotel which fee? a.

Authorization fee UNIT IV - 3

b. c. d. e.

Discount fee Chargeback fee Interchange fee All of the above

39._____“Float” refers to the: a.

Swimming pool gadget that adds chemicals b.

Fee that foreign-money exchangers charge c.

Time between the extension of credit and its payment d.

Period between a room on change and a room that’s ready e.

All of these because the term is used differently throughout the hotel 40._____ Cash received minus cash paid-out is: a.

Net cash receipts b.

Drop c.

Cash short d.

Starting bank e.

None of the above 41._____ An example of an asset is: a.

Taxes collected and due to be paid to a municipal government b.

Accounts receivable due from guests c.

Room sales d.

Beverage allowances e.

All of the above depending on the circumstances 42._____A skipper is a (an): a.

Nickname given to the hotel GM b.

Guest who leaves without paying his bill c.

Guest who charges bar drinks to the room folio d.

American-plan guest who skips one or more meals that have been prepaid e.

Both a and d 43._____Which of the following helps distinguish real bills from counterfeits: a.

Visible watermark b.

Security thread c.

Color-shifting ink d.

Finger printing e.

All of the above except d 44._____Bills are presented to guests by: a.

A copy delivered under the room door the night before check out b.

The front desk at the time of check out c..

Means of the in-room television set d.

Total charges exceeding a ceiling established by the hotel e.

All of the above, depending on the circumstances

UNIT IV - 4

45._____ Split folios are used by/for:

a. b. c. d. e.

Casino high-rollers Due-bill holders Frequent-guest members cashing in points Tour group members All of the above

46._____Which of the following is NOT a category of this city-ledger set? a..

Travel agents b.

Banquet charges c.

Late charges d.

Taxes payable e.

None of the above; that is, they are all city-ledger categories 47._____EFT is shorthand for: a.

Equal and Fair Treatment – federal requirement for treatment of employees b.

Every First Time [Guest] – part of frequent-guest programs c.

Electronic Funds Transfer – for moving money electronically d.

Each Frequent Traveler – the true reference to frequent-guest programs e.

Both b and d, the meaning gets garbled at times 48._____Which of the following is NOT a term used in this set of terminologies for trading room nights for advertising or for products): a.

Due bills b.

Trade advertising contracts c.

Trade outs d.

RNTs, room night tradings e.

Reciprocal trade agreements 49._____Room charges are posted during the day by the front-office staff if the: a.

Auditor has not completed the job the night before b.

Guest is a day-rate guest c.

PMS lacks posting capability d.

Hotel is still using a pencil-and-paper folio e.

All of the above except c 50._____Which of the following may alert the desk to a possible skipper: a.

Charges small items to the folio b.

Has a reservation c.

Provides a credit card d.

Has light or even worthless looking baggage e.

Both a and d 51._____Which of the following is NOT a city-ledger account: a.

Executive (of the hotel) accounts b.

Bank fees for processing bad checks c.

Banquet charges d.

Credit-card companies e.

None of the above; that is, they are all categories of the city ledger UNIT IV - 5

52._____Which of the following is among the 4 most common complaints made by meeting planners about master-account billing? The: a.

Amount of tips and gratuities charged b.

Acceptance of unauthorized signatures on checks for services rendered c.

Refusal of the desk to take reservations beyond the block guarantee d.

Lack of servers during breakfast meetings e.

All of the above 53._____Collection agencies working to recover bad debts for a hotel: a.

Begin collecting small balances and work upward to large accounts b.

Charge a fee of between 5% - 10% of the amount collected c.

Often employ the same techniques as those tried by the hotel d.

Collect most of the amounts and accounts handed to them e.

Both a and b 54._____Hotels sell _______________to their guests: a.

Acommodations b.

Accomodations c.

Accomidations d.

Accommadations e.

Accommodations

Short-Answer Questions: (Value 8 points; 4 points each question) Show Work!

(Note: More information may be GIVEN than is needed.)

1.

Compute how much more the cashier needs to get from the guest as the guest checks out OR how much change the cashier needs to give as the guest checks out.

GIVEN: A guest from the Land of Everywhere (LE) A folio balance of $639.00 The guest has been here 3 nights 9 LE’s = $1.00 The guest tenders 6 each of 1,000 LE bills State sales tax is 5% The bank’s rate is 8 LE’s = $1.00 Cashier’s give change in U.S. currency only

2.

(Value 2 points each.)

Describe the difference in handling a bar bill that is to be posted to the guest’s folio if: a. b.

The bar uses a POS with a PMS at the desk.

The bar has no POS, but there is a PMS at the desk.

UNIT IV - 6

Check-In Check-Out UNIT V EXAMINATION (Chapters 12 and 13) Value 100 Points _________________________

_________________________

Name

Section

_________________________

_________________________

Identification Number

Hour

T/F Questions: Enter either T for True or F for False. (Questions that are partially false should be marked False.) Value 1.5 point each.

1. _____ An acute shortage of night auditors has come about since the industry’s trade association, the AH&LA, has required auditors to have the equivalent (but not the actual qualifications) of a CPA. 2. _____ The night audit reconciles the cash sales made by each department with the actual cash turned in by departmental cashiers.

3. _____ The closing balance of one day’s inventory is the opening balance of the following day with only a few, rare exceptions.

4. _____ A hotel’s closeout hour depends upon its location; different municipalities mandate different closing times.

5. _____ Across the lodging industry, the transcript has replaced the room count sheet as the major format for completing the night-audit.

6. _____ Room sales are always accounts receivable sales, whereas sales in the dining room could be accounts receivable sales, cash sales, or credit-card sales.

7. _____ A hotel system may have some departments charge guests using manual (pencil-and-paper) vouchers even while the balance of the hotel operates with a computerized property management system.

8. _____ The night audit reconciles the hotel’s accounts receivable nightly whereas most other business types do that monthly or even less frequently.

9. _____ Several court cases are now pending because the night audit, which ends the hotel’s accounting day, conflicts with its legal definition: A hotel is required to be open 24/7/365.

10. _____ The Hospitality Information Technology Integration System (HITIS) is such a critical

function of the hotel operation with guest-sensitive information that it can never move to a Webbased interface.

11. _____ Telephone departments have had an historical cycle: First heavily regulated, then deregulated, and now in competition with other communication products (cell phones for example). In spite of this, today’s hotels earn enough money from the telephone department to keep it on the revenue side of the balance sheet.

UNIT V - 1

12. _____ Electronic Locking Systems (ELS) which use the guest’s iris or fingerprint as the code for opening the lock are known as Biometric locking systems.

13. _____ The laws of many states actually require in-room safes be provided to the guest free-of-charge.

14. _____ Telephones which use either IP or VoIP software are actually routing the telephone call over the Internet.

15. _____ Some energy management systems (EMS) are so sophisticated that they actually save energy by adjusting the temperature automatically when the room is unoccupied.

16. _____ Charges and credits are interchangeable accounting terms.

17. _____ Many non-accounting duties face the night auditor when he or she is the sole employee on duty during the late-night and early-morning hours.

18. _____ The night audit audits all types of sales – cash sales; sales on account; sales throughout the hotel for rooms, food, bars, spas, etc.

19. _____ Writing $53.21 as $35.21 is called a slide; writing $53.21 as $532.10 is called a transposition.

20. _____ Simply put: The night audit proves that all cash sales by registered guests have been recorded and the guest folio properly charged.

21. _____ As their title suggests, “Exception Reports” are not usually prepared during the night audit; they are exceptions prepared only when management seeks special information.

22. _____ The recent spurt of hotel technology comes as no surprise, hoteliers have always been technology leaders, investors and innovators.

23. _____ Call accounting systems (CAS) post telephone charges directly to guest folios through an interface with the PMS. 24. _____ If guests are unable to distinguish one hotel property from another, the product that innkeepers sell becomes a commodity and price becomes the major determinant of the purchase.

25. _____ Key chronology (sequence) runs something like this: First, there were no keys; then ELS with card keys; iron keys came next; mechanical keys followed; RFID (radio frequency identification) keys are on the horizon.

26. _____ Most U.S. hotels now use some form of electronic locking systems (ELSs).

27. _____ Keycards for ELS are inexpensive plastic that quickly disintegrates after use, especially at resorts where sun, water and sand interact with the material.

28. _____ Elevator access to the concierge floor can be controlled through an electronic locking system.

29. _____ Someone discussing: “sold; sold and occupied; sold but unoccupied; and unsold (or vacant)” could be talking about an energy management system.

UNIT V - 2

30. _____ Automated in-room minibars are interfaced with the PMS so late charges from missed counts and early departures have been reduced.

31. _____ In-room alarm clocks are no longer needed due to the sophistication of electronics most guests have.

32. _____ Guests prefer centralized HVAC systems over individual in-room installations, which are so noisy.

Multiple Choice: Enter the one answer that best completes the thought. Value 2.0 points each.

33. _____ Late charges are reduced dramatically when POS terminals are used in the dining room because they: a.

Identify guests who have already checked out, preventing new charges from being made. b.

Flag paid-in-advance guests who are not permitted to charge c.

Alert cashiers to balances that exceed allowable credit limits d.

Record charges instantaneously rather than waiting for a runner to take the voucher to the desk e.

All of the above 34. _____ Charges for room and tax are posted by the night auditor except charges or fees for: a.

Late check out b.

Day rate use c.

Use rate use d.

Failure to stay through the reservation commitment e.

All of the above 35. _____ An “Allowance Report” is an example of a (an): a.

Reservation Report b.

Room Status Report c.

Exception Report d.

Registration Report e.

None of the above 36. _____ Which of the following class of reports would be the most helpful to the yield manager for forecasting and setting rates? a.

Exception reports b.

Downtime reports c.

Credit reports d.

Reservation reports e.

Both a and d 37. _____ The Daily Report to the Manager: a.

Is just another name for The Night Auditor’s Report to the Manager b.

Has limited value because it reports cash sales only c.

Is prepared by the Income Auditor d.

Becomes the basis for entries into hotel’s journals e.

Both c and d UNIT V - 3

38. _____ Which of the following symbols is (are) used in the Housekeeper’s Report? a.

NB: Baggage in the room appears to be worthless b.

B: Baggage in the room, no occupant c.

S: No baggage in the room; appears to be a Skipper d.

PA: No baggage in the room; Paid in advance e.

All of the above are used to make the report complete 39. _____ Too early a closeout hour: a.

Puts serious time pressure on the night auditor to finish b.

Probably increases the number of skippers c.

Throws many charges onto the following day’s folio and audit d.

Will likely reduce sales in cocktail lounges and room service e.

All of the above, except b 40. _____ PMS are changing dramatically as hotels a.

Adopted and implemented HITIS b.

Access the World Wide Web c.

Use a Window environment d.

Install more and more dedicated software e.

All of the above except d 41. _____ Organizationally, the night auditor is most likely to be a member of the: a.

Accounting department b.

Front-office staff c.

Legal division d.

Manager’s personal advisory group e.

None of the above 42. _____ Night auditors prepare: a.

Reports b.

Cash overages and shortages c.

Bank deposits d.

Long-distance telephone records e.

All of the above 43. _____ Which of the following does NOT belong in the set? a.

Speedy check out b.

Zip-out check out c.

No-wait check out d.

VIP check out e.

None of the above; they are the same process with different names 44. _____ In terms of keycards, which of the following is NOT a real type of keycard used with today’s electronic locking systems: a.

Magnetic stripe cards b.

Memory cards c.

Smart cards d.

RFID tags e.

All of the above are real keycard types UNIT V - 4

45. _____ Which acronym is NOT part of the lodging industry’s electronic vocabulary? a.

POS b.

PMS c.

ELS d.

A/R e.

HITIS 46. _____ Which federal agency regulates the nation’s telecommunication industry? a.

FCC b.

OSHA c.

FDA d.

FICA e.

None of the above 47. _____ Which of the following services are available at some hotels on the in-room television screen? a.

Guest folio b.

Room-service menu c.

Weather reports and airport times d.

Personal messages e.

All of the above 48. _____ A hard-wired ELS can be upgraded to include: a.

Removal of room-service trays b.

Clearing of smoke from no-smoking rooms c.

Energy control of the guest room d.

Cooking capabilities (but only in all-suite facilities) e.

None of the above 49. _____ Which of the statements about electronic locking systems is NOT accurate? a.

The system can include one-way or two-way communication b.

The keycard console is a large piece of equipment kept at the front desk c.

Each guest gets a new or recycled keycard d.

Lost keycards are inexpensive to replace e.

None of the above; that is, they are all accurate.

50. _____ HOBIC means: a.

Hotels Of [the] Best International Chains, an affiliated rating service b.

Hotel Oversight By Independent Council, a hotel group that evaluates technology c.

Hospitality Overseas Building Into [a] Chain, an Asian form of joint venture d.

Hotel Billing Information Center, a telephone system e.

None of the above, they’re random letters 51. _____ The term “resort services” refers to: a.

An all inclusive offering at some resorts b.

The mix of in-house and out-of-house capabilities, primarily at Caribbean resorts c.

Additional fees levied by some properties over, and in addition to, the room rate d.

Advertising jargon used by four- and five-star resorts e.

Both (or either) a and b

UNIT V - 5

52. _____ “Ma Bell” refers to: a.

The first woman innkeeper in the U.S. colonies b.

Industry slang for the silver bells once used to call bellhops c.

A warm reference to Martha Bell, founder of the Bell Hotel Chain d.

AT&T, the telephone company e.

None of the above fits the meaning 53. _____ In-room hotel safes can be activated by: a.

Magnetic stripe cards b.

Codes (digital) entry c.

Keys d.

Biometrics e.

All of above, depending upon the make and model 54. _____ Self-service kiosks: a.

Make change for foreign currency b.

Generate extra income by accepting advertising c.

Imply, for many guests, that management is uncaring d.

Have replaced telephone booths in lobbies e.

Both a and b

Short-Answer Questions: (Value 8 points) List and describe two factors that management should weigh before buying and installing a new interface to its Property Management System.

UNIT V - 6

Check-In Check Out FINAL EXAMINATION Value 100 Points

_________________________

_________________________

Name

Section

_________________________

_________________________

Identification Number

Hour

T/F Questions: Enter either T for True or F for False. (Questions that are partially false should be marked False.) Value 0.5 points each.

1. _____Unlike the economy as a whole, the hotel industry does not go through cycles, which is what keeps it economically vibrant and profitable.

2. _____Boutique hotels differ from one another because they are quirky and funky; that’s why a chain (with a chain one assumes standardization) of boutique hotels is difficult for some to comprehend.

3._____U.S. hotel chains appeared in foreign countries when the currencies of those countries were weak; but the reverse happens when the U.S. dollar sinks.

4._____“Location, location, location” can be re-interpreted as: “Geography is to the resort, as population is to the residential hotel, and location is to the commercial hotel.”

5. _____The typical lodging facility in the U.S.A. is between 250 and 300 rooms.

6._____Unlike other retail businesses, hotels have the identity of their customers, and that allows them to defer payment until after the services have been rendered, even if that is several days later.

7._____Hotel managers encourage late charges, which gives them an excuse to send marketing letters as follow ups to the guest’s visits.

8._____ Viewed as commodities, where the buyers’ attention focuses on price, as say with Priceline.com, hotel rooms lack brand equity.

9._____Guests can be confidant that overseas hotels that are rated “First-class” are, in fact, the industry’s very best.

10_____Hotel identification is not absolute: A commercial hotel, for example, may service permanent (residential) guests as well as tourists.

11_____The “complete meeting package” offered by conference centers is a close relative to the “allinclusive rate” gaining popularity in Caribbean resorts.

12_____Tour operators pay the hotel only for service actually used by tour customers, evidenced usually by colored coupons that these guests use to “pay” for services included in the package.

FINAL - 1

13_____ One demographic measure of hotel guests focuses on “upstairs” buyers as a different segment from downstairs buyers. .

14_____Airline crews are much sought after by hotels because they represent both a basic occupancy and a high average daily rate (ADR).

15_____Since it makes little difference in collections and since it saves substantial payroll costs, hotel managers should eliminate the traditional 3-day billing period in favor of the more customary 30-day period.

16_____Throwing away the keys to the hotels’ front doors is a symbolic gesture to indicate that hotels never close, which is part of the common law definition of a hotel.

17_____The executive housekeeper operates from an office that is often called the “linen room.”

18_____Hotels that award frequent-flier points as part of their frequent-guest programs need to buy those points from the airlines at a cost of a several cents per mile.

19_____Hotel “A” has a ratio of available rooms to total rooms of 80%. Hotel B’s ratio is 95%. In all likelihood, hotel A is a newer hotel than hotel B. 20_____For housekeeping, the sequence is room ready, room occupied, room on-change,room ready.

21_____A budget motel of 100 rooms might have as few as 30 employees; whereas an upscale property of 400 rooms might have as many as 500 employees.

22_____By definition, properties with outside access to guest rooms are called “motels;” properties with inside corridors are called either “motels” or “hotels.”

23_____“Building Cost Per Room” or "Resale Value Per Room” is a recognized method of estimating the value of a hotel.

24_____ The room count process tracks stayovers and today’s reservations.

25_____Because hotels are pieces of real estate as much as they are operating companies, the cost of borrowing (interest) and the rate of local taxes impact the decision to build or buy in a certain locality and at a certain time period.

26_____Overbooking the hotel requires an educated guess. Too conservative a projection, and the hotel is forced to walk overbooked guests; too aggressive a projection, and the hotel is left with unsold rooms.

27_____The term “double occupancy” includes the possibility of three or even four guests in one room.

28_____More postings to the folio are debits than are credits.

29_____Strategic Account Managers are those assigned to the master account of a large group event.

FINAL - 2

30_____It makes no difference in the computation for the daily percentage of room occupancy if the unavailable rooms are “out-of-order” or “out-of-inventory.”

31_____Early arrivals, cancellations and no-shows reduce the number of rooms available for walk-ins on any given day.

32_____Room count is the number of rooms occupied; house count is the number of guests in the house and together they compute the percentage of occupancy.

33_____Opaque web sites disassociate the name of the hotel from the deeply discounted rate until the transaction has been completed.

34_____The supposedly absolute rule that folios are always reduced to zero at check out has exceptions.

35____Periodically, perhaps quarterly, hotels settle their debt (created by collecting sales and room taxes from guests) with local or state governments.

36____Hotels should never allow guests to settle their folios at any time other than at check-out, when they are actually departing.

37____Upselling a guest at check in takes listening skills on the part of the front desk clerk to quickly assess a need that may be addressed with a better (and more expensive) accommodation.

38_____If management grants a folio allowance because a guest vehemently complains about an absolutely poor experience in the gourmet dining room, it will be charged against room income.

39_____Breakage on IT packages offered by the hotel accrues to the benefit of the guest who bought the package.

40_____Hotel guests who reserve through a travel agencies often present a travel-agency voucher which they expect the hotel will honor for the value of the deposit made to the agency.

41_____The major difference between similarly sounding plans (the Continental plan, the Bermuda plan and the English breakfast plan) is the method of charging, or not charging, for breakfast within the room rate quote.

42_____Hotels may refuse accommodations to any persons who are unwilling or unable to pay in advance for their accommodations including minority persons.

43_____The hotel’s chart of accounts is a secretly coded list of accounts that differs hotel to hotel, the idea for which originated in the casino hotels’ need for privacy.

44_____SMERF is the abbreviation used to indicate pet-friendly hotels.

45_____A single entity group (a troupe of traveling performers, for example) may have all of their rooms charged to one master folio, also referred to as the A folio.

46_____It is helpful to visualize the guest ledger to be at the front desk and the city ledger to be in the accounting office, but computerized hotels mean there is no real physical location.

FINAL - 3

47_____A large convention may have numerous master accounts, which the hotel must track separately.

48_____The “AIG” Effect” refers to the American Inclusive Tour. This has become the standard for group bookings in the U.S. 49_____Condominiums were developed in the ski resorts. Timeshares, which came later to the United States, were developed in the sunshine states.

50_____Quality service in innkeeping is a personal, in-your-face experience that differs it from other service industries and especially from manufacturing.

51_____Management companies grew rapidly when banks needed on-site management after the banks had foreclosed on hotels that were unable to pay their mortgage debts.

52_____In a sale-and-leaseback, a hotel company sells its building to an investor, who then leases (rents) the operation to the hotel company that just sold the building.

53_____U.S. spas were originally established around the supposedly curative value of special waters.

54_____Kemmons Wilson’s Holiday Inn chain proved the importance of flagging properties with recognizable logos and helped speed the development of hotel franchising.

55_____The REIT Modernization Act made one change that is very positive for the lodging industry: It now allows REITs to manage the properties they own.

56_____Hotel leases are popular when times are good (during the industry’s up-cycle); management contracts are popular during the down cycle.

