Introduction to Hospitality, 8th edition John R Walker Solution Manual

Online Instructor’s Manual to accompany

Introduction to Hospitality 8th Edition

John R. Walker

Table of Contents Part I Introducing Hospitality and Lodging 1 1.

Introducing Hospitality

1

2.

The Hotel Business

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3.

Rooms Division

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Food and Beverage

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Part II Beverages, Restaurants, and Managed Services 5.

Beverages

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The Restaurant Business

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Restaurant Management

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Managed Services

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Part III Tourism, Recreation, Attractions, Clubs, and Gaming 9.

Tourism

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Recreation, Attractions, and Clubs

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Gaming Entertainment

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Part IV Assemblies, Events, Attractions, Leadership, and Management 12.

Meetings, Conventions, and Expositions

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13.

Special Events

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Leadership and Management

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Part V Managerial Areas of the Hospitality Industry 15.

Planning

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16.

Organizing

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17.

Communication and Decision Making

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18.

Control

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To my esteemed colleagues: Thank you for adopting this text—hopefully you will find it helpful with teaching this course.

This manual is only a guide for teaching the course. Your resourcefulness will win the day. For example, there is a wonderful story about Bill Marriott, that the editor removed from the first chapter. You can YouTube it by googling Bill Marriott ‘What do you think’? YouTube. There are also several about Conrad Hilton and Horst Schulze and others.

Some chapters have a lot of power points—they were done to accompany a previous edition of this book and although reduced you may suggest students read them outside of class allowing you to focus on activities

Chapter One Introducing Hospitality

I. Chapter Objectives After reading and studying this chapter, you should be able to: 1. Discuss the history of hospitality through the ages.

2. Describe the modern hospitality industry.

3. Explain why service is so important to success in the hospitality industries and how to predict it.

4. Determine and prepare yourself for a career path in the hospitality and tourism industries.

II. Key Teaching Elements/Chapter Outline/Lecture Suggestions Prelude A short introduction to the hospitality industry

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Hospitality through the Ages The word hospitality comes from hospice, an old French term meaning “to provide care/shelter for travelers.”

Hospice de Beaune in Burgundy, France was established as a refuge for the poor in 1443 and still exists today. The sale of wine from its estates every November determines the prices for the next year’s Burgundy wines.

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Ancient Times The Sumerians (in what is now Iraq) were the first to record elements of hospitality as they provided locals and travelers taverns where they served beer, food, and provided a place to stay.

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Between 4,000 and 2,000 B.C.E., early civilizations in Europe, China, Egypt, and India all had some elements of hospitality offerings, such as taverns and inns along the roadside.

Greece and Rome The Code of Hammurabi (circa 1700 B.C.E) made mention of tavern owners responsibilities. Increased travel made some form of overnight accommodations necessary and taverns and inns sprang up everywhere.

By the time Marco Polo traveled to the Far East, there were 10,000 inns with the best in China. The first ‘business lunch’ is reputed to have been introduced for ships brokers who were too busy to go home for midday meals.

Medieval Times Charlemagne established rest houses for pilgrims in the eighth century and innkeepers in Florence, Italy formed a successful guild in 1282 that had 86 members by 1290.

A stagecoach journey from London to Bath took three days with several stopovers at inns or taverns called “post houses.”

In the late sixteenth century, a type of tavern for commoners called an “ordinary” were serving food for a fixed price. The food was “ordinary” and there was no choice in the meal plan.

Coffeehouses Coffee and tea became popular in the sixteenth century and coffeehouses became a way of life.

With water being dangerous, these flavored drinks became popular very quickly. By 1675 Venice had dozens of coffee houses including the Café Florian which is still popular today.

The New World The “ordinary’ as taverns were called in the early days of the American colonies, were gathering places for residents, hold meetings, and conduct business. The first recorded tavern was Coles Ordinary in Boston in 1663.

The tavern was an important part of the new world.

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George Washington used the Fraunces Tavern as his Revolutionary War headquarters and it still operates today.

Even future presidents owned and operated taverns as the new colonies were being established. Innkeepers were respected members of the community.

The French Revolution The French Revolution changed the course of culinary history as it was nobility that employed most of the country’s chefs. With the elimination (literally) of the noble class, French chefs began the immigration to other countries and especially to America and French speaking Quebec Canada.

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Thomas Jefferson installed a French chef in the White House in order to train his kitchen staff, which greatly influenced interest in French cooking in the new colonies.

Many of the immigrant chefs found New Orleans and changed the culinary direction of the region with their style of cooking.

The Nineteenth Century In 1856, Antoine Carême published La Cuisine Classique detailing numerous dishes and sauces. This led to the re-invention of the restaurant and its classic fare. By 1848, a hierarchy of eating places existed in New York City. There was a restaurant, level of service and price for everyone. The Savoy hotel, London (where the author trained) opened in 1889 with Cesar Ritz as general manager and August Escoffier as chef de cuisine. He wrote Le Guide Culinaire, which simplified the extraordinary works of Cêreme. He also installed the brigade system in the kitchen.

American ingenuity created a restaurant for everyone from the “greasy spoon” up to the famous Delmonico’s.

The Twentieth Century Several restaurant chains began in the 1900s, including the classic White Castle with its sparse décor yet popular menu. In 1959 the Four Seasons opened as the first elegant American restaurant that was not French in style.

Following World War II, America took to the road and expanded rapidly with hotels, motels, fast food, and coffee shops. With the expansion of air transportation, hotels and restaurants sprang up to meet the needs of the expanding nation.

In the 1980s, hospitality, travel, and tourism continued to increase dramatically. The baby boomers began to exert influence through their buying power. Due to the growth in air travel, distant exotic destinations and resorts became more accessible and developed tourism.

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The Twenty-First Century The hospitality industry continues to mature with increased market segmentation and consolidation. More people are traveling, especially from and to the United States, China, Brazil, and India.

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The recession slowed the industry, but as we emerged from it occupancies were up along with revenue per available room. Now companies are using technology to offer improved service to guests and driving the margins to squeeze out a reasonable profit.

The Modern Hospitality Industry Welcome to You, the Future Hospitality Industry Leaders!

The hospitality industry is one of the most fascinating, fun, and stimulating to work in, plus you get paid quite well and have excellent advancement opportunities.

The hospitality industry is one where it does not take long before advancement opportunities come along. A degree plus experience enables almost anyone with the service spirit to enjoy success.

One of the reasons that Marriott International is so successful is given by Jim Collins writing in the forward of Bill Marriott’s book The Spirit to Serve: Marriott’s Way. He writes that Marriott has timeless core values and enduring purpose … including the belief that its people are number one… “take care of Marriott people and they will take care of the guests.”

People with a service spirit are happy to do something extra to make the guest’s experience memorable. As one human resource director says, “Creating memorable experiences for others and being an Ambassador of the world, adding warmth and caring.” Now Marriott International is the largest lodging company and it all began as a small root beer shop. Some restauranteurs started out small and with luck and good judgement became rich and famous.

The National Restaurant Association (NRA) forecasts a need for thousands of supervisors and managers in the hospitality and tourism industry.

The secret to success according to one industry veteran is “Service, service, service!”

The Pineapple Tradition The pineapple is a symbol of welcome, friendship, and hospitality.

Imported from the West Indies, pineapples were often served to royal families and the elite.

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The Interrelated Nature of Hospitality and Tourism The hospitality and tourism industry is the largest and fastest growing industry groupings in the world. An exciting aspect is that the industry comprises so many different professions offering graduates a multitude of careers. What position do you see yourself as being in 10 or 20 years?

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Common dynamics in this diverse industry include the delivery of services and products and the customer-guest impressions of them.

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Whether in direct contact with a guest (front of the house) or working behind the scenes (back of the house), the most challenging aspect of working in the industry is creating powerful impressions that have the ability to affect the human experience.

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People who provide services to travelers have the responsibility of representing their communities, creating memorable experiences, and meeting the needs and wants of people away from home.

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Restaurants fill the biological need to eat as well as the need to socialize and to be entertained.

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In managed services, foodservices are provided to institutional clients, meeting the needs of the guests as well as the client itself.

Studies show that as many as 57 percent of consumers now use the Internet to book their travel, a percentage that vastly changes the landscape of the hospitality industry. In fact, technology could be the thin line between a successful business and bankruptcy for many organizations.

Restaurants use more than 30 different technology applications to provide faster, more cost efficient and productive business operations for guests and staff.

Many studies already showed that high-speed Internet is one of the most important in-room amenities that enable guest satisfaction in a hotel.

Characteristics of the Hospitality Industry Open 365 days a year, twenty-four hours a day, the hospitality industry tends to work longer hours than most other industries. Those in senior positions can expect to work 10-12 hours a day regardless of the time or day.