57_____It’s obvious: Flatter organizations that eliminate middle managers force decision-making to stay in the hands of upper management even though it makes for a leaner organization.

58_____An independent observer would consider the registration encounter a “Moment of Truth.”

59_____Quality guarantees are part of the yield management system; put into place when occupancy is medium to low and discarded when occupancy nears full capacity.

60_____Franchise buyers pay several fees for the right to franchise, including a fee for the sign that identifies the franchise.

61_____Professional lingo (language) uses three different terms to refer to non-paying guests: skippers, sleepers or whos.

62_____The company that sells a franchise is known as the franchisor; the one that buys the franchise is the franchisee.

63_____Franchise fees are charged on either a per room basis or as percentage of room sales.

64_____Resort hotels rely more on walk-ins than urban hotels; urban hotels rely more on walk-ins than motor hotels.

FINAL - 4

65_____Bank credit-card companies pay the hotel/merchant in full at face value, but T&E card companies reduce the hotel’s payments by merchant fees.

66_____Rate cutting functions in an elastic market; lower rates generate new business in total for the hotel.

67_____RS (Refused Service) is the floor attendants method of recording a room that was not serviced at the guest’s request.

68_____Demographics refer to measurable qualities of guest profiles such as age, residence, gender and income.

69_____In a brief period, lobby business centers, which were once essential for commercial hotels, have been largely replaced by in-room electronic equipment and telecommunication hookups.

70_____Groups that buy food and beverage events, pay for meeting space and come at off-peak periods are able to negotiate lower room rates with the hotel’s sales department.

71_____Central Reservation Offices (CROs) do not book group business; referring calls, instead to the sales office of the particular hotel or to the chain’s national sales office.

72_____Dynamic pricing is a discount off the hotel’s best-available rate unlike negotiated rates which are a firm, known value.

73_____The bell desk gets commissions from services (rent-a-car; tours; etc.) purchased by a guest through the bell desk.

74_____With a management contract, the owning company pays the management company a fee; with a lease, the managing company pays rent to the owning company.

75_____Yield management is intended to counter the tendency of the average daily rate to fall whenever occupancy falls.

76_____Yield management systems work best with small hotels that are heavily dependent on one market segment.

77_____Guest-service agents/cashiers safeguard their cash by using a “cashier’s well.”

78_____“Exception Reporting” highlights issues that veer from the norm, saving management precious time that would otherwise be spent in reviewing normal data.

79_____Folios are settled (paid) in one of three ways: with cash, with credit, with an allowance.

80_____The folio’s opening balance each day is the same as its closing balance on the previous day, and the same can be said about the cumulative balance of accounts receivable.

81_____The Hospitality Information Technology Integration System (HITIS) is the hotel industry’s united push toward installing telephony, including VoIP. 82_____Guest folios may reflect services provided by outside businesses (florists or guest laundry, for example) as if those services had been provided in-house.

FINAL - 5

83_____Outside agencies working on bad debts usually collect close to 95% for the hotel, minus the fee, of course.

84_____Part of the night audit reconciles the total income earned by any department with the total recorded on all guest folios, accounts receivable, for that department.

85_____There is no difference between Double Doubles and Queen Doubles.

86_____Just as they do with individual cardholders, credit-card companies place ceilings (limits) on the amounts that hotels are protected from credit-card losses.

87_____The housekeeping staff keeps watch on and alerts management to “do-not-disturb” rooms that have been unattended for most of the day.

88_____The basic ratios and statistics that the industry uses are calculated daily during the night audit and reconfirmed by the day (or income) audit.

89_____PMSs record every departmental sale made to a registered guest twice: one as an increase to accounts receivable and once as an increase to sales.

90_____A transcript sheet is used to separate and accumulate departmental sales as they appear on the folios of hotel guests.

91_____Management reporting is the emphasis of night audits done by property management systems; correcting errors was the thrust of the pencil-and-paper night audit.

92_____Some city-ledger accounts are permanent, on-going records (credit-card accounts, for example) and some are one-time records (Jones-Smith wedding party, for example).

93_____Every line on every folio represents an event that always impacts accounts receivable because folios are accounts receivable.

94_____If the hotel bar has a POS, both cash sales and credit-card sales made in the cocktail lounge appear immediately on the folios of the drinking guests.

95_____Due bills were in favor during the high occupancy period that closed the 20th Century and, as expected, were in disfavor during the huge decline in occupancy that followed the World Trade tragedy.

96_____Debit-card accounts are one of the fastest growing segments of the city ledger.

97_____The night audit is nothing more than a cumulative inventory of accounts receivable.

98_____When management wants to review the number of room requests denied, they would look at the Regrets report.

99_____Tap to Pay use of a smartphone just requires a brief contact of the phone to the payment device to record a seamless transaction.

FINAL - 6

100_____The water in dry pipe systems is held back by a mechanical block which is removed by the heat of a fire when it reaches sufficient temperature.

Multiple Choice: Enter the one answer that best completes the thought. Value 1.0 points each.

101____The lodging industry has several characteristics including: a.

A highly perishable product b.

Low turnover of employees c.

An almost zero level of fixed costs (“the nut”) d.

Minimal competition from other industries e.

Both b and d 102_____If the lodging industry has about 4,000,000 rooms and something like 2,100,000 employees working in approximately 50,000 hotels, the average hotel is less than _____ rooms in size with a employee/room ratio of approximately _____. a.

50; and 0.5 b.

50; and 2.2 c.

100; and 0.5 d.

100; and 2.2 e.

None of the above 103____Early departure fees: a.

Have been enthusiastically accepted by guests who were walked previously because their reserved room is now assured b.

Are an understay penalty that has not achieved wide usage c.

Were started by the credit-card companies after they experienced high chargebacks d.

Generally, do not apply to AAA or AARP reservations e.

All of the above 104____REVPAR can be increased by: a.

Increasing food prices in the dining room b.

Increasing the break-even point c.

Petitioning for a decrease in real estate taxes d.

Encouraging the sale of double occupancy e.

Both a and b 105_____Which of the statements is most true: a.

Leisure guests are more inelastic b.

Commercial guests are more inelastic c.

Government employees are more inelastic d.

Retirees are more inelastic e.

Both b and d 106_____The break-even point (as measured in percentage of occupancy) of the hotel industry is: a.

More than 85% occupancy for most hotels b.

A measure of room sales only c.

Goes down as Revpar goes up d.

Goes up step-by-step with double occupancy e.

All of the above except a FINAL - 7

107_____Back-to-back refers to: a.

Tour groups coming one after another b.

Plumbing installations in guest rooms c.

Sequential visits from representatives of OSHA and ADA d.

Union movements to organize a hotel after the first effort fails e.

Both a and b 108_____Among the components of Quality Control is/are: a.

Carrying out inspections b.

Having bell service c.

Providing automatic elevators d.

Rotating employees between departments e All of these except c 109_____The lodging industry experienced a serious decline in occupancy during which of the following periods? a.

World War II, 1940s b.

The great oil embargo, 1970s c.

The collapse of the banking system, 1980s d.

Following the Twin Towers attack, 2000's e.

All of the above except a 110_____“Yes I can” is a (an): a.

Quality guarantee b.

Aphorism (short saying of a basic principle) of quality management c.

Easy method for handling complaints d.

Moment of truth e.

Upselling 111_____Check-in kiosks: a.

Require guests to have a card (credit or debit); they don’t take cash b.

Give guests an option to select a different room than first displayed. c.

Direct guests to another lobby area to secure a key d.

Take longer to process a check-in than does the desk e.

All of the above 112_____To maintain quality management, managers rely on feedback from: a.

Logs of guest complaints b.

Lists of allowances c.

Secret-shopper reports d.

Guest questionnaires e.

All of the above 113_____Even if occupancy is very low, guest-service agents would block rooms early in the day for reservations from: a.

Handicapped guests b.

Commercial guests c.

Families that request connecting rooms d.

Conventioneers within the convention block e.

Early arrivals FINAL - 8

114_____Overbooking is monitored by the: a.

IRS b.

FCC c.

FTC d.

DNS e.

OSHA 115_____Which of the following group members pays the hotel directly for his or her room accommodations? (The others are paid for by the entity) a.

Incentive tour members b.

Tour group members c.

Members of a highschool basketball team d.

Convention attendees e.

Most likely both a and c 116_____Hotel desks use abbreviations, color and symbols to convey information, some communicate the same fact in a different way. For example, “VIP” can also be represented by: a.

OOI b.

WI c.

SPATT d.

QM e.

None of the above 117_____Individuals in a tour group would pay the hotel directly for: a.

Their room rate b.

Items included in the package c.

Items not included in the package d.

Items posted to their B folio e.

Both c and d 118_____“Single” and “double” refer to the: a.

Room rate b.

Type of bed c.

S and D d.

Number of guests who could be housed in the room e.

All of the above 119_____A rule of thumb: a.

Is a simple computation that produces a generalized answer b.

Reduces the room rate by income generated in other departments c.

Deals with the water temperature in the spa d.

Is an estimated ADR e.

All of these except c 120_____Lodging’s budget segment is divided into several parts; which is NOT one of those parts? a.

Hard budget b.

Upscale budget c.

A room 15 feet x 17 feet d.

Capsule room e.

Both c and d FINAL - 9

121_____Errors in addition may be identified by looking for: a.

A slide, where 5,321.00 is recorded as 53.21 b.

A transposition, where 5,321.00 is written as 5312.00 c.

An error that is reflected by differences of 1, 10, 100, 1,000 d.

A figure that is evenly divided by 9 e.

Both a and d 122_____Charges for room and tax are posted by the night auditor except charges for: a.

Late check out b.

Day rate use c.

Use rate use d.

Failure to stay through the reservation commitment e.

All of the above 123_____A “No Luggage” report would be an example of a (an): a.

Accounts receivable report b.

Zip-out check out report c.

Exception report d.

Closeout hour report e.

None of the above 124_____Reports can be grouped into classes; which of the following classes would be the most helpful to the yield manager for forecasting and setting rates? a.

Exception reports b.

Reservation reports c.

Credit reports d.

Downtime reports e.

Both a and d 125_____Which of the following is/are costs of extending credit? a.

Float b Increased bed taxes c.

Frees earned d.

Decrease in bad debts e.

All of these except b 126_____Which of the following measures would NOT be applied to developing brand equity? a.

Broad distribution b.

Standard level of service c.

Availability of conference accommodations d.

Consistent quality e.

Instant identification 127_____An “on-change” room is a room: a.

Due to have weekly linens changed b.

Ready to change from OOI to OOO c.

Being readied by housekeeping between guest occupancy d.

Being remodeled from guest accommodations to offices e.

None of the above FINAL - 10

128_____ Microtel, a budget chain, had a slogan, “Don’t sleep with amenity creep,” meaning: a.

Guests shouldn’t pay for unnecessary amenities b Hotels should add coffee makers to save guests time c Leisure guests and business guests usually want the same amenities d.

Data ports is one amenity that everyone wants e.

Means both b and c 129_____Which of the following parties negotiates hotel rates or space, but never occupies a room? a.

Company travel desks b.

Travel agents c.

Wholesalers d.

American Automobile Association e.

All of the above; that is, they all negotiate but never take occupancy 130_____Which of the following applies to conference centers? a.

Double occupancy is low b.

Weekend occupancy is high c.

Meeting space is dedicated d.

Growth in this segment of the market has stopped e.

All of the above 131_____Timeshares are also called: a.

Interval Ownership b.

Vacation Ownership c.

Vacation Clubs d.

Fractionals e.

All of the above 132_____When sales departments negotiate: a.

Room cost is a critical element when dealing with incentive groups b.

Comp rooms are given almost automatically to large groups at a 10:1 ratio c.

Quality is a critical element when dealing with incentive groups d.

Accuracy in billing is a critical element when dealing with conventions e.

Both c and d 133_____The time selected for the closeout hour of a hotel does NOT depend on the operating hours of: a.

Lounges b.

Room Service c.

Housekeeping d.

Restaurants e.

None of the above, it depends on all of these 134_____RFID locks, having no keycard slot and no keyhole, offer all of the following advantages except: a.

Ease of access for the handicapped b.

Less maintenance c.

One time use due to code expiring d.

Codes being erased when in close proximity to cell phones e Failing to work at the guestroom door FINAL - 11

135_____The Meetings industry utilizes mobile apps in a variety of ways, including all but: a.

Access to the conference’s folio to make adjustments b.

Interactive maps of the exhibit hall c.

Accessing the event’s social media feed d.

“Bump” exchanges e Synopsys of each day’s seminars

FINAL - 12

MATCHING

(Value 1 point each)

Match the items in the left column with the best answer from items in the right column. Place the alphabetic (a to z) identification of the right column adjacent to the numeric identification of the left column. Example: 1A __Z___Minibar.

Identify with a “Z” those items in the left column that have no answer. There may be more than one instance of “Z” answer. Likewise, answers in the right column may be used more than once or not at all.

1A__Z___Minibar

A. Part of the master account

136_____Secret shopper

B. Employees can act

137_____Menu

C. Profit before fixed expenses

138_____C-Corp

D. New York City has one

139_____Hollywood

E. A corporation, but not a REIT

140_____E-type

F. Device for heart-attack victims

141_____Vallen

G. AH&LA

142_____Plus, plus

H. Denied reservation request

143_____CVB

I. Web site with non-branded sales

144_____Defibrillator

J. Off the shelf

145_____Regret

K. Pit or bucket

146_____EBITDA

L. Front office

147_____Empowerment

M. Ethnic and cultural diversity

148_____“A” folio

N. Key

149_____Well

O. Computer display

150_____Opaque site

P. In-room amenity Q. Tip and tax inclusive R. Bed type S. Author Z. Not listed FINAL - 13

Check-In Check-Out; 9th Edition BONUS Supplemental “Pick and Choose” Exam Questions This following “bonus” section provides additional quiz and exam questions from each of the text chapters. Some chapters may provide more bonus questions than other chapters. But each section below provides some added True/False questions as well as some added Multiple Choice questions.

It is recommended that instructors review quizzes and/or exams prior to distributing them to students. Any questions which are not fair game (maybe the instructor deliberately did not cover certain topical areas, or the question is worded in a vague manner, or is simply not appropriate for whatever reason) can easily be re-worded or replaced by the inventory of questions provided below:

Chapter 1 Hotels control labor costs by using call-in staff: Employees work only when the business is there; housekeeping is one such department. T. Hoteliers value their properties on a per room basis; speaking, for example, of $150,000 per room. T. AAA, American Automobile Association, has a contract from the U.S. Department of Commerce to rate and rank hotels in the 50 states as a means of assuring quality standards to international guests visiting the country. F. European hotels that have a “first-class” rating by the World Tourism Organization are the best the country has to offer. F. If a resort includes all meals, tips, food and beverage in one room-rate quote, it is said to be a megaresort. F. Breakfast is the meal most often taken in the hotel by registered guests. T. Geography is to the resort, as commerce is to the transient hotel and population is to the residential hotel. T. BONUS - 1

Because occupancy reflects both supply and demand it measures the economic health of the individual hotel and, indeed, of the entire industry. T. So few countries of the world use governmental rating systems (the U.S.A.’s use is an exception) that travelers are best advised to use ADR as the best measure of class. F. The plan of the conference center, CMP, is similar to the Caribbean’s all-inclusive plan and both borrow from the old-fashion American Plan. T. Classifying a hotel by its class is far more accurate than classifying it by, say, its location. F. The hotel industry is counter cyclical; that is, it improves when the general economy falls and declines when the general economy booms. F. “Mom-and-Pops” and the highway motels that they once operated are a historical note, replaced by franchised/chain names, but the individual properties might still be owned individually. T. A budget hotel might have a 1:1 employee to guest ratio, while a casino hotel would be even better, say 0.05 employees to each room. F. Innkeeping is a cyclical industry that goes from highly profitable peaks to very difficult troughs.

T. RevPar is the product of ADR (say $80.00) multiplied by occupancy (say 80%). T. RevPar measures revenue relative to the total room inventory; ADR measures revenue relative to the number of rooms sold. T. RevPar is closely watched because it reflects management’s overall ability: bringing in business and holding down expenses. F. Once a hotel achieves its break-even point, profits accumulate rapidly because fixed expenses and many semi-fixed expenses have been met. T. Occupancy measures quantity and ADR measures quality. T. The number of rooms available is known to the individual hotel executive but only estimated by those measuring larger units, such as the regional or national occupancy. T. There are approximately 250,000 hotels and about 25,000,000 hotel rooms, in the United States, so the average hotel is about 250 rooms in size. That’s about right. F. Unlike most other industries, hotelkeeping is not subject to the ups and downs of economic cycles. F.

BONUS - 2

The word HÔTEL, meaning large house, comes from the French and is a relatively modern term considering the long history of innkeeping. T. A hotel must be evaluated as a piece of real estate as well as by its operations as an ongoing business. T. The percentage of occupancy is a gauge of the industry’s (and the individual hotel’s) economic health. T. RevPar (Revenue Per Available Room), an old industry standby, is quite different from REVPAR, which was introduced about the turn of the century. F. C.

Which spelling is correct? a.

Acomodations b.

Accadations c.

Accommodations d.

Accomadations e.

None of the above

B.

Location, location, location: a.

Is a term invented by Conrad Hilton b.

Refers to a critical component of real estate c.

Is part of the boutique mystic d.

Is emphasized by trophy hotels e None of the above

A.

Break-even points are usually measured: a.

By a percentage of occupancy b.

As a seasonal factor c.

With RevPar d.

By a percentage of double occupancy e.

All of the above except “c”

C

What other term or terms means the same as “the number or rooms sold?” a Percentage of occupancy b.

Number or rooms available c.

Number of rooms occupied d.

Occupancy percent e.

Both “c”and “d”

B

Which statement is the most accurate? Above all else, hotelkeeping a.

Relies on word-of-mouth marketing b.

Depends on its room sales c.

Focuses on food sales d.

Tries to build double occupancy e.

None of the above BONUS - 3

E.

Which sources track hotel statistics?

A Governments b.

Private consulting/accounting firms c.

International agencies d.

Tourism offices e All of the above

B.

If the hotel has a “large nut,” its: a.

Buffet is spectacular b.

Fixed and operating costs are high c.

Lawns and landscaping are spectacular but expensive to maintain d.

RevPar is terrific! e.

None of the above

B.

Which of the following is a semi-fixed expense: a.

Debt payment b.

Power/energy/water c.

Toilet tissue d.

Real estate taxes e.

All of the above

C.

Which is NOT a characteristic of the commercial lodging industry: a.

Perishability b.

Fixed supply c.

High weekend occupancy d.

Location e.

Seasonality

E.

Industry professionals value hotel rooms: a.

On a per-key basis b.

On a cost per-room basis c.

On the value of the bank loan d.

On a resale price per room e.

All of the above except c

B.

The number of rooms occupied is the same as the number of: a.

Rooms available b.

Rooms sold c.

Employees per room d.

Guests in the hotel e.

None of the above

BONUS - 4

E.

The dollar value of a hotel is often expressed as: so many dollars per… a.

Room key b.

Construction cost per room c.

Sales price per room d.

Square Acreage e.

All of these except d

E.

Room Revenue can be overstated (exaggerated) by: a.

Including the value of breakfasts quoted in the rate b.

Excluding the value of the airport shuttle service c.

Including the value of room taxes collected d.

Excluding the value of room taxes collected e.

Both a and c

E. Which of the several traditional classifications has NOT been used to delineate the hotel industry? a.

Size b.

Number of employees per guest room c.

Class d.

Plan e.

None of the above; all delineate the industry A.

What is or was the name of the national association that represents the hotel industry? a.

The American Hotel & Lodging Association b.

The Association of Hotels & Motor Inns c.

The Organization of American Lodging Companies d.

The Hotel, Motel and Innkeeper’s Association e.

It was all of them, since the name has changed over time

BONUS - 5

Chapter 2 A brand is successful when customers (guests) have come to recognize the name and logo and associate a particular level of service, cost and accommodations with that name. T. Improving RevPar industrywide has brought rising amenities with it. T. Branding is about consistency more than about identifying with the parent corporation; and about quality more than about advertising. T. Web sites that sell hotel reservations focus on price, not brand; that’s possible because more and more hotel rooms are viewed as a commodity rather than a service. T. Hard budget hotel rooms are about 225-275 square feet; especially those found in several airports worldwide. F. Most states that allow casino gambling have passed legislation that forbids casinos to be part of mixed-use projects. F. “Amenity creep” is the industry’s special terminology for a suspect employee whom the hotel doesn’t dare employ. F. Double occupancy is more important to casino hotels than to commercial or resort hotels. T. Mezzanine financing is the money borrowed to help finance construction of the lobby mezzanine; the area between the ground floor and the first floor. F. There are five “Parties to the Deal;” the owner, the lender, the operator, the franchisor and the developer, but one party can combine several roles. T. Hotel chains can be “parties to the deal” by operating the hotel and providing its brand; they are not permitted by law to be the developer, the equity source or the hotel’s owner. F. A membership organization, such as Best Western, is a hotel chain with a fancier name; there is really no difference in being a member of Best Western or a member of, say, Hilton or Marriott.