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Due to the industry running twenty-four hours a day, it relies heavily on shift work. Essentially there are four shifts including 11 p.m. to 7:30 a.m., known as the graveyard shift.

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Hospitality industries are in the business of providing guest satisfaction at a price. The difficulty here is that the product is intangible; that is, the

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consumption and production occur at the same time making them inseparable. This helps explain why the product is also perishable; that is, a room or meal not sold tonight cannot be saved and sold tomorrow.

The other unique characteristic of this industry is the perishability of our product. For example, we have 1,400 guest rooms in inventory that are available to sell, but we only sell 1,200 rooms. What happens with the 200 unsold guest rooms? Nothing! We have permanently lost the revenue from these rooms.

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One other unique characteristic of the hospitality industry to consider is the variability inherent within those that produce and consume. For instance, on the production side of the equation, each employee has different levels of skill, knowledge, ability, and passion for what they do and therefore we often see variability in the quality of work. And the same holds true for the guest!

In the hospitality industry, we are in business to make a return on investment for owners and/or shareholders and society. People invest money for us to run a business, and they expect a fair return on their investment.

Success in Service It is critical to offer guests exceptional service. Remember the expression: “If you’re not serving the guest you had better be serving someone who is,” this is the essence of teamwork.

The back of the house is also called the heart of the house. Often the heart of the house associates serve the front of the house associates who in turn, serve the guest. Another objective in the service equation is to encourage guest loyalty. In the hospitality industry there are thousands of guest service encounters every day.

Career Paths There are hundreds of career options for you to consider, and it’s fine if you are not yet sure which one is for you. The text will explore careers in lodging, foodservice, recreation, and special events to name a few.

Hospitality Industry Philosophy We have seen a change in current corporate philosophy. It used to be that corporate philosophy focused on the manager’s ability to plan, organize, implement, and measure performance. Today there is a more stringent shift toward managers’ counseling associates, giving them resources, and helping them to develop and think for themselves. This shift has proven effective in that it promotes empowerment, and strong ties to Organizational Excellence (OE). Major changes include increased corporate ethics, morals, fairness, and equality.

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Service Philosophy Is a Way of Life “Spirit to serve” comes from deep-rooted values. Service should be a commitment to continuous improvement and overcoming adversity. Our culture influences the way we treat associates, guests, and the community, and that affects the success of everyone.

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To achieve success, exceptional service is required. The satisfaction of external customers ultimately measures a company’s success since they are the people who are willing to pay for its services. To ensure success, one must also ensure guest loyalty.

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Given that approximately 70 percent of the U.S. and Canadian economies and an increasing percentage of other countries’ are engaged in service industries, it is critical to offer guests exceptional service.

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This is the age of service, and the hospitality industry is getting revamped because guest expectations have increased and the realization is that “we buy loyalty with service.”

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Sustainable Hospitality The concept of sustainability involves “development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

Sustainability is the ability to achieve ongoing economic prosperity while protecting the natural resources of the planet and maintaining an ideal quality of life for its people and future generations.

Success in Service

A guest is anyone who receives or benefits from the output of someone’s work.

For success in service, it is necessary to focus on the guest, understand the role of the guest-contact employee, weave a service culture, promote hightouch instead of high-tech, and thrive on change.

Guest loyalty is the key.

Moments of Truth Every hospitality organization encounters hundreds of moments of truth (guest encounters) every day. Service commitment is a total organizational approach that makes quality of service as perceived by the customer.

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The Focus on Service Giving great service is a very difficult task; few businesses give enough priority to training associates in how to provide service. The Educational Foundation of the National Restaurant Association (NRA) developed programs to enhance hospitality students’ professional development. One of their courses is Foodservice Leadership.

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Guest service is a central focus of hospitality. It is what hospitality is all about—what we do. Our job, first and foremost, is to enhance the lives of those people (guests, passengers, etc.) to whom we are dedicated to serve. Our job is to make the lives of others better in a small way or big way; it makes no difference.

Quality guest service requires that we understand our guest’s needs. The guest needs to feel welcome, comfortable, and they need to feel important.

Two basic kinds of service have been suggested: Help me and fix it.

Leaders empower associates to give outstanding service to guests.

Career Paths The career path of most individuals is not necessarily in a straight line. The path is often a combination of paths such as food and beverage, rooms division, marketing, human resources, or finance and accounting. Progression from department to department earns you the experience necessary for the next step.

Career Goals If you are not sure of which career path to pursue, that’s OK. Now is the time to explore the industry to gain the information you need to decide which career path to follow. A great way to do this is through internships and work experience.

Is the Hospitality Industry for You? We also know that it is an exciting and dynamic industry with growth potential, especially when the economy is strong. In the hospitality industry we are often working when others are at leisure.

Ensuring that guests receive outstanding service is a goal of hospitality corporations.

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The personal characteristics, qualities, skills, and abilities you’ll need are honesty, hard work, being a team player, being prepared to work long hours spread over various shifts, the ability to cope with stress, good decisionmaking skills, good communication skills, being dedicated to exceptional service, and having a passion and desire to exceed guest expectations.

Recruiters look for service-oriented people, who “walk their talk,” meaning they do what they say they’re going to do. Good work experience, involvement in on-campus and professional organizations, a positive attitude, a good grade point average—all show a commitment to an individual’s studies.

Self-Assessment and Personal Philosophy The purpose of completing a self-assessment is to measure our current strengths and weaknesses and to determine what we need to improve on if we are going to reach our goals. Self-assessment helps establish where we are now and shows us the links to where we want to go, our goals.

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Your philosophy is your beliefs and the way you treat others and your work. It will determine who you are and what you stand for.

Now Is the Time to Get Involved For your own enjoyment and personal growth and development, it is very important to get involved with on-campus and professional hospitality and tourism organizations and participate in the organization of events. Recruiters notice the difference between students who have become involved with various organizations and students who have not, and they take that into consideration when assessing candidates for positions with companies.

Professional Organizations Becoming a student member in hospitality related organizations show your commitment to your career and become a basis for recruiters to see your professional attitude.

Current Issues in Hospitality and Tourism Major trends in the hospitality industry include Globalization, Health, Safety and Security, Diversity and changing Demographics, Service, Technology, Sustainability and Green Travel, Legal issues, Travel with a Purpose, and Social Media and Mobile.

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III. Teaching Techniques/Classroom Exercises I highly recommend watching the YouTube of Bill Marriott’s interview with Steve Forbs which included the lovely story of President Eisenhower asking young Bill “WHAT DO YOU THINK?” Bill Marriott has used those four words to great advantage for years.

Note: The content of these exercises is such that they may also be used as essay questions.

Exercise One: Have students describe the Hospitality Industry. Their descriptions should include industry characteristics and scope, including travel, lodging, foodservice, and recreation.

Exercise Two: Have students research and discuss the corporate philosophy of a company of their choice, preferably one in the hospitality industry. Be sure to include things such as corporate culture, missions, goals, objectives, and strategies.

Exercise Three: Over the past several years, there have been numerous mergers and acquisitions throughout the hospitality industry. An appreciation of “who owns what” and the company growth pattern can help readers understand how integrated the industry is.

IV. Answers to Chapter 1 Review Questions 1. Provide at least three examples of how the hospitality industry has grown and changed over the centuries and elements that have remained consistent over time. Include an example from before the 1500s, from the 1500s to the 1800s, and from the 1900s to the present.

Time Period Changed Remained consistent Pre 1500s Modes of travel Safety of travel Availability of lodging Existence of taverns Need for overnight lodging 1500–1800 Modes of travel Availability of lodging Types of beverages available Cooking styles Development of the kitchen brigade Wider availability of ingredients Improved food safety Need for overnight lodging Need for good roads (infrastructure) Taverns as gathering places 1900 to present Introduction of “fast food” Modes of travel Introduction of new technology i.e. computers, social media Growth of chain hotels and restaurants Wider availability of ingredients Need for overnight lodging Need for good roads Gathering places such as bars and taverns 2. Explain current hospitality industry philosophy.

Current hospitality industry philosophy has evolved to one where managers focus on counseling associates, giving them resources, and helping them think for themselves. This shift has resulted in a more participative management style which can lead to associate empowerment, increased productivity, and improved guest and employee satisfaction.

3. In your own words, explain what service-oriented personality means to you and the importance of service in today’s industry.