F. Owning companies are able to get many concessions (smaller fees, shorter contracts, etc.) from management companies if the contract is negotiated during good economic times. T. Condominiums and timeshares are the same exact thing but marketed under different names. F. Female guests more than male guests are more likely to be downstairs buyers. F. Under the franchise contract, franchisees (hotel owners) can manage their own properties or hire a management company to do the job. T. BONUS - 6

The conversion to condos of the world-famous Plaza Hotel in New York City is part of a nationwide movement toward condo hotels and the resurgence of residents to city-centers. T. Unlike timeshares, where upkeep is the owner’s responsibility, condominium upkeep and repair are the developer’s costs. F. In an effort to clean up the initial bad reputation of timeshares, states outlawed the placement of operating hotels next to or near to timeshare units. F. Joint Ventures are partnerships of entities (such as governments, private corporations, preexisting partnership, equity firms, etc.) rather than partnerships of individual persons. T. In an effort to further segment the industry, budget hotels are sub-classified as hard budgets (low-end budgets) and upscale budgets. T. Hotels must be open 24-hours each day if they are to qualify legally as a hotel. T. Timeshares have outgrown their very bad reputation because reputable companies such as Hilton, Marriott and Disney have entered the field. T. The growth of the world-wide Web and the simultaneous disaster of the World Trade Center, which caused a rapid fall in occupancy, helped establish new nonguest buyers such as Priceline.com. T. Churning is the professional term given to butter that is offered by hotel companies that stress “green” accommodations. F. Hotel chains such as Hilton grow by acquiring other hotel chains; among Hilton’s recent acquisitions are Starwood and Choice. F. The Hilton Corporation is primarily a landlord company (it owns the real estate) and avoids where possible the operation and management of the operating hotel. F. The CMP (Corporate Meeting Package) is similar to the all-inclusive plan. T. It is said that with nonguest buyers, hotels are buying guests through new marketing channels rather than selling rooms to potential guests. T. Examples of “nonguests buyers” are both those who (1) negotiate rates for large blocks of potential travelers (AAA) or (2) buy a reservation for an individual traveler (travel desk). T. Buying a “block of rooms” means committing to a certain number of rooms for a given number of nights. T. Sources of equity funds shift from Main Street to Wall Street as projects grow in size and cost.

T. BONUS - 7

A REIT, a real estate investment trust, is a private equity source that a family creates to buy and sell real estate, including hotels. F. C-Corporations pay income taxes on earnings; REITS do not so long as they return 90% of their profits in dividends. T. Although hotel REITS cannot operate the hotels that they own, they can own as subsidiaries the companies that do operate the hotels. T. Wholesalers and tour operators can sell rooms and transportation at less than the sum of the two individual prices because they buy these in large lots from the hotels and the airlines. T. Hilton has launched a new brand, Waldorf=Astoria, named after the famed New York City hotel landmark, which Hilton owns. T. Foreign hotel companies enter the U. S. market when the dollar is weak and U.S. companies expand overseas when the dollar is strong. T. Political stability is especially important to non-USA investor in hotels because foreign investors have a long business horizon and a great appreciation of the value of real estate. T. The budget hotel concept, long used in the USA, is gaining ground overseas in Europe and even in the PRC (China). T. The 36/12 rule-of-thumb applies chiefly to the all-suite, extended stay hotel type. T. Spas feature stress reduction and fit nicely with the appearance of new, “lifestyle” hotels, such as aloft hotels by Starwood’s boutique division. T. By law, hotels must accept all who come in good condition and are able and willing to pay. T. Business guests are a relatively elastic market; that is, they will come to the hotel when business calls with less concern about the room rate. F. Business guests are chiefly men; leisure guests are chiefly couples. T. It’s quite possible that the party which buys (reserves) a guest room is not a individual, not a human being. T. The awards given to PGPs (preferred guest programs) can be seen to be part of amenity creep.

T. “Breakage” is slang for the sales manager’s under-the-table (illicit) cut (his/her “break” on the deal) from the tour operator because of the special rate quoted. F.

BONUS - 8

Unfortunately for small hotels, tour group business from tour operators is not possible; only large hotels can handle that type of business. F. Although it would be great to do, hotels are limited to one IT package per property, either a spa package; a valentine package, a golf package, etc. F. IT packages must be offered with care because the hotel is competing against itself: selling the IT room at less than rack rate. T. Conventions may be so large that a number of hotels as well as the publicly owned convention center may need to combine to service the group. T. Convention delegates pay their own bills and book their own rooms within a block of rooms that has been reserved by a trade show executive or other nonguest buyer. T. If many attendees from the same company come to the show/convention, a single entity group may be created within the convention. T. Incentive tours are highly prized single entities with the “winners” expecting and receiving only the best of accommodations. T. Incentive companies are nonguest buyers that place themselves between the destination resort and the company that uses the incentive to increase sales (or productivity). T. Incentive companies and tour operators exert the same type of price pressure on the hotel/seller because each represents the possibility of additional and continuing business. T. The ups and downs of hotel cycles can be caused by factors external to the industry, changes in income tax laws or events like 9-11, for example. T. The typical profile worked up by hotels on their guests is a psychographic one; demographic profiles (age, income, gender, etc.) are more difficult to create. F. Trade shows and conventions are not usually held together; in fact, some state outlaw the combination. F. Hotels and conference centers alike face competition from in-house (company-owned) training centers that book other activities when not being used by the company. T. Tour groups are not single entity groups because they do not exist prior to or after the trip. T. The hotel industry is static – same old; same old; with none or few new products of brands introduced in the past decade or two. F. Renaissance Hotels is actually one of Marriott’s brands. T. BONUS - 9

Branding is more about consistency than about identification with the parent. T. An “amenity” is a special amendment (paragraph) added to either the hotel lease or to the management contract after the terms have been agreed upon. F. Hard budget hotel rooms might measure 75 square feet or less compared to a typical hotel room of, say, 250 square feet. T. Hostels are favored by the young, the single and the not-too-discriminating traveler because the lack of privacy (dorm rooms; shared bath) is offset by very low rates. T. High payroll taxes in countries such as France encourage the growth of all-suite hotels because they operate at greatly reduced labor savings. F. Vacationing guests stay longer in their booking than do commercial guests. T.

A. The kitchenette is to the ________________ as the swimming pool is to the motor hotel; everyone wants it, but few use it, a. all-suite hotel b. hard budget hotel c. time share facility d. mixed use project e. spa B. Brand equity requires several components to be in place; which of the following is least critical to brand equity? a.

Consistent quality b.

Location, location, location b.

Instant identification d.

Broad distribution e.

Assured level of service D.

Choice Hotels has many sub-brands, among which is/are: a.

Travelodge b.

Howard Johnson c.

Fairfield Inns d.

Sleep Inn e.

Both b and c

D.

“The Residences” at the Atlantis Hotel in the Bahamas sounds to be a: a.

Member of a joint venture b.

PGP, preferred guest program c.

Modified American Plan d.

Condominium hotel e.

None of the above BONUS - 10

D.

Budget hotels compete by: a.

Using an employee to room ratio of 1 to 1 b Reinforcing the brand name through additional amenities c.

Focusing on the quality and special characteristic of their swimming pools d.

Locating on less expensive, somewhat-out-of-the-way real estate e.

All of the above

D.

Which of the following is out of place in the group? a.

MICE b.

SMURF C. SMERF d.

CURFF e.

None of the above; that is, the all suggest the same idea

E.

Which of the following components would NOT be in a mixed-use project? a.

Hotels b.

Retail c.

Entertainment d.

Businesses e.

Government

E. Which characteristic(s) differentiate a conference center from a hotel offering meeting facilities: Conference Centers have -- but hotels do not: a.

Dedicated space b.

Higher double occupancy c.

Bundled rates d.

Food service only for house guests e.

All of the above C. Spas come in various formats just as hotels do; which of the following is not recognized as a spa type? (The question asks for a spa type, not a spa service.) a, Stay spas b.

Medical spas c.

Mud baths & wrap spas d.

Mineral spring spa e, Day spas E.

Which of the following might be part of a guest’s profile a.

Reason for the visit b.

Income level c.

Membership in a group d.

Frequent-guest card holder e.

All of the above

BONUS - 11

C.

Which of the following would NOT be a nonguest buyer? a.

Travel company, such as American Automobile Association b.

A travel desk within a business complex c.

A traveling couple d.

Web sites e.

A travel agent

C.

Which of the following is NOT an aspect of the hotels sale to tour groups a.

Reduce credit card costs b.

One sale books numerous rooms c.

Final step in a yield management system d.

Free advertising for the hotel e.

Reduction in bad debts

E.

The separation of ownership from management gained momentum from: a.

The inability of the individual or the immediate family to finance the equity b.

New construction techniques which allowed for larger building c.

The creation of the corporation as a legal entity d.

The development of a separate management profession e.

All of the above

A. Equity money comes from several sources, which of the following is NOT a source for such funding? a.

The trust fund of Social Security b.

Local and regional banks c.

Condominium owners themselves d.

Insurance companies or union pension funds e.

REITS D.

Which of the following is NOT a single entity group a.

Traveling ball team b.

National orchestra on tour c.

Broadway show coming to an intermediate-size city d.

Convention group e.

Company sales meeting

C.

Which of the following is NOT now a hotel brand? a.

Holiday b.

Hyatt c.

Statler d.

DoubleTree e.

Choice

BONUS - 12

E

Which term is used to describe a budget hotel? a.

Capsule b.

Limited-service c.

Upscale d.

Hard e.

All of the above

BONUS - 13

Chapter 3 The company that owns the hotel building is not likely to be the company that manages the hotel.

T. Anti-trust laws forbid a hotel company (say, Marriott) from owning another hotel company (say, Ritz-Carlton). F. Public corporations may have thousands of shareholders (stockholders). T. Corporations are “legal persons” which can sue and be sued; buy and sell real estate; operate and manage hotels. T. Traditional corporations are sometimes called C-Corporations to distinguish them from REITs. T. To assure shareholders’ interests are independently maintained, the general manager of a hotel is never an officer of the company that manages the property. F. Despite the title, an assistant manager is not a direct assistant to the general manager, but is, rather, a manager in the rooms division. T. Large hotels such as the Las Vegas properties employ several thousand workers; perhaps as many as two employees per room. T. An ideal hotel organization does not allow staff members (accounting, legal, technology, etc.) to interact with guests, leaving guest contact to line members (desk personnel, food and beverage supervisors, etc.) exclusively. F. The food and beverage department has become less important – not unimportant, but less important – to the lodging industry during the past three decades. T. Most hotels have all of the positions listed in Chapter 3’s organization chart; otherwise the chapter wouldn’t bother itemizing them. F. It’s a measure of the importance – actually the unimportance – given to the hotel’s housekeeping department that rating agencies such as AAA do not consider cleanliness during their inspections. F. The bell department (uniformed services) and the telephone department have been shrinking during the past decade as technology and lifestyle changes impact the lodging industry. T. A guest-room attendant can clean between 12 and 18 rooms per day depending on the number of check-out rooms versus the number of stay-over rooms. T. The GM’s role of “greeter,” which was emphasized during the 1930s to 1950s by an organization called Hotel Greeters, has not changed much in over a half-century. F. BONUS - 14

Light courts are the newest theme in lobbies, bringing in outside, natural light to replace higher cost electrical connections. F. Hotel suites are often named, so all-suite hotels always have bridal suites, presidential suites, suites named for historical persons, and so on. F. Corner rooms are less desirable, and therefore sell for less, because of the long walk from the elevators to the corners of the building. F. Floor numbering is simple and identical worldwide: The ground floor is numbered 1, the first sleeping floor is floor number 2, and so on. F. In a effort to save lives, most local fire departments have forced the lodging industry to adopt standardized room numbering systems. F. Obviously, every connecting room adjoins; and every adjoining room connects. F. Theft of guests’ belongings is a function of opportunity as much as of temptation. T. Hotel security must be first a deterrent to crime before it acts to restrain, as a police force. T. A “last” (shorten from “at last”) is a tip-earning call for the bell department. F. The concierge “floor” is actually a raised section of the lobby in which the concierge’s desk is located. F. Bellpersons prefer the late-night shift because fronts are more frequent and tips larger than other times of the day. F. Rotating shifts should follow the clock: day, swing, graveyard and then back to days and should occur only after the employees’ days off. T. Because there is no need to relieve staff for meals, hotel managers are scheduling split shifts at the desk more than ever before. F. Assigning guest complaints to the guest’s “telephone mailbox” is a recent innovation in the telephone department. F. Hotels that have “large footprints” are those that impacts heavily on the economic and social life of the surrounding community. F. Sit-down registration pods are more common today than the traditional front-desk design that placed a counter between the staff and the guest. F.

BONUS - 15

The guest-service agent is part accountant, part manager, part psychologist and part salesperson because front-office duties include all of these. T. Housekeeping should rotates mattresses top to bottom and head to foot according to a fixed schedule attached to the side of the mattress. T. “California” is the term given to any bed that has been shortened to 72- 75 inches from the more traditional length of 79 – 84 inches. F. The increasing cost of land and construction has forced hotel companies to build smaller and more compact rooms. F. It’s a pretty sure bet that no modern hotel has single rooms anymore. T. Franchisors cannot cancel “the flag” once the franchise contract is signed even if the property deteriorates; they must simply wait until the contract period ends. F. Better to keep all security personnel in mufti (street clothes) rather than make their presence known by putting them in uniforms. F. Bed furnishings have evolved over time: Kings and queens have been replaced because guest prefer double beds or twin beds. F. “Family room” is the term given to double doubles or queen doubles. T. The appearance of the all-suite hotel can be explained in part by the disappearance of the studio room which once served the same purpose. T. Placing the bath on the inside corridor wall of the guest room creates a sound buffer to the hall and leaves the external wall for windows and balconies. T. Larger beds mean higher laundry bills because laundry costs are calculated by the weight of the linen. T. Tour houses, hotels that specialize in tour groups, may build separate tour lobbies to keep the heavy arrival/bus traffic away from the main registration desk. T. The segmentation of the lodging industry is the result of the different structures (physical and organizational) that the industry adopts. T. “Mine Host” was once a nickname for the head waiter in the gourmet dining room, but has fallen from favor as women moved into the job. F. Larger beds – queens and kings rather than doubles and twins – account, in part, for the increased size of guest rooms between mid-century (1950) and today. T. BONUS - 16

Because public lobbies are costly real estate that require extra security measures, new hotel construction, especially of full-service hotels, has smaller lobbies and reduced services. F. To protect guest security and to assure the clarity of the telephone message being left for guests, good hotel managers insist that all incoming messages be taken by the hotel operator. F. Selling rooms and reservations to achieve maximum occupancy without overbooking is a combined effort of reservations, sales and marketing, and the front desk. T. Tradition has kept hotel general managers from receiving bonuses as part of their salary package.

F. Because of the legal environment in the United States, it is unlikely that a modern hotel would be organized as a corporation although older ones hold on to that business form. F. Since most property is lost from guest rooms, floor housekeepers must be security conscious, even denying access to guests who have forgotten their room keys. T. Twisted professional language makes it possible for a single occupant to pay a double rate. F. It’s possible for one hotel corporation to own another hotel corporation. T. By rotating “an executive on duty,” the hotel organization (1) develops an in-depth management cadre and (2) allows free time for the very demanding schedule that hoteliers work. T. It takes more time for a floor housekeeper to make up a stay-over room that to make up a checked-out room. F.

C.

An “inspector” or “inspectress” is the name given to: a.

Security officers in plain clothes b.

Staffers in charge of fire watch c.

Housekeeping employees who signs off on ready rooms d.

Franchise shoppers who approve renewal of contracts e.

Both b and d, but under different circumstances

A.

The approximate formula for converting square feet/square meters is: a.

Square meters are about 1/10 the number of square feet b.

Square meters are smaller than square feet c.

Square feet and square meters are about equal d.

Square feet are larger than square meters e.

Both b and d

BONUS - 17

E.

Hotels may be owned by which of the following: a.

REITS b.

Partnerships c.

Corporations d.

Joint ventures e.

All of the above

C. Which of the following sections of the hotel are generally NOT cleaned by the housekeeping department? a.

Guest rooms b Public corridors c.

Banquet floors d.

Employee locker rooms e.

None of these; that is, housekeeping is responsible for all E. Other than general cleanliness, housekeeping also may be responsible for which of the following: a.

Reporting maintenance issues b.

Lost and found c.

Sick guests d.

Counting and weighing linens e.

All of the above B.

The legal definition of a hotel requires it to: a.

Remain open during legal holidays (unless it is a seasonal resort) b.

Accept all who come in good condition c.

Honor at least one national credit card d.

State on signs or other advertising that it holds itself out to be a hotel e.

Both b and c

B.

Which of the following tend(s) to make a guest room look larger: a.

Raising the bed to at least 20 inches from the floor b.

Mirrors on the wall c.

Multiple shower heads d.

Armoires to house television sets e.

All of the above

A.

Which class of employee has the smallest take-home earnings? a.

Housekeeping b.

Bells c.

Telephone d.

Reservations e.

Security

BONUS - 18

D. Operational changes caused in part by technological changes have restructured the hotel organizational chart causing staff: a.

Increases in the bell department b.

Decreases in the security department c.

Increases in the telephone department d.

Decreases in the reservations department e.

All of the above except b E.

Room sales: a.

Account for most of the industry’s revenue b.

Are the industry’s second most profitable department c.

Produce more dollars than food, beverage and telephone combined d.

Account for almost 100% of revenue at budget hotels e.

All of the above except b

B.

Elevators a.

Were adopted by hotels only after proving successful elsewhere b.

Helped speed the development of high-rise hotels c.

Now account for the largest portion of the uniformed-service department d.

Delayed the development of rejuvenated lobbies e.

None of the above

B.

The square footage of a full-service hotel can be estimated as the size of: a.

All guest rooms added together b.

Twice “a” above c.

Three motor hotels provided they have food-service capacity d. x2, where x is 10 times the hotel’s acreage e.

Cannot be estimated

C.

Single and double refer to all the following answers except the: a.

Rate charged for a room b.

Number of guests in the room c Single housekeeper or the housekeeping team that services the room d.

Number of guests that the room could accommodate e.

Size and type of bed

E.

In addition to cash salaries, GMs may get which of the following: a.

Membership fees b.

On-property housing c.

State income taxes waived d.

Stock options e.

All of the above except c

BONUS - 19

C.

Management bonuses are usually computed: a.

On location, location, location b.

Using the number of rooms in the hotel c.

Based on ADR d.

By including professional courtesy from other hoteliers e.

All of the above except a

E.

Which ownership pattern is never used in the hotel industry? a, Partnership b.

REIT c.

Individual d.

Joint Venture e.

None of the above; that is, they are all used

BONUS - 20

Chapter 4 A room placed out-of-order is generally repairable within a relatively short time. A room placed out-of-inventory usually takes longer to repair. T. Reservations without deposit or guarantee (non-guaranteed reservations) are sometimes referred to as 4 p.m.- or 6 p.m.-hold reservations. That is because by 4 p.m. or 6 p.m. (or whatever other time might be hotel policy—like possibly noon for a resort property), the hotel has the right to cancel the reservation if the guest has not yet arrived. T. By their very nature, guaranteed reservations (including advance deposit reservations) have no time limit on them. Guaranteed reservation guests arriving as late as 2am (or even later) should still expect to find their room. After all, that is one of the key reasons for guaranteeing the reservation. T. It is possible for a guest who sent-in an advance deposit to be walked to another hotel, despite the fact that the room had been paid for. T The daily accuracy of reservation forecasts can be improved by making hourly adjustments, just as the monthly forecast can be improved by making weekly adjustments. T. It is probable that on most days, the percentage rate of no-shows with guaranteed reservations would be lower than the percentage rate of no-shows with non-guaranteed reservations. T Because each day’s reservation forecast begins with the previous day’s occupancy, long-range forecasting is considered accurate only to about thirty days. F Hotels will dishonor the reservations of new arrivals rather than evict guests who overstay their original reservations. This is one of the root causes of overbooking. F. Advance deposit reservations have a greater likelihood of no-show than non-guaranteed reservations. F. A hotel reservation is essentially a legal contract. Therefore, in the case of an overbooking situation, hotels or guests could probably sue for breech of contract. However, few ever do—it’s too much work for too little return. T. All advance deposit reservations are considered guaranteed for the most part, but not all guaranteed reservations are advance deposit. T. A hotel might sell a room to a “walk-in” guest who arrived without a reservation. This is the same as "walking" a guest into one of the hotel’s unreserved and vacant guest rooms. In other words, “walking” a guest and a “walk-in” guest are basically the same thing. F. A computerized reservation system tracks reservation counts by room type rather than by an actual room number (like “room number 2137”). T. BONUS - 21

Historically, when only a few rooms remained available for a given date at a hotel prior to the introduction to “last room availability” systems, the hotel's reservation manager had to “close” availability with the central reservation office. This meant that remaining sales had to be done by the hotel, but this method prevented the CRO from overbooking the date. T. Guaranteed reservations made against a national credit card are less secure than many people realize. In many instances, guests who get charged a no-show but refuse to pay are supported (upheld) by their credit card company. This leaves the hotel without payment for the unoccupied room night. T. Out-of-inventory rooms do not affect the room availability count, while out–of-order rooms do affect the room availability count. F. The perfect fill is defined as a hotel which reaches or exceeds 100% occupancy on a given night AND every room in the hotel is physically occupied by a guest(s). T. A simple, unadjusted room count does not consider historical trends (like higher no-shows on Wednesdays) in the calculation. T. Adjusted room counts are re-calculated several times thorough the day. This increases their overall accuracy. T. The number of anticipated stayover rooms in an adjusted room count calculation generally becomes a moot point for those calculations made after the check-out hour. T. The number of nonguaranteed reservations in an adjusted room count calculation generally becomes a moot point for those calculations made after 6 p.m. T. Understays and overstays, though opposite in definition, actually affect the number of rooms available for sale in the same manner; they each increase rooms available by the number of rooms understaying or overstaying. F. Overbooking is a strategic decision made by the reservations manager in concert with the frontoffice manager and the housekeeping manager. F. Out-of-order rooms are included with marketable rooms in the room count and occupancy statistics.

T. “Whos” are occupied rooms for which the front office has no record. T. Large permanent (extended-stay) guest populations are not included in computations involving stayovers and anticipated departures. F.

BONUS - 22

D A 500-room hotel had 80% occupancy last night. Today's expected departures are 250, arrivals are 350, and there are 10 rooms out of inventory. How many rooms are available for sale? a. +100 b. +10 c. +0 d. –10 e. -100 E Assume that a 350-room hotel sold 70% of its rooms last night. Today, we anticipate that 150 rooms will depart. We hold 120 that are 6 p.m. reservations and 150 that are guaranteed reservations. Ten (10) rooms are reported to be out of inventory after last night's damaging monsoon. We know historically that understays are 5% and overstays are 7% of occupied rooms; that early arrivals are 2% and cancellations are 6% of expected arrivals. No shows for 6 p.m. reservations are 10%; no shows for guaranteed reservations are 3%. How many rooms are available to walk-ins? a) -7 b) -2 c) +0 d) +3 e) None of the above D

Regarding overbooking: a. Most states allow punitive damages b. Most states allow ejection of guests who overstay their reservations c. Most states allow the wronged party to recover between two and four times the room rate d. All of the above e. None of the above

B

Overbooking is caused in part by: a. RNA (registered not assigned) b. NS (no-show) c. DNS (did not stay) d. IRR (internal rate of return) e. All of the above

E

The no-show factor for reservations fluctuates with the: a. Nature of the guest or group b. Purpose of the guest’s trip c. Type of hotel d. Distance the guest is coming e. All of the above

BONUS - 23

B

A guest who remains a day beyond the originally scheduled departure date is a(an): a.

Late departure b.

Overstay c.

Latent check-out d.

Understay e.

Both a and c

B Using the following data, how many rooms are available using a simple, unadjusted room count? The hotel has 260 rooms. Last night's occupancy was 80%. Today there are 5 rooms outof-inventory. 6pm reservations are 80. Guaranteed reservations are 100. There are 150 rooms due to check out today. How many rooms are available using a simple, unadjusted room count: a. +22 b. +17 c. +0 d.

-5 e.

-7 D Using the following data, how many rooms are available using an adjusted room count?

The hotel has 330 rooms. Last night's occupancy was 90%. 6pm reservations are 100. Guaranteed reservations are 100. There are 200 rooms due to check out today. Understays are projected at 2%.

Overstays are projected at 4%. Early arrivals are projected at 3%. 6pm cancellations are projected at 10%. Guaranteed cancellations are projected at 5%. No shows are projected at 2%. How many rooms are available using an adjusted room count: a. +22 b. +17 c. +0 d.

-5 e.

-7 E Room availability forecasts often allow for adjustments based upon historical data. In regard to these adjustments, which of the following is true: a.

No-shows are guests with reservations (either guaranteed or non-guaranteed) who never arrive b.

Understays are guests who check-out at least one day earlier than their scheduled departure date c.

Cancellations increase the number of available rooms d.

Early arrivals are guests who arrive at least one day prior to their scheduled arrival e.

All of the above are true.

BONUS - 24

E

In regard to the concept of overbooking, which of the following is true: a.

Overbooking is a relatively common and widely used technique used by hotels to diminish the impact from no-shows b.

Deliberate overbooking which results in walked guests is a breach of legal contract c.

The federal government has threatened, in the past, to enact legislation penalizing hotels for overbooking d.

Some states have passed legislation which forces hotels to award damages to walked guests e.

All of the above are true

E

In regards to a property's cancellation policy, which of the following is true: a.

Generally, the cancellation policy of a resort property may require more lead time for full refund than the cancellation policy of say an airport hotel b.

A property is more likely to be lenient in regards to their cancellation policy if a guest makes the effort to call and cancel his reservation in advance rather than waiting until the next day to call and explain why he was a "no-show" c.

A property is more likely to charge a "no-show" if he were a vacationing tourist than if he were a regular corporate customer d.

Generally, "no-shows" are more likely with an advance deposit reservation than they are with a 6pm reservation e.

All of the following are true except d

C Regarding the "quality" of the reservation, rank the following from highest (best) quality to lowest worst) quality.

1.

4 p.m. or 6 p.m. reservation 2.

Corporate or credit card guarantee 3.

Advance deposit reservation Rank from highest ____ middlest ____ to lowest____. a.

Highest 1, Middle 2, Lowest 3 b.

Highest 2, Middle 1, Lowest 3 c.

Highest 3, Middle 2, Lowest 1 d.

Highest 3, Middle 1, Lowest 2 e.

None of the above.

C If a 320-room hotel sold 160 rooms and had 20 rooms out of inventory (OOI), what would its occupancy percentage be: a.

50% b.

60% c.

53.33% d.

20% e.

Impossible to say. This question does not provide sufficient information.

BONUS - 25

A A guest remaining in the hotel at least one day past his originally scheduled departure date is known as a(n): a.

Overstay b.

Understay c.

Latent check-out d.

Late departure e.

None of the above D Assume that a given property has 300 rooms. After accounting for the day's departures and arrivals, 100 rooms remain unsold. Of these 100 rooms available, 50 rooms cannot be sold because they are out-of-inventory. In this case, the forecasted occupancy percentage would be: a.

The forecasted occupancy percentage would be 20% b.

The forecasted occupancy percentage would be 40% c.

The forecasted occupancy percentage would be 60% d.

The forecasted occupancy percentage would be 80% e.

None of the above are the correct occupancy % B

Early departure fees: a.

Have been enthusiastically accepted by guests who were walked previously because their reserved room is now assured b.

Are an understay penalty that has not achieved wide usage c.

Were started by the credit card companies after they experienced high chargebacks d.

Generally do not apply to AAA or AARP reservations e.

All of the above

BONUS - 26

Chapter 5 A common complaint by hotels about travel agents is that travel agents send business chiefly during the hotel's busiest periods, and send relatively few guests when hotel occupancy is low.

T. Due in part to the assistance of yield management procedures, it is generally accurate to say that the most expensive rates are charged to the last rooms sold. Similarly, the lowest rates are available far in advance, when few rooms have yet been sold for the date in question. T. Although costly and impressive, large hotel chain reservation centers receive relatively few reservations directly from guests. It seems most leisure and corporate guests generally prefer dealing with travel agents rather than dealing directly with CRS’s. F. Yield management has achieved its objectives if the fraction (Rate Realized / Rate Potential) is one (1) or higher. T. Although on-change and out-of-inventory rooms are caused by different circumstances, their impact on yield management decisions is the same. F. Like closing certain dates to arrival, requiring a minimum length of stay is also a commonly used yield management control technique. T. Last room availability technology allows the CRS to sell the hotel’s last room without accidentally overselling the property. T. From a yield management perspective, corporate guests are usually more rate sensitive than leisure guests, because they are traveling on their company’s budget. F. The yield management team should have members from the front desk, the reservations department, and the hotel sales office. T. From a yield management perspective, the occupancy pattern of a resort (busy on weekends and slower on weekdays) is opposite to that of the commercial hotel, which is slower on weekends and busier on weekdays. F. A general manager knows his/her yield management program has achieved its objectives when the ratio of Rate Realized: Rate Potential is one or higher. T. A failure to pay commissions in a timely manner is one of the travel agency industry’s major complaints against the hotel industry. T. Among other things, yield management considers customer demand, lead time, buyers’ sensitivity to price, and room type requested. T.

BONUS - 27

Although we see fenced rate quotes (non-refundable reservation, 21-day advance purchase, stay over on a Saturday night) regularly in the airline industry, it is still relatively uncommon to find them in the lodging industry. T. The United States is the global leader in online travel reservations. T. Application Service Providers (ASP’s) provide global distribution and central reservation services to unaffiliated, independent hotel properties. T. Yield management decisions are partially based on the fact that leisure guests are sensitive to date (they must travel during their vacation dates), while corporate guests are most sensitive to rate (as businesses strive to save money, hotel room prices are carefully evaluated). F. Single-image inventory allows all Application Service Provider (ASP) members to feed data from the same database. T. Airlines generally pay travel agents a 10% commission on all air travel booked. Hotels generally pay travel agents no commission at all (beginning in 2001). F. With growing corporate and leisure business, the travel industry is widely successful these days.

As such, the number of travel agents in America has grown substantially since 2001. F. Surprisingly, the most expensive average room rates are booked on-line. Cheaper average rates come from direct telephone calls to the CRS. F. Third-party travel sites act as inventory aggregators; contracting with hotels for a set number of rooms at a deeply discounted price, and then re-selling the rooms through popular web sites. T. Meta-search web sites (e.g. SideStep, Kayak, TravelZoo), use sophisticated search technology to exploit hotels and chains which have not ensured internal rate integrity. T. The average corporate guest books his/her lodging accommodations and air flights at least 45days in advance of travel. F. In terms of yield, a 200-room property selling 80% of its rooms for $65 per night ADR would demonstrate identical yield to a different 200-room property selling 65% of its rooms for $80 per night ADR. T. Hurdle pricing is the term given to the competitive environment in reservation offices. It requires each reservationist to better his/her record by either the number of reservations taken, or the number of days booked or the average rate of the booking. F Many small chains and independent properties outsource their reservation offices to travel agents as a method of reducing costs, increasing the quality of guest service, and upping the ADR. F

BONUS - 28

The price-occupancy mix is a management decision because the same total rooms revenue (yield) can be achieved by either higher rates and lower occupancy or lower rates and higher occupancy. T The airlines’ decision to eliminate commissions to travel agents had a similar consequence for hotels. Reservations originating with travel agencies almost disappeared for both airlines and hotels. F Yield management was initially introduced by the hotel industry in the late 1960’s. The rapid development of yield management technology, however, is attributed to the airlines because they had the financial resources to implement this capital-intensive investment. F D set):

Which of the following items seems out of place (doesn’t belong with the others in the a. b. c. d. e.

E

Amadeus Apollo Gemini Hampton Sabre

Which of the following would not be considered a method for making a hotel reservation: a. E-mail b. Telephone c. Internet d. Travel agent e. All of the above are methods for making reservations

E Which of the following services do Application Service Providers (ASP) offer member hotels: a. Listing on a CRS b. Connection to the GDS c. Internet-based reservations d. Access to alternate distribution systems e. All of the above

E

Chain-owned Central Reservation Systems: a.

Charge hotels a per reservation fee b.

Monitor the length of time reservation agents invest per call c.

Receive upwards of 1-2 million calls per month d.

Accept, hold and relay incoming calls by means of automatic call distributor equipment e.

All of the above

BONUS - 29

A

Yield management systems for the lodging industry: a.

Were adopted from the airline industry b.

Improve overall room cleaning time (yield) c.

Increase room rates as occupancy falls d.

Apply to individual reservations and not to group business e.

All of the above

D

As occupancy improves and the hotel fills, the reservation manager will likely: a. Book more IT packages b. Lower room rates c. Give the central reservation system increased authority to sell and report d. Restrict sales to government per diem and AARP guests e. All of the above

A

When the hotel approaches capacity, reservations may be regretted if they come: a. From travel agents b. As a result of an advertised hotel package c. For AAA or AARP d. From a government employee e. All of the above may be regretted

B

Regarding Central Reservations Offices: a. Most are located in the East, and many of those are in either Boston or New York City b. Some handle as many as 2 million or more calls per month c. Few chains use them; it is primarily a franchise service d. All have the authority to override the local property e. None of the above

A

The universal switch (switch technology) allows a travel agent to: a. Use one reservation terminal even though s/he is sending numerous reservations to various central reservations systems. In other words, the travel agent can use one terminal and it can speak the language of many systems b. Bypass the hotel’s yield management system c. Override closed dates by switching off certain guest parameters (like AAA or AARP) d. Make hotel reservations through voice recognition e. None of the above

E

Regarding central reservation offices, which of the following is true: a.

Res centers generally charge a fee to the hotel for each room booked b.

Time is of the essence. Most CRO's monitor the length of time each agent spends on the phone. c.

The average call to a CRO lasts approximately six minutes and thirty seconds d.

Automatic Call Distributor Equipment holds and relays calls in a rotating sequence e.

All of the above are true except c BONUS - 30

B

Travel agents: a. Charge guests approximately 10% more for the room than the hotel does b. Get a commission from the hotel of approximately 10% c. Get a larger commission from the central reservations office, so they usually bypass hotel reservations offices d. All of the above are true e. None of the above are true

C the:

Yield management’s major contribution toward setting room rates is its recognition of a. b. c. d. e.

Quality of the room’s furnishings and amenities Importance of local competition Amount of room inventory available (in-house supply and demand) Height of the floor of the room assigned All of the above

B

Which of the following is NOT one of the four global distribution systems (GDS)? a.

Sabre b.

THISCO c.

Galileo d.

Worldspan e.

Amadeus

E

PHASER, TravelCLICK, and Smith Travel Research’s STAR are examples of: a.

Voice recognition systems b.

Mapping capabilities now available on GDS c.

Computer interfaces between the desk and the marketing department d.

Reservation outsourcing acronyms e.

Tools for measuring yield management results

A

SMERF is an acronym for: a.

Social, Military, Educational, Religious and Fraternal group business b.

One of the GDS’s, global distribution systems c.

AT&T’s voice recognition system d.

An Internet travel site that Travelocity has opened e.

None of the above

A As part of the reorganization taking place in the lodging industry (per Chapter 3), the reservations department of the individual hotel: a.

Has become more computerized b.

No longer reports to the rooms manager c.

Is now headed by a vice-president d.

Has essentially disappeared, having been replaced by Web sites e.

All of the above except b

BONUS - 31

E

Central reservation offices (CROs): a.

Can be accessed by dialing toll-free 800 numbers b.

Are sometimes located outside of the United States c.

Charge member hotels a fee for each reservation taken d.

May employ as many as several hundred agents during peak periods e.

All of the above

BONUS - 32

Chapter 6 Because organizations which qualify for discounts at most hotels, like AARP (American Association of Retired Persons) and AAA (American Automobile Association), are interfaced directly to national central reservations systems, they do not require members to ask for discounts when making reservations. Through the interfaced technology, discounts are automatically granted to registered members. F. Within a given city, there is usually a convention and visitor's authority or bureau (CVA or CVB) which handles group room negotiations between more than one hotel. In other words, a large convention coming to Fresno (assume it is too large a convention to be housed in just one of Fresno’s hotels) would initially be handled by the CVB acting on behalf of several hotels at once.

T. Guaranteed reservations made by telephone are confirmed on the spot, with the reservationist furnishing the caller a confirmation number. This is true even for those reservations systems which send written acknowledgment to the guest several days later. T. Reservations without deposit or guarantee (non-guaranteed reservations) are sometimes referred to as 6 p.m. -hold reservations. T. Guaranteed reservation guests arriving very late (say 2am or later) will still be provided a room, because their guarantee paid for it and it belongs to them all night long, no matter what the arrival time. T. An IT (Inclusive Tour) package is put together by a tour operator and sold to guests through travel agents. F. Reservations should not be quoted an exact rate. Rather, they should be quoted a rate range (usually about a $6 to $10 spread) with the low-end of the range being the rate requested by the guest. In this way, if the exact room requested is not available when the guest arrives, the hotel can upgrade the guest to a more expensive accommodation and charge the higher end of the rate range quoted. T One complimentary room per 50 room nights sold is a widely quoted industry measure used when negotiating convention and group business. T. A hotel’s IT package is generally identical in terms of services and amenities as a package offered by a wholesaler through a travel agent in a distant city. F. Public convention and visitor bureaus (CVB’s) usually operate housing agencies (often without fee) to facilitate reservations for groups too large to be housed in one hotel. T. Trade associations reserve a block of rooms roughly equal in size to the number of delegates anticipated to attend the meeting, annual conference, etc. Thereby, the association becomes financially responsible for unsold rooms through attrition clauses in the group rooms contract. T. BONUS - 33

Because hotels block a certain number of rooms for a given convention group reservation, it is possible to accept reservation requests from conventioneers, but refuse requests for the very same night from individuals with no affiliation to the group. T. Although it creates labor savings for the chain, many potential guests become frustrated with automated telephone systems which require callers to listen to options and press buttons to move through the process. Many callers just want to talk with a live person. T. Many of today’s central reservations call centers are located overseas. T. Hotels which utilize guest history database systems both save time and appear more efficient; a reservationist using such a system could literally remind the caller what he had for room service breakfast and that it was delivered at 6am. And ask if he would like to arrange the same order for this visit as well. T. Generally, one would expect to see higher average per delegate spending with a medical convention than with a military or religious convention. T. SMERF business is usually regional in nature and is characterized by shorter lead time than fullblown convention business. T. A trade show is a type of advertising (movie or Internet video) traded for lodging business. Also known as a trade-out. F. For most conventioneers, the hotel room is the largest single expenditure category aside from air travel. T. All else equal, the reservationist should always offer the caller a list of possible discounts before quoting a rack rate for the reservation. F. Group and convention business comp rooms are usually quoted in a ratio of 1 free (comp) room for every 86 rooms paid (sometimes shown as 1:86). F. Association executives will often visit a community and look at several hotels before deciding where to book their group. These visits are often called “site inspections.” T. Because reservation agents are monitored for the amount of time they take on each call, optional reservation data (such as date of arrival and number of rooms required) is often omitted when taking a telephone reservation. F Under pressure from anti-terrorist groups, the federal government’s Office of Homeland Security has required the hotel industry to standardize all reservation-codes across the industry. This allows for easy identification of travelers. F Travel-agency reservations need to be distinguished from other reservations because travel agents typically get a 25% commission for business booked. F BONUS - 34

Many hotels choose to stay away from convention business because convention delegates generally spend less per day than other guest types. F Pressure to balance municipal budgets has forced Convention and Visitor Bureaus (CVBs) to limit their cooperation with lodging industry partners and reduce overall services to citywide convention groups. F C

All else equal, the reservationist should be trained to first offer the caller a: a. Package rate b. Convention rate c. Rack rate d. Weekend rate e. Flat rate

C

Regarding group business: a. Tour guests are sold individually, but handled as a group by the front desk b. IT packages are sold individually, but handled as a group by the front desk c. Convention guests are sold individually, but handled as a group by the front desk d. Trade shows are developed by the sales department and presented (shown) to prospective hotel clients (also called the “trades”) as a means of increasing group room sales e. All of the above

C The International Society of Horse Traders convention has been quoted a number of different rates; the $165 rack rate standard room is $125 for this convention, the $189 queen parlor is $144 and the $215 king deluxe is $169. This group has been quoted: a.

Flat rates b.

Run-of-house rates c.

Spread rates d.

Rack rates e.

None of the above D If tour-group guests, given coupons with which to buy meals in hotel restaurants, do not use the coupons, the: a. Guests must reimburse the hotel b. Tour operator must reimburse the hotel c. Guests get refunds from the tour operator d. Hotel will not receive the meal revenues from the tour operator because there is no proof the meal was received since no coupons were redeemed e. None of the above B

Fam trips are complimentary or discounted rates furnished: a. To families b. For travel agent familiarization trips c. To famous meeting planners d. For famous celebrities e. None of the above.