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Answers will vary but should include elements such as: • Focus on customer experience • Happy • Willing to go the extra mile • Service minded • See the solution through to the end • Do what it takes to resolve the situation • Focus on delivering what the guest wants and needs • Make it easy for me • Willing to learn, grow, and change 4. What are possible career paths you could follow if you wanted to be: a. Rooms Division Manager (there are many paths, this is just one) Front Desk Agent Bell Services Housekeeping Associate Assistant Executive Housekeeper Assistant Front Desk Manager Executive Housekeeper Front Desk Manager Rooms Division Director b. Restaurant Manager (there are many paths, this is just one) Host(ess) Server Assistant Server Bartender Cook Assistant Restaurant Manager Kitchen Manager Chef General Manager c. General Manager of a mid-sized hotel (there are many paths, this is just one) Restaurant Server Cook Sous Chef Executive Chef Front Desk Agent Housekeeping Associate Assistant Front Office Manager Front Office Manager Director of Operations General Manager

V. Mini-Case Discussion Question Answer Case: Thankfully, This Is Not Your Résumé A. No name = how is anyone going to contact you?

B. The goal is not clearly identified. Bad goal you should not emphasize money on a resume.

C. This resume was not checked for spelling and grammar. This should be “Key Competences.”

Bullet points could be used or or include a statement for each competency that includes skills and experience.

D. Education—Hospitality should be capitalized. 2.3 GPA should be moved to after the date of graduation. However, GPA is not necessary to list on a resume, especially if it is mediocre.

E. No phone numbers.

F. Tries to reach goals is too weak.

G. Poor points.

H. Foot cost analysis typo.

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No details on competences.

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Low GPA 2.3.

K. Cannot be a member of ESD with a low GPA. L. Beer society could send the wrong message.

M. Dishwasher for four years?

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N. Gap in employment makes people wonder.

O. Busser with a BS in Hospitality Management.

P. Another gap in employment?

Q. Still only a restaurant server after 25 years.

Experience—this section should be checked for grammar, capitalization, and spelling issues.

A description of key responsibilities for each item should be included using action verbs.

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Chapter Two The Hotel Business I. Chapter Objectives After reading and studying this chapter, the student should be able to do the following: 1. Compare different methods of hotel development and ownership.

2. Summarize the rating and classification systems of hotels.

3. Describe some prestigious and unusual hotels.

II. Key Teaching Elements/Chapter Outline/Lecture Suggestions Hotel Development and Ownership

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Franchising in the hospitality industry is a concept that allows a company to expand more quickly by using other people’s money, rather than acquiring its own financing.

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Under a franchise agreement, the company or franchisor grants certain rights—for example, the right to use the company trademark, operating procedures, reservation systems, marketing know-how, purchasing discounts, etc.—for a fee. In return, the franchisee agrees to operate the restaurant, hotel, etc., within guidelines set by the franchisor.

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Holiday Inn, Ritz-Carlton, and Howard Johnson’s all grew in the 1950s and 1960s through franchising. One of the key factors that led to the success of Holiday Inn was that they were the first company to enter the mid-price range and that they were located near important freeway intersections and in the suburbs. Budget hotel properties (Motel 6, Days Inn) grew during this time period.

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Franchising was the primary growth and development strategy of hotels and motels during the 1960s through the 1980s. Challenges to the franchise arrangement include the maintenance of quality standards and the financial stability of the franchisee. Franchise fees can vary tremendously and are often negotiated between the franchiser and the franchisee. The average agreement is three percent to four percent of room revenue.

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The lodging industry is a multi-billion-dollar industry that includes approximately 54,200 properties with almost five million guestrooms.

Franchising and management contracts are the two main driving forces in the development and operation of the hotel business.

Franchising

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Franchising presents both benefits and drawbacks. Careful consideration should be given to these factors.

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It is predicted that more than half of retail sales in the United States (including restaurants) will soon be transacted through franchised units.

There are jobs working directly for a franchiser, a franchisee, or you might buy a franchise yourself.

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Many franchisors own their own units that they use to test new operational or marketing ideas and to demonstrate the viability of the business to potential franchisees.

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Many of the mistakes that a new entrepreneur may make have already been overcome by your franchisor. The company might provide cash flow.

The company might also provide other support services at little or no cost, such as marketing and advertising, site selection, construction plans, assistance with financing, and so on. All this assistance leads to a second key reason for buying a franchise—reducing your risk of failure.

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Franchising does have some disadvantages. As a franchisee, your freedom is somewhat restricted. You must operate within the constraints set out by your franchise agreement and the operational standards manual.