BONUS - 35

A

A guest who arrives without a reservation is a: a. Walk-in guest b. Walked guest c. Walking guest d. Walking-by guest e. None of the above

C Which of the following falls into the nonessential (nice-to-know) category of reservation data, as contrasted with essential (need-to-know) data? a.

Name and number in the party b.

Type of sleeping accommodations requested c.

Means of travel or transportation d.

Date of arrival e.

None of the above; that is, they are all essential.

A Guests with an arriving convention group are assigned whichever room appears first on the computer screen at the time of their check-in, but everyone is charged the same $100 rate.

This group was quoted: a.

Flat or run-of-the-house rates b.

Over-under rates c.

Spread rates d.

ROC (room of choice) rates e.

None of the above C

Which of the following are accurate types of business represented by the acronym SMERF: a.

Socratic b.

Medical c.

Educational d.

Rorschach e.

Flat rate

D Association executives and meeting planners will often visit a community and look at several hotels before deciding where to book their group. These visits are usually referred to as: a.

Family trips b.

Lodging Audits c.

Room sizing-up d.

Site inspections e.

None of the above E

It is standard procedure to offer rate discounts to: a.

Senior citizens b.

AAA members c.

AARP members d.

Uniformed personnel, military and even firefighters and police e.

All of the above BONUS - 36

A Executives of various trade and professional associations have, in turn, their own affiliation, ASAE, which is the... : a.

American Society of Association Executives b.

Associated Society of American Executives c.

American Standard for Associated Enterprises d.

Associated Society for American Standards e.

None of these are involved in convention business D

Tour groups are: a.

Assigned rooms throughout the hotel to minimize noise and baggage handling on floors b.

Not a component of yield-management considerations c.

Part of a hotel’s IT package d.

Quoted rates as per person double occupancy (shares-with) e.

All of the above

C

If members of a convention group are offered a range of rates, the rate quote is said to be: a.

Flat rate b.

Rack rate c.

Spread or sliding rate d.

Run-of-house rate e.

All of the above except d

C.

Reservations requiring cash deposits have: a.

Generally replaced credit-card deposits as a means of saving commissions b.

Wider use among commercial/business properties than roadside motor inns c.

Never been popular with hotels d.

Been required from travel agencies since airlines have stopped paying them commissions e.

None of the above

D At any given property, which of the following is a valid argument in favor of marketing for group business. a.

There are economies of scale or savings generated by selling and delivering a bulk of rooms to group business b.

The individual guests within the group may spend more (have a higher worth) than regular guests c.

Group business represents a high percentage of the industry's occupancy d.

All of the above are valid arguments e.

None of the above are valid arguments

BONUS - 37

B The PriceWaterhouseCoopers convention has been quoted a single rate. No matter which room they may receive at check-in (standard room, city-view parlor or king deluxe), they are all charged $149 per night. This group has been quoted: a.

Spread rates b.

Run-of-house/flat rates c.

Set day rates d.

Rack rates e.

None of the above

BONUS - 38

Chapter 7 Many hotels prefer “associate” as a softer name for “employee,” because it also references the individual’s critical role in accomplishing the hotel’s mission. T. Despite all the fancy amenities available, guests still rank a good alarm clock high on the “musthave” list. T. Because of the high annual cost of mattresses, most hotels delay replacing them as long as possible. F. The term “soft goods” refers to the furniture in the hotel rooms: bed, bureau, television and the like. F. A 180 thread count, 100 threads in one direction and 80 in the other, is popular with most hotels.

T. A “par” inventory of 5 is recommended for bed linens: one set on the bed; one in the floor closet; one on the maid’s cart; one in the linen room and one in the laundry. F. “Road warriors” protect travelers against mishaps and are more evident in the USA since the attack on the World Trade Center. F. The very best hotels usually dry clean traditional bedspreads every other occupant. F. Comforters with duvet covers are replacing the more traditional bedspreads in many hotels. T. Shortening – almost reducing – the size of the vanity that holds all the bath amenities makes the bathroom look cleaner. F. Minor, in-room repairs often go unreported by the room housekeeper because the English form for doing so does not make sense to a foreign-speaking attendant. T. Quality circles are impressive building designs that hotels are using in lobbies to make a startling architectural statement. F. Empowerment gives the workforce authority to act in some areas that had previously been management’s responsibility. T. Round and round we go, because empowering employees reduces the need for supervisors and reducing the need for supervisors requires employees to make more decisions. T. As one would expect, the racial and cultural diversity of the hotel industry’s workforce is the same as the cultural and racial diversity of the national population. F. A counter revolution is taking place because hotels that were once smoke-free are quietly switching back to allow smoking. F. BONUS - 39

The same guest holds different expectations about the service to be received because the type, plan, rate and size of every hotel differs. T. Hotels are no different from manufacturing: The quality of both products can be monitored, measured and quantified. F. Total quality management (TQM) originated in the service industries, spearheaded especially by the hotel industry, and has been adopted gradually by heavy industry. F. Bedding has become as much a public relations/advertising issue as it is a factor of guest Comfort. T. Amazingly, cleanliness ranks lower in guest survey results than does a good mirror and an inroom coffee maker. F. Although different hotel companies use different names and stress different issues, the focus of all QA programs is hiring, training, delegating and rewarding employees. T. Third (top) sheets, which are gaining popularity especially in upscale hotels, have an cost over and above the actual sheet’s initial price, they add weight and hence cost to the laundry. T. Top sheets (third sheets) are changed along with other bedding, often daily; duvets might be changed daily, but that is unusual. T. “How was everything?” is the right question for management to ask guests if it is trying to uncover problem areas within the hotel. T. Safety can be improved by directing children and the elderly to escalators rather than elevators.

F. Because few guests actually return to the same hotel, modern management theory leaves complaints slide by rather than spending time and money to resolve them. F. Complaints are like the icebergs that sank the Titanic: Most are below the surface, unseen until they appear with disastrous results. T. Preparing for complaints includes recognizing the best practices for solving them since complaints often follow the same pattern within a given department. T. If it were merely a question of dollar cost, it makes good sense (cents) to retain the worker rather than recruit a new one.

T. One of the difficulties with introducing empowerment is that many employees don’t want it. T. Probably the best place to fill a job opening for a bar back (support position for a bartender) is the Worldwide Web. F. BONUS - 40

Hotel labor unions are strongest in the large hotel cities, best represented by southern cities: such as Orlando, New Orleans and Memphis. F. Total quality management (TQM) is difficult to define and identify because both the lodging industry (the seller) and the guest (the buyer) are segmented into many parts. T. Managing for quality adds “leadership” to the traditional management functions of planning, organizing, staffing, directing and reviewing. T. TQM never permits criticism of a bad decision, but stresses, rather, a proactive approach that aims to avoid errors. F. Customer relations management (CRM) begins with employment, where “selecting” the employee is more important than “hiring” the applicant. T. The ADA is a federal law that followed and explained much of the original OSHA legislation.

F. Among the early problems of the ADA, was the failure of the law to define terms (such as “readily achievable” or “undue burden”), which pushed many issues into the courts. T. Most visually handicapped persons read Braille. F. The dollar costs of unresolved complaints can be calculated quite accurately by using the dollar values that are part of the “Moments of Truth.” F. Hotel managers complain more about the accuracy of guest-comment cards when those cards are used for salary and promotion decisions. T. The low response rate of guest-comment cards can be improved by reducing the size of the questionnaire. T. Managers should distract complaining guests by handling other business (telephone calls, computer messaging, etc.) while the complainant is talking. F. Quality control is maintained by several techniques, including fear of job loss; reduction in salary; and assignment of poor working hours (hotels are opened 24 hours per day). F. Avoiding mistakes rather than correcting them is the essence of total quality management. T. Public areas, such as lobbies, are the best place to resolve guest complaints because guests are less likely to make a scene. F. Good hotel managers resolve complaints without excessive costs, especially if no harm was done: Apologies are free; give away as many as needed. T. BONUS - 41

“Customers are always right” is so true in fact that every complaint requires the hotel to make some type of adjustment. F. Franchise inspectors and rating agencies frequently visit the housekeeper’s office knowing that an orderly office means an orderly hotel. T. Sheraton’s “Service Promise” awards discounts, frequent-guest points and even cash for failing to meet given levels of service. That sounds like a Quality Guarantee. T. The most successful quality guarantee programs start out as advertising ideas. F. Meeting planners have started asking for guarantees from the hotel (coffee served with 5 minutes after the meeting session breaks) to balance the guarantees they give (so many hundred covers for the final banquet). T. Employee empowerment has emerged because the hotel industry no longer has a traditional topdown line organization (manager-supervisor-supervised) structure. F. A “Moment-of-Truth” is the term used during the employee interview, when sensitive questions are posed by the interviewer and answered by the job applicant. F. Avoiding mistakes rather than correcting them is the essence of total quality management. T. Public areas, such as lobbies, are the best place to resolve guest complaints because guests are less likely to make a scene. F. Good hotel managers resolve complaints without excessive costs, especially if no harm was done: Apologies are free; give away as many as needed. T. “Customers are always right” is so true in fact that every complaint requires the hotel to make some type of adjustment. F. TQM gets more attention from management when the economic cycle is up and the operating company has more money to use on the concept. F. Edward Deming’s work in Total Quality Management considered, in part, the size of a worker’s shovel; hotel managers should look to the weight of the housekeeper’s vacuum cleaner. T. Changing the terminology – “associates,” for example, instead of “employees” – is thought to be one step toward improving staff members’ attitudes. T. First-class hotels replace mattresses every three to five years, the typical life of a premium mattress. F. “Green tent cards” left on the bed mean the guest wants housekeeping to use duvets instead of bedspreads. F. BONUS - 42

Strangely, both professional terms “hard goods” and “soft goods” mean the same: The weight of baggage being carried by arriving guests. F. The professional term, “down lights,” refers to lighting from above, such as those above bathroom mirrors/sinks. T. Their name notwithstanding, “bed” bugs can be found throughout the room, not only in beds. T. Total Quality Management is more about error-avoidance and less about error-review. T. A. How would you resolve this complaint: Power on the room TV went off for 30 minutes after the guest had paid for a film on HBO? a.

Give an allowance for the cost of the film b.

Comp the guest’s room for the night c.

Give his party of 4 a round of drinks in the bar d.

Upgrade two levels to a master suite e.

Each of these would be appropriate E.

Preparing for the complaint means: a.

Developing a tolerance for drunks b.

Understanding that some guests are show-offs c.

Overlooking a bit of exaggeration d.

Accepting the fact that some guests will never be satisfied e.

All of the above

C. When referencing their customers, retailers speak of _____; economists cite _____ ; galleries talk of _____; and hotels refer to _____: a.

Shoplifting; gross domestic product; art; food and beverage, b.

Seasons; downturns; Mona Lisa; conventions c.

Customers; consumers; patrons; guests d.

Styles; inflation; artists; yield management e.

None of the above E.

Which of the following issues should NOT be part of hotel training? a.

Personal needs: cleanliness, promptness; retirement savings, etc. b Work skills: technical ability; computer savvy c.

Interpersonal skill: meeting, greeting, courtesy d.

Broadening beyond the immediate job such as security and emergency awareness e.

None of these, that is, they are all hotel related

C

Bedbugs: a.

Are almost unknown in modern, sanitary hotels b.

Must feast every night (on blood) or die c.

Are appearing, in part, because of increased international travel d.

Must have bed linens (to eat) to survive BONUS - 43

e.

Two of the above are accurate

B

Which of the following is essential for good sleep? a.

Being roomed on a floor midway in the building b.

Quiet c.

In-room amenities d.

Centralized HVAC e.

All of these add to the sleep experience

A.

AAA requirements include: a.

Accessibility for the handicapped b.

In-room refrigerators c.

Duvets on guest room beds d.

Proprietary reservation systems e.

All of the above except c

B.

“Peer-group” hiring: a.

Has nothing to do with employment despite its name b.

Involves the very associates with whom the new hire will work c.

Brings guests into the hiring process d.

Uses outside, disinterested agencies or individuals e.

Either: Both c and d Or both b and c

E.

Among the “new” additions to the American guest room is/are: a.

Top (third) sheets b.

Duvets c.

Variety of pillows d.

Bottom fitted sheets e.

All of the above

A

ADA a.

Is a legislated type of quality guarantee b.

Applied initially to guests only; current proposals will broadened coverage to employees as well c.

Is an abbreviation of a federal law, “Act for Disabled Americans” d.

Recognized the Ritz Carlton Company for its good business practice e.

All of the above

D

“Mystery Shopper” is a (an): a.

Euphemism (a less offensive word) for an employee spy b.

Federal employee checking on ADA compliance c.

Unannounced health inspector, usually (but not always) for food d.

Individual who reports on employee attitudes and company procedures e.

None of the above

BONUS - 44

B

Retailers speak of _____; hoteliers of _____ and galleries of _____: a.

Clients; regulars; visitors b.

Customers; guests; patrons c.

Consumers; patrons; visitors d.

Regulars; guests; patients e.

None of these is correct

BONUS - 45

Chapter 8 Registration lines can be speeded up by simply removing non-registration services, such as change making or stamp purchases, from the front desk. T. Q-ing (queuing) is the lodging industry’s professional term for a guest who squiggles out of paying for the room by claiming either poor service or injury. F. Urban hotels have a greater need for a doorperson than do resort hotels. T. The arrival process is an important moment-of-truth for every hotel. T. The earnings that hotels make from the doorperson’s position is usually enough to cover the cost of salaries and uniforms. F. Walk-in guests are roomed more quickly than guests with reservations because reservationholding guests require the computer to be up and running and this equipment fails at times. F. It’s quite possible that a “Road-warrior” will arrive at his or her room without ever interacting with a member of the hotel’s staff. T. Resort hotels rely more on walk-ins than urban hotels; urban hotels rely more on walk-ins (drive-ins) than motor hotels. F. Members of frequent-guest programs are permitted to arrive early (before the check-in hour) and depart late (after the check-out hour). T. Union contracts designate the 10-minute rest period that guest-service agents are allowed every four hours as “On-change.” F. Handicapped guests are sent immediately to the room even if housekeeping has not yet cleaned the room. F. The liability of hotels for guest’s valuables was established by an act of Congress. F. A large party, including unrelated persons, would require more than one registration card, unless the entire bill is paid by one individual, who would then be the only person to register. F. Hotels have moved from a few no-smoking rooms, to entire no-smoking floors; eventually there may be hotels that are entirely nonsmoking, but we are not yet there. F. Aware that some guests are allergic to animals, hotels that accept pets alert other arrivals with appropriate signs on the door, just as hotels do for no-smoking rooms. F. Seeing-eye animals (dogs, monkeys, etc.) are admitted to every hotel including those with a no-animal policy. T. BONUS - 46

Bellpersons should not address guests by name; it makes a professional situation appear to be a social one. F. Baggage-in and baggage-out is an important money maker for the bell departments of hotels doing a large group business. T. Bells earn commissions from car–rental companies, event venues and tour operators for business booked through the bell desk. T. “Front” is the tem given to the entire desk and the reception area of the hotel; some properties even include the lobby. F. “Rooming a guest” is the process by which a guest-service agent assigns a room to an arriving guest who holds no reservation. F. Bellhops are among the staff’s most mobile population so they must serve as the eyes of security.

T. Most guests learn too late that using a credit card at registration prevents them from settling the bill with cash at check-out time.

F. Hotels have a legal right to ask for cash payment in advance whether the guest tenders a credit card or not and whether the guest has baggage or not. T. The lodging industry started late, but it now leads most other industries as an advocate of sustainable development and eco-tourism. F. There’s both truth and discomfort in this popular saying: “Eco-tourism is successful so long as it doesn’t succeed.” T. Once advanced payment is made, “Paid-in-advance” guests are able to charge purchases (bar, dining room, etc.) to their folios (front-office bills). F. Guests who room themselves, get their rooming slip directly from guest-service agent. T. Registration cards for guests with reservations are preprinted the night before arrival as part of the night audit. T. The 2002 Anti-Terrorism Act requires hotels to record the purpose of the guest’s visit using the categories of business, pleasure, tourism or transient (en route to somewhere else). F. The number of children in an arriving party is more important for an all-inclusive hotel than it is for a motor inn. T. Guests are addressed directly by name, but behind the desk it is their room number that identifies them. T. BONUS - 47

To avoid anti-discrimination law and other legal harassments, most U.S. hotels now charge the same rate to everyone who comes. F. Special rates are given to persons in uniform (military and police), to clergy and to governmental employees traveling on government “per diem” business. T. It’s an old but accurate saying: The fewer the rooms available, the easier it is to make a room assignment. T. “Upgrades” are promotions – step up a grade – given to guest-service agents who meet specific selling targets; for example, selling higher room rates than the average. F. VIPs, convention executives and travel writers receive special attention from the hotel; they’re often comped. T. Hotels must mail guests any personal items that they leave behind within 30 days although some state jurisdictions allow up to 60 days. F. Completing the individual registration cards of a group arrival (say, arriving by bus) is the desk’s most time-consuming procedure. F. “Sustainable development” is another term for and is used interchangeably with “Eco-tourism.”

F. Guest-service agents “play solitaire” with the room rack by shifting room blocks and changing pre-assigned reservations, as the arrival/departure pattern of walks-ins and check-outs becomes apparent. T. Property management systems (PMSs) are able to display vacant rooms (those available for sale) in only one format: in room number sequence. F. Upgrades give the guests more value; upsells give the hotel more value. T. Hotels mail reservation confirmations less and less, but one cost of doing so is the loss of valid guest addresses, and therefore a lesser ability to track unpaid bills. T. Hotels have a great deal of personal information (guests’ names, addresses, company affiliations, telephone and Internet records, credit-card data, guest histories) that make them targets for governmental anti-terrorism actions. T. Pet owners are generally unwilling to pay extra fees to accommodate their animals. F. To estimate the number of rooms available for sale today, the desk ties today’s projections to historical records. T. BONUS - 48

All rooms in the same category (king rooms, for example) have the same room rate. F. Large, upscale hotels that can afford the extra payroll costs have avoided the use of check-in terminals, sticking rather to the personal reception offered by human agents. F. Because hotels have met the posting requirements of state laws, they have avoided costly legal settlements after guests have been injured or killed. F. Despite differences in size, type and class, the registration process is almost standardized across the U.S. hotel industry. T. As one would expect, the larger the hotel, the more structured is the choreography of arrival. T. Porte-cochère is a French term referring to the open lobby design (which started in Paris) where registration takes place at a table/desk with easy chairs and informal seating. F. Some urban hotel own and operate their own garages; some rent garage space (sometimes from the city) and still others lease the concession to a third party. T. A “walk-in” is the noun reference to the verb reference “walk a guest.” F. Urban hotels have a greater need for a doorperson than do resort hotels. T. Membership in a Preferred Guest Program allows guests to arrive before the check-in hour and stay beyond the check-out hour. T. The earnings that hotels make from the doorperson’s position is almost enough to cover the cost of salaries and uniforms for that position. F. Registration lines can often be speeded up by simply removing non-registration services,such as change making or stamp purchases, from the front desk. T. It’s quite possible that a “Road-warrior” will arrive at his or her room without seeing a single hotel employee. T. .

Union contracts (not all hotels are unionizes) designate the 10-minute rest period that guestservice agents are allowed every three hours as “On-change.” F. Handicapped guests are sent immediately to the room even if housekeeping has not yet cleaned that room. F. The liability of hotels for guest’s valuables was established by an act of Congress during the colonial period; although the actual dollar-values has been changed often since then. F. A large party of unrelated persons would require more than one registration card, unless the entire bill is paid by one individual, who would then be the only person to register. F. BONUS - 49

Hotels have moved from a few no-smoking rooms, to entire no-smoking floors; and eventually to hotels that are entirely nonsmoking. T. Aware that some guests are allergic to animals, hotels that accept pets alert later arrivals with appropriate signs on the door, just as hotels do for no-smoking rooms. F. Seeing-eye animals (dogs, monkeys, etc.) are admitted to every hotel including those with a noanimal policy. T.

E

More than ever before, innkeepers are striving to meet the environmental measures of: a.

LED-ED b.

AH&LA c.

HSMA d.

OSHA e.

None of these references have anything to do with the subject

C Which of the following might appear on a foreign reg card but would NOT appear on a U.S. registration card: Guest’s… a.

Family name b.

Home address c.

Next destination d.

Length of stay e.

None of the above; that is, they all appear on U. S. registration card B

Check-in kiosks: a.

Require guests to have a card (credit or debit); they don’t take cash b.

Give guests an option to select a different room than first displayed. c.

Direct guests to another lobby area to secure a key d.

Take longer to process a check-in than does the desk

C

Electronic check-in terminals: a.

Are talked about a great deal but are not often available b.

Must be located within 100 feet of the computer terminals behind the desk c.