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Management contracts have helped stimulate the growth of the hotel industry since the 1970s. They are popular because little or no up-front financing or equity is involved.

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The management contract usually allows for the hotel company to manage the property for a period of years. In return, the company receives a management fee determined as a percentage of gross or net operating profits. Today, many contracts are for a percentage of sales and a percentage of operating profit. This is normally 2 + 2 percent.

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Hotel companies have increasingly entered into management contracts because less capital is “tied up” in managing the properties than is required in owning properties.

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Today, hotel management companies exist in an extremely competitive environment. They have discovered that the hotel business, like most

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Is There a Franchise in Your Future?

Referral Associations A marketing consortium or referral organization is a group of independent properties that refer businesses to one another. The benefit of this arrangement is that independent hotel operations are able to compete with chain operations. Hotels with a referral association share a centralized reservation system (CRS) and a common image, logo, or advertising slogan.

Management Contracts

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others, has changed and they are adapting accordingly. Today’s hotel owners are demanding better bottom-line results and reduced fees.

Management companies are seeking sustainability and a bigger share of the business.

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Hotel ownership and development is very capital intensive. New hotels are built as a business venture by a developer, and because the developer expects to make a fair return on the (substantial) investment, a feasibility study is done to assess the viability of the project. The feasibility study determines the degree to which the proposed hotel project would be financially successful.

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One of the most important documents is a Summary Operating Statement, which details revenues and expenses for a period.

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Close to 70 percent of a hotel’s revenue and most of the profit comes from the sale of rooms. About 26 percent of revenue comes from food and beverage sales.

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There are two views on new hotels versus remodeled hotels as far as room rates and profits are concerned. It is often difficult for a new property to make a profit for a few years because of the higher cost of construction and the need to become known and to gain a good market share. On the other hand, a remodeled hotel has the cost of remodeling to pay for plus higher operating costs for energy and maintenance, so the two options tend to cancel each other out.

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Older hotels are generally renovated about every seven years. This is because they become dated and would otherwise lose market share, which equals profit. Older hotels have an advantage over new ones—or should have an advantage as a result of positive recognition in the market.

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A Real estate investment trust (REIT) must have at least 75 percent of its assets in real estate. Today, about 300 REITs, with a combined market value of $70 billion, are publicly traded. Investors like them because they do not pay corporate income tax and instead are required to distribute at least 95 percent of net income to shareholders. In addition, because they trade as stocks, they are much easier to get into or out of than are limited partnerships or the direct ownership of properties.

Hotel Development

The Economic Impact of Hotels Hotels provide substantial direct and indirect economic impact to the communities in which they are located. For direct impact, consider a hotel that has an average of 240 guests a night who spend $250 at the hotel and in restaurants and stores in the community. That would mean $240 × $250 × 365 days = $21.9 million a year infused into the local economy.

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The indirect impact comes from the ripple effect, which we describe in the tourism chapter; this is where money is spent by the employees (wages and salaries) of the hotel in the community. It is also money used by the hotel to purchase all the items to service the guests.

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A hotel may have multiple affiliations including being part of a chain, parent company, operation (such as corporation, franchise, or independent), management company, owner, asset management company, and/or a member of a membership or marketing group.

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Hotels may also be classified as corporate, franchise, or independent. A corporate hotel is a chain hotel owned or managed by the chain or parent company. A franchise hotel is a chain hotel run by a third party, where the chain receives some sort of franchise fee. An independent hotel is not affiliated with a chain or parent company.

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Communities also benefit from the Transient Occupancy Tax (TOT), otherwise known as the bed tax.

Rating and Classification of Hotels According to the American Hotel and Lodging Association (AHLA), in 2013 the U.S. lodging industry consists of 54,200 hotels and motels, with a total of five million rooms and $1.1 trillion in sales.

The Lodging Industry Hotels may be classified in several ways and may have one or more affiliations. For instance, hotels may be classified using the Smith Travel Research (STR) hotel classification system, the Forbes Travel Guide FiveStar rating process, and the American Automobile Association (AAA) Diamond Rating award system. Smith Travel, Forbes, and AAA have all expanded their rating practices outside the United States.

Hotel Affiliations

Hotels may also be affiliated with a management company that operates the hotel on behalf of another party.

Hotels may also be affiliated with one or more membership and marketing groups that provide various benefits, such as marketing assistance and reservation services.

Hotels may now be classified as a quasi-chain. Quasi-chains have recently come into existence and are basically a cross between a chain and a marketing group for independent hotels.

Hotel Classification by Rating System: AAA and Forbes The AAA has been inspecting and rating the nation’s hotels since 1977.

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properties inspected annually throughout the United States, Canada, and Mexico earn the five-diamond award, which is the association’s highest award for excellence. In 2013, the five-diamond award was bestowed on 124 lodging establishments in the United States, Canada, the Caribbean, and Mexico.

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City center hotels meet the needs of business and leisure travelers. They offer a range of accommodations and services.

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They offer a signature restaurant, coffee shop, or an equivalent recognized name restaurant; a lounge; a named bar; meeting and convention rooms; a ballroom; and possibly a fancy night spot.

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Resort hotels developed initially with the growth of rail travel, In the late 1800s, luxury resort hotels were developed to accommodate the clientele that the railways brought.

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Many resorts began as seasonal ventures, but with the increase of air and automobile travel, many resorts have become year-round destinations.

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Today, there are numerous resort hotel properties that cater to the needs of many segments of the population. Some resorts are family friendly, whereas others seek to create a quiet get-away for the adult. Many resorts actively work to attract conventions and conferences to increase occupancy, especially in the off-season.

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Similar to the system used by AAA, Forbes Travel Guide classifies hotels using a five-star rating system. Out of the 50,000 hotels in the United States, Forbes rates and recommends about 8,000 properties a year. Of those, only a few dozen earn the five-star rating.

The hotel industry also classifies hotels by location or features and benefits. A hotel may be located in an urban or city center, suburban, airport, interstate or freeway, resort, small town/rural, casino, full-service, extended-stay, all-suite, convention, or bed and breakfast.

City Center and Suburban Hotels

Resort Hotels

To increase occupancies, resorts have diversified their marketing mix to include conventions, business meetings, sales meetings, incentive groups, sporting events, additional sporting and recreational facilities, spas, adventure tourism, ecotourism, and more.

Because guests are cocooned in the resort, they expect to be pampered. This requires an attentive, well-trained staff; hiring, training, and retaining a competent staff present a challenge in some remote areas and in developing countries.

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Airport Hotels In general, airport hotels have high occupancy rates because of the large number of travelers arriving and departing from major airports. Some properties have added meeting space to cater to businesspeople who need to fly in, meet, and then fly out on a very tight schedule.

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These hotels are usually full service and have 200 to 600 rooms.

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Freeway hotels and motels grew most quickly in the 1950s and 1960s.

They provided a convenient place to stay that was reasonably priced with few frills.

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They are smaller than most hotels—usually fewer than 50 rooms—and are frequently mom-and-pop establishments or franchised (such as Motel 6).

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The casino hotel industry is now coming into the financial mainstream, to the point that, as a significant segment of the entertainment industry, it is reshaping the U.S. economy. The entertainment and recreation sector has become a very important engine for U.S. economic growth, providing a boost to consumer spending, and thus creating tremendous prosperity for the industry. One of the fastest-growing sectors of the entertainment field is gaming.

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Larger casino hotels also attract conventions, which represent a lucrative business. There are now more than 150 hotels on Native American tribal land.

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Freeway and Interstate Hotels and Motels

Casino Hotels

Conference and Convention Hotels Convention hotels offer facilities that meet the needs of groups attending and holding conventions. These facilities may include large public areas and banquet facilities, a business center, a travel desk, and an airport shuttle, as well as other amenities.

Convention hotels usually have a minimum of 300 guest rooms and a minimum of 20,000 square feet of meeting space and larger public areas to accommodate hundreds of people at any given time. Convention hotels have many banquet areas within and around the hotel complex.

Full-Service Hotels Hotels may be classified by the degree of service offered: full-service, economy, extended-stay, and all-suite hotels. Full-service hotels offer a wide range of facilities, services, and amenities for both the business and pleasure traveler. Examples: Hilton, Hyatt and Four Seasons.

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Most of the major North American cities have hotel chain representation, such as Four Seasons, Hilton, InterContinental, Choice, Hyatt, Marriott, Omni, Wyndham, Radisson, Loews, and Starwood.

Economy/Budget Hotels These properties provide clean, reasonably sized and furnished rooms without “frills.” Economy hotels focus on selling beds. They do not offer meals or meeting rooms, as a general rule.