Are more popular with experience travelers than with inexperienced travelers d.

Still lack the personal security that transient hotels should deliver e.

Both a and d

A

Registration cards contain statements that: a.

Require guests to take ultimately responsible for their bills b.

Alert guests to the availability of room service c.

Determine which bellperson takes the front d.

Allow arriving guests to remain beyond the check-out hour e.

All of the above BONUS - 50

D A hotel has 100% occupancy last night. Yet the guest-service agent prepares to actually room a new arrival even before the first check-out the following day because…? a.

It was a DNS b.

One room was a sleep-out c.

The ADR was miscalculated d.

There were reservation no-shows last night e.

It cannot not be done; the guest-service agent is mistaken B

Which of the following abbreviations has no application to innkeeping? a.

RNA b.

DNA c.

SPATT d.

DLX K N/S e.

None of the above; that is, they are all hotel-related terms.

E

Management should consider doing what if registration lines are long and irritating? a.

Adding directional signs b.

Increasing the number and character of the staff c.

Creating distractions (clowns, for example) in the lobby d.

Redesigning the physical structure of the front desk e.

All of the above

A

To be assured of having a limited liability for the loss of guest valuables, hotels must: a.

Adhere exactly to the requirements of the state laws b.

Train guest-service agents to explain the regulations to new arrivals c.

Put safes in every guest room d.

Have certain employees (housekeepers, for example) cleared by a police check e All of the above except b

E

Urban parking is a revenue center for the hotel when it: a.

Owns the garage b.

Leases the garage c.

Out sources the garage d.

It is rarely a revenue maker for hotels e.

All of the above except d

B To forestall after-the-fact issues, desk agents repeat several “points of agreement” as part of the registration’s close, including: a.

The in-room security devices b.

No-smoking room c.

Date and hour of arrival d.

Hours of the dining room (especially at MAP hotels) e.

EITHER a and b OR c and d

BONUS - 51

E

What terminology is used to identify the location that greets new arrivals? a.

Reception b.

Registration c.

Check-in d.

Arrivals e.

All of the above

C The desk should be prepared for commercial guests, who typically arrive about _____ and depart on a later date at about_____. a.

10:00 a.m. to noon; and noon to 2:00 p.m. b.

2:00 p.m.; and noon to 1:00 p.m. c.

4:00 p.m. to 7:00 p.m.; and 7:00 a.m. to 9:00 a.m. d.

Noon to 2:00 p.m.; and whenever their business is done e.

None of these; it’s not possible to generalize C Which of the following might appear on a foreign reg card but would NOT appear on a U.S. registration card: Guest’s… a.

Family name b.

Home address c.

Next destination d.

Length of stay e.

None of the above; that is, they all appear on U. S. registration card A

Registration cards contain statements that: a.

Require guests to take ultimately responsible for their bills b.

Alert guests to the availability of room service c.

Determine which bellperson takes the front d.

Allow arriving guests to remain beyond the check-out hour e.

None of the above

BONUS - 52

Chapter 9 Inelastic markets respond to small changes in price (room rates) with large changes in demand, either up or down. In other words, a hotel operating in an inelastic market would see a large increase in occupancy from a relatively small decrease in the average rate. F. Industry experience has proven that declines both in occupancy and in average room rate can be recovered by aggressive rate-cutting. F. The rate spread (that is, the amount of difference in rate) between single and double occupancy is greater in European plan hotels than in American plan hotels. F. The hotel industry uses fewer rate categories today (perhaps three to five rate levels in the average hotel) than was customary a decade ago. T. If day-rate room counts are included in the occupancy computation, it is possible for a hotel to exceed 100 percent occupancy. T. Up-selling a guest checking in at the desk means giving him/her a nicer accommodation at no extra charge. This is also known as up-grading the guest. F. In setting rates, the Hubbart Room Rate Formula focuses on the need to recover costs and return a reasonable profit. T. In setting rates, the Building Cost Formula rule-of-thumb focuses on cost of construction and land as opposed to the day-to-day costs of labor, food cost, supplies, etc. T. Establishing what should be the hotel’s room rate is decided partly by the prices charged by competing properties, and partly by the hotel’s own internal cost structure. T. Lodging taxes paid by hotel guests often find their way into the community’s coffers for use in a myriad of local municipal expenses. T. Hotel operators sometimes complain that lodging taxes they collect are used by the community for things which are not tourism-related. Such operators might argue that it is fine to use lodging taxes to help pay for a new convention center facility. But argue against using lodging taxes to help pay for a new prison. T. Mathematically, a 10 percent increase in occupancy will exactly offset a 10% rate discount. A 20 percent increase in occupancy will exactly offset a 20% rate discount. F. The General Services Administration (GSA) of the U.S. government is responsible for setting annual per diem rates for cities to which government employees travel. T. Generally, the industry standard dictates that resorts charging anything over $211 per night will not charge guests a “resort fee.” F. BONUS - 53

By law, any added surcharges or fees (e.g. energy surcharge, resort fee, or other nonroom surcharges) must be disclosed at the time of reservation, or the guest is not required to pay the fee. T. Front office guest service agents (GSA) should be trained to attempt to up-sell guests at the time of registration by offering a more expensive accommodation and only quoting the supplemental price difference. In other words, rather than saying; “You can stay in our luxury suite for only $345 per night.” The well-trained GSA might say; You can stay in one of our luxury suites for only $65 more than the standard rate you are already paying.” T. The most expensive community in the United States with regard to lodging taxes is Albuquerque, New Mexico, with a 23.75% lodging tax rate. F. Just as operating costs dictate a minimum room rate that the hotel needs to charge, so competition sets a maximum that can be achieved. T Increases in lodging taxes impact on the elasticity of room demand just as if the rate, itself, had been increased. T Per diem room rates are those established by the American Hotel & Lodging Association (AH&LA) for each major U.S. city, but all cities in the nation cannot be covered (generally those with populations under 50,000). F Published rates (printed in advertising materials) and posted rates (legally required by state laws) must be the same. F The double rate has always been twice the single rate; falling occupancies in the late 1990’2 and early 2000’s were bolstered, in-part, by this traditional approach to rate quoting. F

D

Which of the following are common practices with regard to employee rates? a. Offering complimentary/discounted employee rooms is an inexpensive way for chains to supplement their employee benefits packages b. Special rates are always provided on a space-available basis c. Special rates are extended to employees of the chain when they travel to other properties d. All of the above are correct or common practices e. Both a and b are true. But c is false because other properties tend to be concerned only about their own employees

B Using the traditional or building cost rate, how much should a 200 room hotel charge per night if construction costs were $16,400,000 and land acquisition costs were $1,600,000? The hotel should charge: a. $82 per room night b. $90 per room night c. $98 per room night BONUS - 54

d. $110 per room night e. None of the above are correct D

Which of the following is true. Room rates: a.

Are often adjusted higher or lower to reflect seasonal demand b.

Should be high enough to cover variable costs and return a reasonable profit c.

Must be reasonable enough to attract customers d.

All of the above are true e.

None of the above are true

D Using the ideal room rate method, if your actual ADR is lower than the ideal room rate, this indicates: a.

Guests do not see your higher priced rooms as a good value. In other words, they don’t believe your premium rooms are worth the incremental rate spread above your standard rooms b.

Your front desk is suffering from poor salesmanship c.

Your front desk is doing an excellent job upselling rooms to guests d.

Both A and B are true. C is false e.

Both A and C are true. B is false A A given hotel has 150 rooms. Operating expenses run about $980,750 annually.

Depreciation is scheduled at $645,500 per year. Additional costs (taxes, insurance, etc.) are expected to be about $226,750 for the year. The owners require a reasonable return of $647,000 per year for their investment. Net income (repeat… this is net INCOME) from other operated departments (like lounge and restaurant) is projected to be $500,000 annually. Calculate the Hubbart Room Rate required assuming a 75% annual occupancy rate: a. $48.71 b. $73.06 c. $74.07 d. $26.67 e.

None of the above are the correct answer D Using the traditional or building cost rate on brand new construction, how much should a 250 room hotel charge per night if construction costs were $21,400,000, land acquisition and improvement was $3,600,000, and FFE cost $5,000,000 (furniture/fixtures/equipment): a.

They should charge $ 85.60 per room night b.

They should charge $ 100.00 per room night c.

They should charge $ 105.60 per room night d.

They should charge $ 120.00 per room night e.

None of the above are the correct answer

BONUS - 55

C Based upon the following information, calculate the ideal room rate: The hotel has 150 rooms (75 kings at $90 single and $100 double, 50 deluxe kings at $110 single and $125 double, and 25 mini-suites at $150 single and $170 double). The double occupancy rate is projected at 20%.

What is the ideal rate? a. $21.87 b. $106.67 c. $109.00 d. $164.33 e.

None of the above are the correct answer D

In regards to room rates which of the following IS NOT true. Room rates: a. May be seasonally adjusted for changing demand b. Must be high enough to cover costs and make profit c. Must be reasonable enough to attract customers d. All of the above are true e. None of the above are true

D In using the ideal room rate method, if the ideal rate is higher than your actual ADR, this indicates: a. You do not have a sharp enough contrast between your low- and high-priced rooms b. Your front desk is suffering from poor salesmanship c. Your front desk is doing a good job upselling d. Both a and b are correct. But c is false e. Both a and c are correct. But b is false A Use the following information to calculate a Hubbart Room Rate Formula: A given hotel has 225 rooms. Operating expenses run about $1,110,000 annually. Depreciation is scheduled at $445,000 per year. Additional costs (taxes, insurance, etc.) are expected to be about $135,000 for the year. The owners require a reasonable return of $850,000 per year for their investment. Net loss from other operated departments is projected to be $400,000 annually. Calculate the rate required assuming a 65% annual occupancy rate: a. $55.08 b. $53.38 c. $40.09 d. $29.40 e. Either b or d could be correct.

C Use the following information to calculate an Ideal Average Room Rate Formula: The New York Metropolis Lodge has 350 rooms. There are three categories of rooms; 200 are standard rooms that sell for $80 (and $90 double occupancy); 100 are city deluxe rooms that sell for $110 (and $125 double occupancy); 50 are executive parlors that sell for $145 (and $165 double occupancy). Calculate the rate assuming a 30 percent double occupancy rate: a. $85.00 b. $97.86 c. $101.71 d. $105.56 e. None of the above.

BONUS - 56

C

All else being equal, a reservationist should be trained to first offer the caller a: a. Package rate b. Convention rate c. Rack rate d. Weekend rate e. Flat rate

B Suggesting the guest might prefer to pay a little extra for better accommodations than he/she originally reserved is called: a. Upgrading b. Upselling c. Upclassing d. Upassigning e. All of the above except d are true B

The Hubbart Room Rate Formula: a. Sets the ceiling on the maximum room rate b. Sets the floor on the minimum room rate c. Erects the walls (that is, the spread between rates for different room types) d. Is built around the yield management approach to rates e. None of the above

C Use the following data, some of which may be helpful and some of which may be useless, to compute the building cost rule-of-thumb formula: The hotel has 400 rooms. Income from all operating departments is $3,200,000 annually.

Cost of land is $4,000,000. Cost of the building is $32,000,000. Cost of bank funds is 12% annually. Occupancy for next year is projected to be 72%. a. $29.59 b. $64.80 c. $90.00 d. $108.00 e.

None of the above are the correct answer for the Building Cost Formula C

Elasticity is a change in: a.

Supply resulting from a change in rate b.

Rate resulting from a change in supply c.

Demand resulting from a change in rate d.

Rate resulting from a change in demand e.

None of the above

B

Which of the following is out-of-place with the rest of the set? a.

Day rate b.

Shoulder rate c.

Use rate d.

Part-day rate e.

None of the above; that is they are all synonyms BONUS - 57

E

Among the surprising surcharges that some hotels have added to their room rates are: a.

Energy fees b.

Resort fees c.

Early departure (before the date specified by the reservation) fees d.

Complimentary newspaper fees e.

All of the above

E

The Building Cost (Room) Rate: a.

Is simply a rule-of-thumb, a frequently quoted yardstick for room rates b.

Works out to be $1 per $1,000 in construction costs c.

Includes land improvements (landscaping, for example) as part of building costs d.

Translates into rate distinctions for suites, standard rooms, and usually “view” rooms e.

All of the above except d

D

Regarding room rates: a.

New York City has the world’s highest ADR b.

Upselling produces its most dramatic effects on sold-out days c.

Resort hotels have used incentive rates successfully to get leisure guests to check out early d.

Conventions are often charged the same for single or double occupancy e.

All of the above

BONUS - 58

Chapter 10 Hotels use a special designation identified as “late charges” for guest postings that occur after midnight. F. City-ledger guests are billed immediately; registered guests are usually billed every three days unless they check-out earlier. F. Registered guests have the same two choices as nonguests: Pay for services in restaurants and bars with either cash or credit card. F. An arrival date of 10/12/10 means October 12, 2010 everywhere across the globe. F. During the check-out procedure, hotels require guests to sign an agreement that they will accept responsibility for payment if a third-party fails to pay. F. Hotels may require a guest to pay the bill at any time, even if the guest is not leaving. T. The information that appears on the top of a computerized folio has its source in either the registration card or a previously made reservation. T. Hotels usually submit the bill for payment if the guest’s account reaches a given amount of dollars (that sum determined by the class of hotel) whether the guest is leaving or not. T. Hotels decide how master accounts are to be handled (who signs for what, for example) at the time of negotiations – that is, before the group arrives. F. Large conventions can generate numerous master accounts: from sponsoring companies, exhibiting companies, allied members and, of course, from the group itself. T. Split billing for tour groups calls for “A” and “B” folios. T. It is most likely that some of the hotel’s largest account receivables have never, ever been registered as guests. T. Industry professional no longer refer to a group of folios as a ledger because such terms were used in the pre-electronic age. F. Well run hotels employ “best practices,” one of which requires one folio for each person occupying a room. F. Every debit (charge) recorded on a guest folio must have an equal and offsetting credit, say a departmental sale or a tax collection. T. Registered guests who sign for services in bars and restaurants may have those charges appear on their folios. T. BONUS - 59

Collecting for the night’s room charge requires the night auditor, who is recording the charge, to track down each guest either by telephone or by Blackberry. F. Except for two unusual circumstances, every folio must have a zero balance at the time of departure. F. With high rollers and frequent-guest programs, the hotel itself is the A-folio. T. Pre-electronic folios used + and – to indicate charges and credits; modern folios use two columns (charge and credit) to do the same thing. F. Cash has become less and less important to the management of guest folios since both the hotels and their guests prefer credit cards. T. Because hotels are so open with people coming and going, registered guests must pay for their “purchase” (rooms, food, etc.) with cash or a credit card when the service is delivered. F. Master-account folios use formats (forms) different from regular front-office folios. F. Room sales is the industry’s largest income-producing department. T. National accounting rules for lodging prohibit mixing pencil-and-paper systems with electronic posting systems. F. Most folio lines convey two messages: The amount the guest owes and the reason for that debt.

T. The chart of accounts that hotels use for their accounting records is confidential information so employees are sworn to secrecy. F. Only the night auditor is authorized to post room charges. F. City-ledger folios are maintained much like front-office folios, one folio per available room. F. Point-of –Sale (POS) terminals enable departmental cashiers to post departmental charges directly to guest folios. T. Guest folios do NOT usually use dollar signs ($). T. At check-out, most guests transfer their city account to their front-office account using a credit card. F. As far as the guest’s folio is concerned, taxes have the same impact as do food sales room sales or bar sales. T.

BONUS - 60

Guests are accounts receivable to hotels; hotels are accounts receivable to the government for taxes it collects on room sales. T. There are only three methods of paying (settling) a folio as the guest departs: cash, allowances or transfers. T. Allowances are to hotels as returned merchandise is to retail outlets. T. Collection from a skipper accounts is rare; the amount is usually written off as a bad debt. T. Hotels ask for a credit-card number when taking a reservation, but they rarely – almost never – post the charge by opening a folio before the guest arrives. T. The widespread use of credit cards has accounted for the disappearance of hotel skippers. F. Hotel associations, such as the AH&LA, have lobbied state governments so successfully that in most jurisdictions only one class of sales tax can be levied against hotel room sales. F. Master accounts are like corporations, both have legal identity separate from their individual members. T. Guests of some hotel chains can access their folios on line days after they check out from the property. T. Tour-group guests, those booking through a tour operator, have a lower room rate posted to their personal folios than do even leisure guests. [Watch it! trick question.] F. Once electronic folios (PMSs) replaced pencil-and-paper records, transfers between guest folios and city-ledger accounts almost disappeared. F. Paid-in-advance guests are uncertain credit risks so they are not allowed to charge services from the operating departments to their folios. T. Allowance for the hotel’s mistake should be granted only if it is not possible to first remedy the situation. T. Property Management Systems (PMS) that use Point-of-Sale terminals (POS) eliminate the vouchers, control sheets, runners and late charges associated with pencil-and-paper folios. T. Master accounts and their posting procedures should have be omitted from the text discussion because very few circumstances now involve master accounts in the hotel business. F. Active master accounts are in the guest ledger; but usually become city accounts after the group checks-out. T.

BONUS - 61

Only registered guests can have accounts in the city ledger; nonregistered guests have accounts in the rooms ledger. F. Transfers of folio values can be made guest folio to guest folio, or guest folio to city-ledger account or city-ledger account to guest folio. T. Whereas other retailers—department stores for example—send monthly statements, the hotel’s statement is ready at a moment’s notice. T. Unlike most other retailers who collect as the sale is made, hotels wait for the guest to settle the bill; sometimes that wait may be several days. T. The folio is a current, accurate record of what the guest owes. T. A guest who owes (must pay) the hotel is known as an account payable. F. It is possible for someone to owe a bill to a hotel, even if he/she has never stayed even one night at the hotel. T. Once identified, individuals do not change categories: A transient guest cannot become a city guest and a city guest cannot become a registered guest. F. Ledgers are the hotel industry’s professional terminology for “dirty-old-men;” a humorous takeoff of lechers! F. Hotel procedures change quickly which makes many of the old accounting terms, “folio,” for example, outdated. F. There is no major difference in the format (design/layout) of the modern folio, which takes its model from hand-prepared folios that were once widely used. F. A patron who pays for drinks in the bar with a credit card must have first registered as a guest.

F. If a customer pays for drinks in the bar with a credit card, the customer owes the credit-card company and the credit-card company owes the hotel. T. The rule is firm: One folio per guest room is all that may ever be used! F. So long as a group is still in the hotel, its master account is a front-office record, which is pretty much a standard-looking folio. T. “Direct billing” means the credit-card company is billed manually (by mail) rather than electronically. F.

BONUS - 62

A traveling band, church or boy-scout group traveling together is a good example of a “singleentity group.” T. Room charges for individual convention delegates would be posted to the convention’s master account. F. Room charges for individual convention delegates who all belong to one company might be posted to that company’s master account. T. Depending on the nature of the convention, several master accounts could be generated during one convention. T. “Split billing” takes place when several unrelated individuals share a room and divide the folio’s charges at the time of settlement. F. Very high rollers, sometimes called “whales,” are comped at hotel/casinos. T. “Charges” on the folio decrease the account-receivable balance; “credits” increase it. F. Every accounting event (sale, allowance, tax collection, etc.) impacts at least two records in the hotel’s accounting system. T.

E Which condition, if any, requires the guest-service agent (not the night auditor) to post room charges to a folio? a.

Day rate b.

Paid-in-advance check-in c.

Late check-out d.

Penalty for understaying a reservation e.

All of the above E

By which of the following can a register guest settle his/her folio – by a transfer: a From a guest folio to a credit card in the city ledger b From a guest folio to a city ledger account c.

To a guest folio from a credit card d To a guest folio from a city ledger account e.

Both a and b

C

A hotel’s accounting day ends a.

At midnight b.

When local authorities decide the hour that bars must close c.

Whatever hour management decides d.

Usually an hour before the new day begins e.

Catch question: Hotels must remain open 24 hours per day

BONUS - 63

D

If a folio shows cash paid out for a bellperson’s tip, the folio also reflects: a.

Either an increase or decrease to the guest’s folio balance b.

A decrease to the guest’s folio balance c.

No change in the guest’s folio balance d.

An increase to the guest’s folio balance e.

Could be any of the above depending on circumstances

D

Which of the following items is NOT treated in Chapter 10, Billing the Guest Folio? a.

Recording sales b.

Preparing the folio c.

Sale of services d.

Making credit decisions for weddings, retirement parties, and similar groups e.

Accounting for each transaction

B

If comps are not registered, a.

Hotels can legally avoid paying sales taxes b.

There is no record of house count or room count c.

An allowance journal must be used d.

Each guest is identified as a “who” e.

All of the above except C

E

In professional language, allowances are also called: a.

Accounts payable b.

Late charges c.

Ledgers d.

Master accounts e.

None of the above

C

Nonregistered guests charge the bar drinks they receive: a.

To room folios b.

By means of the in-room TV set c.

Using credit cards d.

On corporate master accounts e.

Both a and b

B

The “the power of the pen” is the authority to: a.

Sign hotel checks to settle account payable b.

Issue comps c.

Negotiate union contracts d.

Enter into business contracts for the corporation e.

Both c and d

E

Which, if any, of the following should be corrected with an allowance? a.

Duplicate posting to the folio b.

Double occupancy charges for a single person c.

Small late charge d.

Comp rate e.

All of the above BONUS - 64

A

Which of the following terms DOES NOT belong to the set: a.

Allowances b.

Rooms Ledger c..

Guest Bill d.

Folio e.

Account Card

A.

Another name for the cashier’s well is: a.

Cashier’s bucket b Cashier’s drawer c.

Cashier’s envelope d.

Split-billing e.

Both a and c

B

The city ledger would NOT contain which of the following categories: a.

Skippers b.

Government taxes withheld c.

Travel agents d.

Association master accounts e.

Advance deposits

D

Which of the following bits of information DO NOT appear on a folio heading? a.

Date of arrival b.

Guest name c.

Address d.

Notice of safe availability e.

None of these; that is, they all appear on the folio heading

E

Companies or organizations that use master-account billing would interact with the: a.

Sales office b.

Credit manager c.

General manager d.

Housekeeping e.

Both a and b

A

Coupons are sometimes used with: a.

Travel agencies b.

Master accounts c.

Per diem travelers d.

Late charges e.

None of the above

BONUS - 65

D.

Which of the following departments would a full-service hotel NOT necessarily have? a.

Coffee shop b.

Banquet facilities c.

Swimming pool/spa d.

Wedding chapel e.

None of the above; a full-service hotel would have all

D.

Parties that owe the hotel, but are not registered are called: a.

Accounts payable b.

Current guests c.

DNA’s d.

City ledger guests e.

None of the above

A.

Which of the following terms mean the same? a.

Guest bill and folio b.

Folio and ledger c.

Ledger and night audit d.

Night audit and allowance e.

Allowance and guest bill

E.

The guest ledger is also called the: a.

Room-rate ledger b.

Front-office ledger c.

Registration ledger d.

Visitor accounts (outside the U.S.A.) e.

Both b and d

E.

Guests can access their bills by means of: a.

In-room televisions b.

Terminals c.

Under-the-door deliveries d.

Guest-service agents e.

All of the above

B.

Master accounts are always used for: a.

Travel writers b.

Convention groups c.

Casino high-rollers (whales) d.

Guests who occupy suites e.

All of the above

BONUS - 66

Chapter 11 Because they are savvy individuals, most hotel guests settle their accounts with cash, avoiding thereby the cost of doing business with credit cards. F. Just as many predicted, the U.S.A. unofficially became a cashless society within the the past three years or thereabouts. F. Cashiers at every department of the hotel (dining room, bar, etc.) take in and pay out cash throughout the business day. F. Before the POS was available, employees frequently came to the front desk to collect tips that were added to guest checks in the bars and restaurants. T. Foreign exchange rates at ATMs are usually lower than those at foreign banks. T. Contractors install, maintain and pay commissions for newspaper racks and cigarette and soda dispensers that they place in hotel lobbies. T. A lobby concessionaire is appointed by the rooms manager to handle and resolve guest complaints. F. Outside businesses that service hotel guests (florists or guest laundry, for example) need the hotel to act as a middleman in collecting for services rendered. T. $100 dollars is the legal separation of regular transactions from petty- cash transactions (petty means small) throughout most states and, consequently, most hotels. F. It takes longer for guests to check out if they elect to pay with cash. T. The night audit and the day audit are the same procedure, repeated by two different persons as a means of verification. F. Front-office-cashier reports are used in both the night audit and the income audit. T. Maintaining the same size bank for every cashier is the most accepted method of cash control in large hotels. F. Most hotels allow cashiers to keep overages provided they reimburse shortages. F. Front-offices cashiers handle both cash receipts and cash payments; so do most F&B cashiers. F. “Due backs” may not be requested simply because the cashier has a drawer-full of large bills. F. “Breakage” refers to the loss of room income when fewer guests arrive than were originally booked as a group. F. BONUS - 67

U.S. hotels that include foreign exchange at the desk will sell dollars, but not buy dollars (that is, not sell their foreign currency). T. Despite an ever-increasing flow of foreign tourists to the U.S.A., few U.S. hotels operate a foreign-exchange service. T. In order to keep exchange costs low, hotel cashiers are instructed to make change in foreign currency they have — perhaps the guest will even accept currency other than their own. F. Hotels have two types of accounts receivable: registered guests and city guests. T. Credit cards still keep their original distinctions: Bank cards were and still are for individuals; T&E cards were and still are for business use only. F. Despite their names, “debit cards” are really no different from “credit cards.” F. Hoteliers and other retailers like debit cards because there is no float. T. Chip cards (digital cash) have electronic chips instead of magnetic strips. T. One could visualize future cell-phones morphing into smart cards. T. Co-branded card-users get many of the special hotel privileges associated with frequent-guest programs (FGP). T. Under most convention contracts, hotels are required to charge the personal (room) folio of the individual who signed the voucher for a particular group event. F. A master folio is the control record that hotels use to balance the city-ledger. F. Split folios are used when one portion of the bill is posted in the guest ledger and the other portion is posted to the city ledger, but it need not be 50%-50%. F. In order to be a “city” account, the guest must live within the city as delineated by the last national census; that opens the procedure to several difficulties. F. Three-day billing is standard procedure for banquet charges, master accounts and speedy checkouts. T. POSs, point-of-sale terminals, have almost eliminated late charges. T. Hotels can collect late charges with less difficulty if the guest has used speedy check-out instead of checking out at the desk. T. E-folios offer advantages to the business guest; to that guest’s company paying for that employee’s travel expenses and for the hotel housing that guest. T. BONUS - 68

Passing bad checks is a criminal offense even if restitution is made. T. Some “due bills” are negotiable and traded on the open market, and some are not. T. Hotels use due bills most frequently during the economy’s up-cycle. F. Due-bill users are assigned the least expensive rooms because the media (TV, newspapers, etc.) run the hotel’s ads in the poorest locations or times; tit-for-tat. F. The “dollar” denomination is unique to U.S. currency; no other country uses dollars. F. Good occupancy enables a hotel to adopt a conservative credit policy. T. All else equal, a hotel manager would be more likely to extend credit for group room sales than for group food-and-beverage sales. T. The longer a bill remains unpaid, the more likely the bill will never be paid. T. Collection agencies use the same techniques (letters and telephone calls) that hotels can use for collecting bad debts. T. Chargebacks (or debit memos) take place when city-ledger accounts are transferred (returned to) the guest ledger; an advanced deposit, for example. F B.

Cash is: a.

Considered a liability in accounting terms b.

Subject to both guest and employee dishonesty c.

The only means of payment accepted by mom-and-pop motels d.

The most common method of payment used by accounts receivable e.

All of the above except d

E.

Employees who handle money must be on the alert for: a.

Counterfeiters b.

Bad check passers c.

Photocopiers d.

Short-change manipulators e.

All of the above

C.

Among the advantage/s of membership in PGPs (Preferred-Guest Programs) is/are: a.

Waiver of fees for bad checks b.

Reduced charges for room service c.

Check-cashing privileges d.

First call on handicapped-room reservations e.

All of the above

BONUS - 69

B.

“Should have” and “does have” is meaningful for: a.

Room reservation projections b.

Cash over and short computations c.

Room availability projections d.

Comp counts for convention groups e.

All of the above except d

E.

Which of the following credit-card fees would a hotel NOT pay? a.

Set-up fees b.

Per-transaction fees c.

Programming fees d.

Lease fees e.

None of the above; that is, hotels pay all these fees

E.

Which of these costs result from credit-card “chargebacks?” a.

A chargeback fee paid to the credit-card company b.

Loss of the value of the sale being charged back c.

Tips added to the original check d.

None of the above are “costs” e.

All of the above

D.

Master accounts: a.

Are usually used by heads of families b.

May not exceed two per convention group c.

Can be structured to avoid “b” (above) d.

Use basic front-office folios e.

Both/either b and c depending upon the contract

E.

Hotels render a bill (folio) whenever the: a.

Week has passed b.

Deposit has been used c.

The total folio approaches a pre-set figure d.

Daily charges exceed a pre-set figure e.

All of the above except b

D.

Which of the following has (have) a credit “floor”? a.

The guest b.

The hotel c.

The credit-card company d.

All of the above e.

None of the above

BONUS - 70

Chapter 12 Charges and debits are interchangeable accounting terms. T. The night audit closes the hotel’s day, which the American Hotel & Lodging Association (AH&LA) has set at 1 AM, although exceptions are allowed upon petition. F. Pencil-and-paper night audits spend a great deal of time and energy uncovering errors caused by the very pencil-and-paper system. T. Night auditor jobs are hard to fill because most of the U.S. states require that person to be a certified public accountant, CPA. F. Many non-accounting duties face the night auditor when he or she is the sole employee on duty during the late-night and early-morning hours. T. The night audit has grown less important in modern hotels because most guests now pay with credit cards rather than cash. F. “Account Receivable” is an accounting way of saying, “that guy owes us money.”

T.

The night audit audits all types of sales – cash sales; sales on account; sales throughout the hotel for rooms, food, bars, spas, etc. F. The Daily Report to the Manager, which is prepared by the income or day auditor, is a more inclusive report than the Night Auditor’s Report to the Manager. T. The night audit reconciles the hotel’s accounts receivable nightly whereas most other business types do that monthly or even less frequently. T. City-ledger receivables must be audited more frequently and more promptly than an audit for transient receivables. F. Writing $53.21 as $35.21 is called a transposition; writing $53.21 as $532.10 is called a slide. T. The closing balance of each day is the same as the opening balance of the following day; whether the count is cans of peas, bottles of scotch or accounts receivable. T. If the night audit is too relied upon, only the night auditor should be permitted to post room charges and taxes. F. Simply put: The night audit proves that all cash sales by registered guests have been recorded and the guest folio properly charged. F. Management should contact the room – enter it if necessary – if the “Do-Not-Disturb” sign remains there throughout the day. T. BONUS - 71

A “Reverse Housekeeper’s Report” goes from the linen room to the floor housekeepers rather than the traditional route of the floor housekeepers to the linen room. F. Uncovering errors is not the real purpose of the night audit; correcting records is. T. “The total equals the sum of the parts” means that the total income charged to individual account-receivable folios should equal the total of charged sales recorded for that particular department. T. Both wage-and-hour regulations and union contracts prevent night auditors from remaining beyond their work hours even if they have failed to balance within the shift. F. Night auditors can do their jobs even if they do not understand the accounting difference between a debit and a credit. T. If a PMS crashes, at say, 8:00 am, it is not possible to accurately check out a guest, at say, 8:15 am. F. POS terminals electronically connect the various departments to the PMS, except for telephone calls, which must still be manually posted to the folio. F. One would expect an Arrivals Report to help the bell-service department. T. Many computer-prepared reports are “dumped” 24 hours after they were printed. T. Both pencil-and-paper audits and electronic audits use similar, sometimes identical, departmental control sheets. F. As their title suggests, “Exception Reports” are not usually prepared during the night audit; they are exceptions prepared only when management seeks special information. F. By using “turnkey” installations, the hotel industry has slowed innovation and stalled the development of new uses for Property Management Systems. F. “Today’s opening balance must equal yesterday’s closing balance” is an issue for pencil-andpaper audits but is not a factor for electronic audits. F. To speed check-outs, folios of departing guests may be placed under the guest-room door, even if the hotel offers in-room television access. T. Property Management Systems capture a great deal of information that can then be arranged and reordered in a variety of reports. T. An “on-change” report indicates which guest rooms are undergoing renovation and when they will be ready for sale again. F. BONUS - 72

The night auditor reconciles only account-receivable sales. T. Property Management Systems require unit managers to wait for nightly reports rather than having the data for operational decisions throughout the day. F. Restaurant POS terminals reduce bad debts by rejecting invalid meal checks from guests who have already checked out and/or paid in advance. T. We’re not there yet, but a computerized system might eventually display information such as the number and identity of vacant king rooms. F. “Downtime Reports” are used whenever the night audit crew takes a break for rest or meals. F. The Night Auditor’s Report to the Manager contains a running (cumulative) balance of accounts receivable at the desk, cans of peas in the storeroom and bottles of scotch at the bar. F. Information on the Night Auditor’s Report may be changed as a result of the income auditor’s work. T. Having a credit manager on duty is more important to the operation of a highway motor inn than for an upscale, four-star hotel. F. Two ratios, the Percentage of Occupancy (%) and the Average Daily Rate (ADR), are among the statistics included on the Night Auditor’s Report to the Manager. T. A Room Status Report shows rooms occupied, vacant, out-of-order and on-change for a particular day although it is prepared as part of the night audit. T. A well designed credit-limit report would list the outstanding balance of every folio so the credit manager could see how close to the limit was any particular balance (folio). F. Yield Management depends on current and accurate information about reservations, the very information provided by the Reservation Reports of a PMS. T. PMS systems are reliable enough that backups are only needed once a week. F The most valuable communication tool for the front desk and housekeeping is the Room Productivity report. F Room count and house count are terms for the same number, the number of room occupied. F While true that the closing balance on one day’s rooms, guests, and dollars should equal the opening balance of the following day of these tallies, the Change Report highlights the exceptions that occur between the two. T

BONUS - 73

Sleep-outs are rooms with guests who have not received their baggage due to transportation mishaps. F The Housekeeper’s Report is generated by the front desk for housekeeping. F The Reverse Housekeeper’s Report is also called the Room Occupancy Status Report. T Pencil-and-paper folios are used to create emergency backups in the event of a PMS crash. F

B

Which of the following symbols is (are) used in the Housekeeper’s Report? a.

NB: Baggage in the room appears to be worthless b.

B: Baggage in the room, no occupant c.

S: No baggage in the room; appears to be a Skipper d.

PA: No baggage in the room; Paid in advance e.

All of the above are used to make the report complete

A

Too early a closeout hour: a.

Throws many charges onto the following day’s folio and audit b.

Probably increases the number of skippers c.

Puts serious time pressure on the night auditor to finish d.

Will likely reduce sales in cocktail lounges and room service e.

All of the above, except b

E

PMS are changing dramatically as hotels a.

Adopted and implemented HITIS b.

Access the World Wide Web c.

Install more and more dedicated software d.

Use a Window environment e.

All of the above except c

A

Organizationally, the night auditor is most likely to be a member of the: a.

Accounting department b.

Front-office staff c.

Legal division d.

Manager’s personal advisory group e.

None of the above

C

Night auditors prepare: a.

Bank deposits b.

Cash overages and shortages c.

Reports d.

Long-distance telephone records e.

All of the above

BONUS - 74

E

Which of the following does NOT belong in the set? a.

Speedy check out b.

Zip-out check out c.

No-wait check out d.

VIP check out e.

None of the above; they are the same process with different names

D.

Which of the following is NOT done electronically by a Property Management System? a.

Addition and subtraction b.

Posting room charges c.

Preparing reports d.

Reconciling discrepancies between the Housekeeper’s Report and the desk e.

None of the above; that is, the PMS does all of these

D

An “Allowance Report” is an example of a (an): a.

Reservation Report b.

Room Status Report c.

Registration Report d.

Exception Report e.

None of the above

C Which of the following reports would be of the most help for management involved in planning new room additions to the hotel? a.

An Exception Report; a Skipper Report, for example b.

A Credit Report; a Cumulative Charge Report, for example c.

A Reservation Report; a Daily Analysis Report, for example d.

A Rooms Management Report; Rooms Out Of Order, for example e.

Both b and d E Night auditors prepare both dollar denominated and non-dollar reports; an example of the second type includes: a.

Tomorrow’s arrival list b.

Tomorrow’s departure list c.

Reverse housekeeper’s report d.

Front-office log e.

All of these E

There are sales that may not appear within the night audit, such as: a.

Nonregistered guests buying F&B services with credit cards b.

Registered guests buying F&B services with credit cards c.

Banquet sales posted directly to the city ledger d.

Registered guests buying F&B services for cash e.

All of the above

BONUS - 75

D

Accounts Receivable reports include: a.

Permanent Guest Reports b.

ADA Reports c.

Pickup Reports d.

Alpha Reports e.

None of the above

E

Occupancy and Rooms Revenue reports include: a.

Room count b.

Room income c.

House count d.

Alpha list e.

All of the above except d

D

Zip-out check outs, due to the nature of the process, have not included the use of: a.

In-room TV sets b.

Lobby consoles c. efolios d.

In-room telephones e.

Envelopes

B

Which of these alphanumeric codes, widely used by the hotel industry, is NOT correct? a. √ = Occupied b.

NS = No Show c.

VD = Vacant and dirty d.

OOO = Out of order e.

DND = Do Not Disturb

BONUS - 76

Chapter 13 The recent spurt of hotel technology comes as no surprise; hoteliers have always been technology leaders, investors and innovators. F. Hotelkeeping is highly segmented; even the “big guys” are small as business enterprises are measured. T. The hotel industry under the leadership of the AH&MA (now the AH&LA) was at the forefront of new technology: researching and investing large sums during the 1990 decade. F. Early technology, such as ice machines in the room or on the floor, was designed and seen primarily as labor-savings devices. T. Call accounting systems (CAS) post telephone charges directly to guest folios through an interface with the PMS. T. Amenity creep [read: competition] pushes hotels to adapt new technology rather quickly. T. Telephone department became profitable after federal deregulation and have remained so ever since. F. If guests are unable to distinguish one hotel property from another, the product that innkeepers sell becomes a commodity and price becomes the major determinant of the purchase. T. Wireless Internet carries a cost: security breaches of private conversations is a real possibility.

T. Monitors no longer use CRTs, cathode ray tubes, because they emit dangerous radiation. T. Key chronology (sequence) runs something like this: First, there were no keys; then ELS with card keys; iron keys came next; mechanical keys followed; RFID (radio frequency identification) keys are on the horizon. F. Mechanical keys carried the hotel’s name and room number on the tags putting security in doubt.

T. Biometric systems are not popular because they require guests to have a fixed (national) PIN (number) that can be used at any site within the country. F. Most U.S. hotels now use some form of electronic locking systems (ELSs). T. “Hard-wired key systems” are a misnomer (incorrectly named) because there are no wires in a hard-wired system. F.

BONUS - 77

One disadvantage of ELSs is the long delay between the guests’ arrival at their rooms (after registration) and the system’s inability to give them immediate room access. F. Keycards for ELS are inexpensive plastic that quickly disintegrates after use, especially at resorts where sun, water and sand interact with the material. F. Keycards can be recycled; they can be used for another guest and another room. T. Two-way communication systems for electronic locks enable guests to access locked areas other than the guest room – swimming pools; parking structures; exercise facilities. T. Elevator access to the concierge floor can be controlled through an electronic locking system. T. Energy management has grown in importance because energy is the industry’s second largest operating (variable) cost after labor. T. A body-motion detection system is the first line of defense in fire-safety. F. Someone discussing: “sold; sold and occupied; sold but unoccupied; and unsold (or vacant)” could be talking about an energy management system. T. The Hotel and Motel Fire Safety Act is a federal law that itemizes the fire safety equipment and procedures that hotels must have if they accept interstate guests, essentially anyone. F. Even early versions of in-room minibars were profitable despite the labor costs associated with counting and restocking inventory. T. Automated in-room minibars are interfaced with the PMS so late charges from missed counts and early departures have been reduced. T. Many hotels bought in-room safes on credit by sharing safe income with the safe’s seller/manufacturer. T. Electronic locks battle external theft; in-room safes reduce internal losses caused chiefly from temptation. T. Strange as it may seem to sophisticated electronic users, in-room alarm clocks are a must for most travelers. T. Guests have rushed to adopt biometric security in hotels and motels just as they have done as travelers at airports and at industry sites. F. “Interstate” and “intrastate” mean the same; local customs have produced different eastern and western spellings. F.

BONUS - 78

Guests prefer centralized HVAC systems over individual in-room installations, which are so noisy. F. Most hotel chains have broadband, high-speed Internet connections, which could be used as lowcost telephone servers, VOIP. T. Even in a period of rising costs, technology costs continue to fall relatively. T. For hotels, technologies greatest impact has been at the desk, with the PMS. T. It may be an anomaly (a contradiction), but self-service kiosks are seen to be an improvement in service. T. Hotels adopted electronic locking systems despite the ease and speed of changing locks and keys with a manual key systems. F. HTNG (Hotel Technology, the Next Generation) is just that: the next generation after HITIS (Hospitality Industry Integration Standards). T. With all the advances in technology, it is very easy today to impress guests with a hotel room that is more advanced than a quest’s own home. F State-of-the-art hotels have eliminated the physical front desk, opting instead for hand-held devices. T Even though most of the check in function can now be performed with a mobile device, doorlocks and swiping of credit cards use hard-wired machines so there is still a front desk space requirement to complete the check in. F Because of the constant need to respond to amenity creep, innkeepers have always been technology leaders. F Hoteliers’ use of technology had to mature with its rapid introduction, learning to use it for the right reasons in order to reap the benefits. T Because of the competitive environment in the hotel industry, cost/benefit analysis is rarely done when looking to upgrade technology. F Strangers often slept in the same bed in inns during colonial times and keys were not used. T During the times when less bulky brass keys were used by hotels, they were so costly to replace that hotels did not change locks just because a key was not returned so found keys could be used by thieves. T With plastic tags, keys follow the room, not the lock. F BONUS - 79

Plastic keys are a form of mechanical locking systems. T With plastic keys, the design of the lock establishes a hierarchy of keys to open the door; previous keys are rejected by the lock. T While plastic keys allow access through a hierarchy, deadbolts cannot use the same system due to their physical constraints. F Since hard-wired systems can use the existing wiring in any hotel, they are relatively inexpensive to retrofit. F Hard-wired ELS transmit a new code for room access before the guest arrives at their door, invalidating the previous code simultaneously. T Microprocessor-based ELS are ideal for retrofit hotels. T ELS microprocessors, since they have to be so small, can provide little information beyond holding the room access code and unlocking the door with card use. F With two-way ELS communication systems, the key communicates with a central database, giving the guest freedom to use the card for access to more than just their room (the pool area, for example). T Since magnetic stripe cards hold more than one track in their magnetic strip, they can carry more than lock access, a guest’s credit card number being a common use of a secondary track. F The use of an RFID locking system allows a guest to keep their tag for each visit, a major step in guest service for their frequent guests. T Even if a guest arrives with their RFID tag, they still need to go through a brief front desk check in process to receive the new code for room access. F RFID locks are close proximity systems requiring a physical contact with the door’s locking device. F Since RFID’s track a guests overall movements, then scrutiny of their visited places and time spent there is useful for marketing promotions to them or tracking conference attendance, to name just two uses. T Biometric locking systems provide security because they are one-way communication systems. F In spite of potential privacy risks with biometric systems (your iris ID ending up in the wrong hands), adoption of these systems is increasing because of the ease it gives in the guest experience overall. F With all the improvements offered by RFID systems, smartphones stand to replace them via apps that allow for close-proximity room access. T BONUS - 80

With increased use of smartphones in the hotel setting, the opportunities abound for upselling and suggestive selling. T

A

Which of the statements about electronic locking systems is NOT accurate? a.

The keycard console is a large piece of equipment kept at the front desk b.

The system can include one-way or two-way communication c.

Each guest gets a new or recycled keycard d.

Lost keycards are inexpensive to replace e.

None of the above; that is, they are all accurate.

D

Ergonomics deals with: a.

A new interface for PMSs b.

The obsolescence of computer equipment c.

The economic meaning of hotel statistics d.

The interaction of persons and equipment e.

All of these; they’ll all the same with a different slant

B

HOBIC means: a.

Hotels Of [the] Best International Chains, an affiliated rating service b.

Hotel Billing Information Center, a telephone system c.

Hospitality Overseas Building Into [a] Chain, an Asian form of joint venture d.

Hotel Oversight By Independent Council, a hotel group that evaluates technology e.

None of the above, they’re random letters

E

“Voice Mail” deals with a.

Automatic morning wake-up calls b.

Tentative attempts at machine-answering reservation systems c.

Electronic translation services for international guests d.

Methods of activating the PMS e.

None of the above, the term is used without meaning

C

The term “resort services” refers to: a.

An all inclusive offering at some resorts b.

The mix of in-house and out-of-house capabilities, primarily at Caribbean resorts c.

Additional fees levied by some properties over, and in addition to, the room rate d.

Advertising jargon used by four- and five-star resorts e.

Both (or either) a and b

E

TV sets can be used for: a.

Welcome message for new arrivals b.

Menus for room service c.

Zip-out check-outs d.

Pay-per-view films e.

All of the above seem right BONUS - 81

C

“Ma Bell” refers to: a.

The first woman innkeeper in the U.S. colonies b.

Industry slang for the silver bells once used to call bellhops c.

AT&T, the telephone company d.

A warm reference to Martha Bell, founder of the Bell Hotel Chain e.

None of the above fits the meaning

D

HVAC is the responsibility of the ___________ department: a.

Bells (Uniformed Services) b.

Housekeeping c.

Front Desk d.

Engineering e.

All of the above, depends upon the time and location

E

In-room hotel safes can be activated by: a.

Magnetic stripe cards b.

Codes (digital) entry c.

Keys d.

Biometrics e.

All of above, depending upon the make and model

B

Regulatory control of the hospitality industry’s telephone system rests with the: a.

AH&LA b.

FCC c.

INNCOM international inc. d.

AT&T e.

None of the above, telephones are not regulated

D

Telephones, like locks and safes and minibars, have gone through stages of development; for telephones the sequence has been: a.

High speed; dial-up; wire; wireless b.

Dial-up; VOIP; operator-assisted; wireless c.

Operator-assisted; Internet; dial-up; high-speed wire d.

Dial-up; high-speed wire; wireless; VoIP e.

All of the above because it is difficult to say which came first

C

Self-service kiosks: a.

Make change for foreign currency b.

Imply, for many guests, that management is uncaring c.

Generate extra income by accepting advertising d.

Have replaced telephone booths in lobbies e.

Both a and c

BONUS - 82

E

Voice-Over-Internet Protocol is identified as a.

VOIP b.

VoIP c.

IP telephony d.

Broadband telephone e.

All of the above, terminology is somewhat in flux (changing)

E

Internet-based systems: a.

Allow guests to register before arrival b.

Enable departed guests to review folios over the Internet c.

Rely on debit cards, not credit cards d.

Use guest-room control panels to upgrade service e.

Both a and b

E

Proximity-based apps do not include: a.

Coupons offered while outside a retail establishment b.

Announcements of programs starting within walking distance c.

Casino games and events d.

Guestroom access e.

None of the above

E

Guest room keys with two-way communication enabled still cannot access: a.

Parking Garages b.

Concierge floors c.

Fitness Rooms d.

The Pool e.

None of the above since they can gain access to all of them

E

Hotel-related smartphone apps are gaining momentum; they are already being used for: a.

Suggestive Selling b.

Check in c.

Upselling d.

Payment e.

All of the Above

BONUS - 83

Instructor’s Easy Guide Incorporating interactive CD-based exercises contained in the new

Front Office Management Simulation (CD) with the use of:

Check-In Check-Out (8th. Edition) Vallen and Vallen

Check-In Check-Out by Vallen and Vallen is an excellent textbook designed to enhance the learning experience of all students reading it. Students will benefit even more from the text when it is used in conjunction with the Prentice Hall Front Office Management Simulation CD (FOM Simulation) because they will actually be able to practice the concepts presented in that text.

The FOM Simulation CD was designed to replicate the kinds of tasks students working at a hotel’s Front Desk would complete using their hotel’s property management system (PMS).

These tasks include important activities such as forecasting rooms’ availability, making reservations, checking guests in and out, balancing ledgers, and completing a Manager’s Daily.

This newly released and innovative educational tool consists of: • •

A student’s interactive practice disc (CD) with 24 individual lessons An on-line Instructor’s Guide with teacher’s notes about each of the 24 lessons, as well as each lesson’s answers.

The on-line Instructor’ Guide contains: • • •

An overview of each simulation lesson’s objective A description of the importance of the simulation topic Complete “Answer screens” for each lesson

When used in conjunction with Check-In Check-Out, students will benefit from two excellent teaching resources. This Instructor’s Easy Guide was designed to make it simple to identify the concepts presented in Check-In Check-Out and match them to the parallel learning experiences made possible by utilizing the FOM simulation. To make it trouble-free to do so, this Guide: • • •

Presents the learning objective of each FOM Simulation lesson Identifies each simulation lesson’s correlating topic areas as presented in Check-In Check-Out Pinpoints the specific text chapters and Page(s)s where the concepts related to the FOM Simulation lessons are located

The FOM Simulation appeals directly to current students’ desire for immediate feedback and interactive learning. It can be used in a classroom computer laboratory or by individual students utilizing their personal computers. Instructors may make use of all 24, or any number of the following individual lessons.

Front Office Management Simulation CD Lessons Topic

Topic

Topic

Topic

Topic

Revenue Management

Lesson Title

Lesson 1 Main Lesson 1 Advanced

Enter Occupancy Forecast Data Estimate Future Rooms Revenue

Lesson 2 Main Lesson 2 Advanced

Manage Group Block Data Modify ADR Estimates

Reservation Management Lesson 3: Main Lesson 3: Advanced

Make Individual Room Reservations Modify Individual Room Reservations

Lesson 4: Main Lesson 4: Advanced

Make Group “Master” Reservations Modify Group “Master” Reservations

Lesson 5: Main Lesson 5: Advanced

Learn Revenue Management Principles Determine Room Rates to Be Charged

Guest Stay Information Lesson 6: Main Lesson 6: Advanced

Update Room Status Reports Schedule Room Attendants

Lesson 7: Main Lesson 7: Advanced

Assign Guests to Specific Rooms Make Alternate Room Assignments

Guest Departure and Payment Lesson 8: Main Lesson 8: Advanced

Post Folio Charges Adjust Folio Charges

Lesson 9: Main Lesson 9: Advanced

Split Charges and Close Folios Manage Payment Disputes

Accounting and Financial Summaries Lesson 10: Main Lesson 10: Advanced

Balance and Close Out a Shift Balance a Full Day’s Shift Reports

Lesson 11: Main Lesson 11: Advanced

Reconcile a Guest Ledger Reconcile a City Ledger

Lesson 12: Main Lesson 12: Advanced

Complete a Manager’s Daily Assess Competitive Set Data

Attractively priced when purchased jointly, the use of Check-In Check-Out in conjunction with the Front Office Management Simulation CD is a winning combination for students and for their Hospitality instructors.

Instructor’s Easy Guide to Using: Check-In Check-Out (8th. Edition) and The Front Office Management (FOM) Simulation This Instructor’s Easy Guide will help you quickly identify many of the areas within Check-In Check-Out (8e) that correspond to the lesson objectives found in the FOM Simulation. These are suggested content pairings, but individual instructors may prefer to make use of specific FOM Simulation lessons in other portions of the text. Of course, Instructors should utilize lessons in the FOM Simulation in any manner that best helps meet the unique instructional needs of their own students.

FOM Simulation: Lesson Number and Objective

Lesson Topic(s) in Text

Location of Lesson Topics in: Check-In Check-Out (8e) (ISBN: 0132059673)

Forecasting Available Rooms

Chapter

4

Page(s)

130146

Hotel Room Demand

Chapter

9

Page(s)

326

Lesson 1 Main: Enter Occupancy Forecast Data In this lesson, students will learn how to read, and then make adjustments to, a hotel’s occupancy forecast. Second, they will become familiar with what they must know to successfully navigate this simulation product (e.g. selecting the proper cell for the appropriate data entry).

FOM Simulation: Lesson Number and Objective

Lesson Topic(s) in Text

Location of Lesson Topics in: Check-In Check-Out (8e) (ISBN: 0132059673)

Lesson 1 Advanced: Estimate Future Rooms Revenue

The Yield Management Revolution

Chapter

5

Page(s)

188

Hotel Room Demand

Chapter

9

Page(s)

326

Chapter

4

Page(s)

130146

Chapter

6

Page(s)

229

Chapter

9

Page(s)

326

Chapter

5

Page(s)

188

Chapter

9

Page(s)

354

In this lesson, students will learn how to interpret data found on a 14-day occupancy forecast, and then based upon pre-established room rate strategies, apply them to estimate the Rooms Revenue that will be achieved on selected dates included in the forecast.

Lesson 2 Main: Manage Group Block Data

In this lesson, students will learn Forecasting how to modify an occupancy Available forecast by entering group block Rooms information into the forecast. As a Adjusting the result, students will learn that Room Block rooms blocked ( but not sold/ picked-up), still reduce the number Hotel Room Demand of guest rooms available to sell.

Lesson 2 Advanced: Modify ADR Estimates In this lesson, students will learn how to develop a more accurate Room Revenue forecast for a The Yield specific time period based upon an Management evaluation of the hotel’s occupancy Revolution and the total number of rooms available for sale during that period. They will also learn to modify ADR estimates based upon Determining the number of hotel rooms the Proper remaining to be sold.

Room Rate

FOM Simulation: Lesson Number and Objective

Lesson Topic(s) in Text

Location of Lesson Topics in: Check-In Check-Out (8e) (ISBN: 0132059673)

Lesson 3 Main: Make Individual Room Reservations In this lesson, students will learn Traditional and practice the proper procedures Reservation for making guest room Channels reservations.

The guest room reservation process is an important skill that any hotelier associated Information with the front office simply must Contained in the master.

Reservation Lesson 3 Advanced: Modify Individual Room Reservations In this lesson, students will learn and practice the proper procedures for retrieving from a PMS, then modifying or canceling, previously made guest room reservations.

Chapter

5

Page(s)

174

Chapter

6

Page(s)

206212

Traditional Reservation Channels

Chapter

5

Page(s)

174

Information Contained in the Reservation

Chapter

6

Page(s)

206212

FOM Simulation: Lesson Number and Objective

Lesson Topic(s) in Text

Lesson 4 Main: Make Group “Master” Reservations In this lesson, students will learn Marketing to and practice the procedures for the Group making a “group block” reservation in a PMS. As a result Traditional students will learn the fundamental Reservation Channels components that are needed to complete a group “Master” The Yield reservation.

Management Revolution Information Contained in the Reservation Convention and Tour Group Business Handling Tour Group Reservations

Location of Lesson Topics in: Check-In Check-Out (8e) (ISBN: 0132059673)

Chapter

2

Page(s) 47-53

Chapter

5

Page(s)

174

Chapter

5

Page(s)

188

Chapter

6

Page(s)

206212

Chapter

6

Page(s)

220221

Chapter

6

Page(s)

237

FOM Simulation: Lesson Number and Objective

Lesson Topic(s) in Text

Lesson 4 Advanced: Modify Group “Master” Reservations In this lesson, students will learn Marketing to and practice the proper procedures the Group for retrieving and then modifying Traditional group block “Master” reservations.

Reservation Channels The Yield Management Revolution Information Contained in the Reservation Convention and Tour Group Business Handling Tour Group Reservations Lesson 5 Main: Learn Revenue Management Principles In this lesson, students will learn How Hotels principles of revenue (yield) Count and management that are utilized by Measure hoteliers when determining the The Yield rates that they should charge for Management their guest rooms.

Revolution Determining the Proper Room Rate

Location of Lesson Topics in: Check-In Check-Out (8e) (ISBN: 0132059673)

Chapter

2

Page(s) 47-53

Chapter

5

Page(s)

174

Chapter

5

Page(s)

188

Chapter

6

Page(s)

206212

Chapter

6

Page(s)

220221

Chapter

6

Page(s)

237

Chapter

1

Page(s)

5--10

Chapter

5

Page(s)

197

Chapter

9

Page(s)

354

FOM Simulation: Lesson Number and Objective

Lesson Topic(s) in Text

Lesson 5 Advanced: Determine Room Rates to be Charged In this lesson, students will apply the knowledge learned in Lesson 5: The Yield Main to adjust the room rates their hotel will charge on future selected Management dates based upon the room demand Revolution levels forecasted for those dates.

As a result, students will recognize the relationship between accurate room demand forecasts and the Determining optimization of room rates. the Proper Room Rate

Location of Lesson Topics in: Check-In Check-Out (8e) (ISBN: 0132059673)

Chapter

5

Page(s)

197

Chapter

9

Page(s)

354

307309

Lesson 6 Main: Update Room Status Reports In this lesson, students will learn how to read a Housekeeping report and use the information in it to update guest room status within the PMS. Lesson 6 Advanced: Schedule Room Attendants

The Assignment Process

Chapter

8

Page(s)

In this lesson, students will review a selected day’s rooms sales forecast and, based upon preestablished standards for the amount of time required to clean various types of rooms, create a work schedule detailing the number of room attendant hours that will be required to fully staff that date.

Forecast Scheduling

Chapter

3

Page(s) 98-99

Lesson Topic(s) in Text

Location of Lesson Topics in: Check-In Check-Out (8e) (ISBN: 0132059673)

The Assignment Process

Chapter

8

Page(s)

307309

The Assignment Process

Chapter

8

Page(s)

307309

Lesson 8 Main: Post Folio Charges In this lesson, students will learn how to keep guest records up-to- Posting to the Chapter 10 Page(s) Folio date by posting (recording) five different transactions to active Posting Room guests' folios.

Chapter 10 Charges

388

FOM Simulation: Lesson Number and Objective Lesson 7 Main: Assign Guests to Specific Rooms In this lesson, students will learn how to assign arriving guests to a Ready and Vacant room of the room type requested on the guest’s room reservation which students made in Lesson 3. As a result, students will learn how guests are checked into Ready (clean) and Vacant rooms that these guests have previously requested.

Lesson 7 Advanced: Make Alternate Room Assignments In this lesson, students will learn how to assign arriving guests to Ready and Vacant rooms when the room type originally requested on the guest's reservation is not available at the time of check-in.

396

FOM Simulation: Lesson Number and Objective Lesson 8 Advanced: Adjust Folio Charges In the previous lesson, students learned how to manually post charges to guests' folios. In this lesson, students learn how to manually adjust (deduct) charges from guests' bills.

Lesson 9 Main: Split Charges and Close Folios In Lesson 8, students learned how to manually post charges to, and adjust charges from, guests’ folios.

In this lesson, students will learn how to close (accept full payment on) guest folios, and if needed, split guest charges among various hotel accounts when checking guests out.

Lesson Topic(s) in Text

Location of Lesson Topics in: Check-In Check-Out (8e) (ISBN: 0132059673)

Recording Credits to Accounts Receivable

Chapter 10 Page(s)

398403

Settling with Transfers

Chapter 10 Page(s)

403

Mechanics of the Entry

Chapter 11

443

Lesson 9 Advanced: Manage Payment Disputes In this lesson, students learn techniques and actions Front Office agents should take when they Handling the encounter guests who are disputing Face-to Face all or part of the charges that Complaint appear on their folios.

Chapter

Page(s)

278

Allowance for Chapter 10 Page(s) Poor Service

400

7

FOM Simulation: Lesson Number and Objective

Lesson Topic(s) in Text

Location of Lesson Topics in: Check-In Check-Out (8e) (ISBN: 0132059673)

Lesson 10 Main: Balance and Close Out a Shift In the previous lesson group, students learned how to record guest payments and adjustments, split charges, and close folios. In The Cashier's this lesson, students will learn how Daily Report Chapter 12 Page(s) to sum each transaction group to balance and close a single shift.

Lesson 10 Advanced: Balance a Full Day’s Shift Report In the previous lesson, students learned how to balance and close a The Cashier's Chapter 12 Page(s) single shift report. In this lesson, Daily Report students will learn how to balance and close a full day’s shift report.

Closing Chapter 13 Page(s) Routine Lesson 11 Main: Reconcile a Guest Ledger In this lesson, students will learn how a hotel’s Guest Ledger accurately maintains records of its registered guests’ purchases and payment transactions.

468

468

510

Settling with Transfers

Chapter 10 Page(s)

403

Recording Charges to Accounts Receivable

Chapter 10 Page(s)

392

Closing Routine

Chapter 13 Page(s)

510

FOM Simulation: Lesson Number and Objective

Lesson Topic(s) in Text

Lesson 11 Advanced: Reconcile a City Ledger In this lesson, students will learn how a hotel’s city ledger accurately maintains records of its non- Settling with Transfers registered guests’ purchases and payment transactions.

Location of Lesson Topics in: Check-In Check-Out (8e) (ISBN: 0132059673)

Chapter 10 Page(s)

403

Chapter 11 Page(s)

416

Mechanics of Chapter 11 Page(s) the Entry

443

Review: The City Ledger

Closing Routine

Chapter 13 Page(s)

510

Chapter 13 Page(s)

524528

Chapter

191194

Lesson 12 Main: Complete a Manager’s Daily In this lesson, students will demonstrate they can apply their previously acquired knowledge of Reports to hotel operations by inserting the Manager missing data into a Manager’s Daily report.

Lesson 12 Advanced: Assess Competitive Set Data Students completing this lesson will learn about, and demonstrate their mastery of, the following concepts: • Competitive Sets • An ADR Index • An Occupancy Index • A RevPAR Index

Tools for Measuring Results

5

Page(s)