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Boutique Hotels These hotels offer a different experience. They have a unique architecture, style, décor, size, usually 25-125 rooms offering a high level of personal service.

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Extended-Stay Hotels and All-Suite Extended-Stay Hotels These hotels provide accommodations to guests staying longer than five days. Rates are usually decreased based on the length of the stay. Guests are usually a mix of professionals, businesspeople, and families that are relocating.

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Extended-stay hotels offer full kitchen facilities and shopping services or a convenience store on the premises.

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All-suite hotels usually offer more space per room, for the same rate as a regular hotel in the same price range. The additional space is usually dedicated as a lounge or kitchenette, or both, within the room.

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These hotels are attractive to guests who may be relocating, attending training seminars, or are on work-related projects.

Condotels, Timeshare, and Mixed-Use Hotels A combination of a hotel and condominium. Developers build a hotel and sell it as condo units.

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This means that a hotel may also have residences; condos that people use rather than renting like a condotel. They have spas and sports facilities.

Can be part of urban or resort development that might include office buildings, etc.

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Bed and Breakfast Inns Bed and breakfast operations offer variety in accommodation and in cost.

Although not all B&Bs are owner occupied, they provide an alternative to the traditional lodging experience.

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Time share ownership lets owners save on the rising costs of vacation accommodations over the long term, while providing the space and flexibility to meet the needs of any size family or group. Vacation or fractional ownership is a form of real estate ownership or right to use a property in part. These types of properties are often resort or urban condominiums, town homes, or single-family homes, in which multiple parties own and have rights to the property and amenities.

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Time shares also provide the possibility of worldwide travel by means of ownership exchange. By locking in the purchase price of accommodations, vacation ownership helps ensure future vacations at today’s prices at luxurious resorts with amenities, service, and ambience that rival any of the world’s top-rated vacation destinations.

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A true B&B is an accommodation with the owner, who lives on the premises or nearby, providing a clean, attractive accommodation and breakfast, usually a memorable one. There are an estimated 25,000 bed and breakfast places in the United States alone.

Best, Biggest, and Most Unusual Hotels and Chains The largest hotel in the world is the Izmailovo Hotel in Moscow with 7,500 rooms, followed by the 7,372-room MGM Grand in Las Vegas and the Venetian Hotel, also in Las Vegas, which has 7,117 rooms.

The Best Hotel Chains The Ritz-Carlton and Canadian-owned Four Seasons are rated the highest quality chain hotels. The Ritz-Carlton Hotel Company has received all the major awards the hospitality industry and leading consumer organizations can bestow. It has twice received the Malcolm Baldrige National Quality Award from the U.S. Department of Commerce.

The Most Unusual Hotels Unusual hotels include the Treetops in Kenya, the Ice Hotel in Swedish Lapland, and the underwater hotel at Great Barrier Reef, Australia.

Timeshare, Vacation Ownership, and Fractional Ownership Vacation ownership is the fastest growing segment of the U.S. travel and tourism industry. A variation of the “time share” model is the vacation club.

Consumers earn points toward vacation benefits. Flexibility is a key advantage of this type of program. Hotel companies have found this segment of the industry to be extremely lucrative. As a result, many leading hoteliers are entering into it.

Fees such as yearly maintenance fees are required in addition to vacation ownership charges.

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Travel the World through Exchange Vacations 47

Through the international vacation exchange networks, owners can trade their timeshare intervals for vacation time at comparable resorts around the world. Most resorts are affiliated with an exchange company that administers the exchange service for its members. Typically, the exchange company directly solicits annual membership. Owners individually elect to become members of the affiliated exchange company. To exchange, the owner places his or her interval into the exchange company’s pool of resorts and weeks available for exchange and, in turn, chooses an available resort and week from that pool.

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International Perspective The global economy is segmented into large trading blocks such as the European Economic Community (EEC) and the North American Free Trade Agreement (NAFTA). Such agreements reduce limitations on the transfer of goods and labor. This can lead to increased travel, tourism, commerce, and industry.

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Growth is expected to continue under the EEC and NAFTA. The Pacific Rim is also growing dramatically in the realm of tourism. In Asia, Hong Kong’s growth has been encouraged by booming economies throughout Southeast Asia and the kind of tax system for which supply-siders hunger.

The Hong Kong government levies a flat 16.5 percent corporate tax, a 15 percent individual income tax, and no tax on capital gains or dividends.

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In developing countries, once political stability has been established and maintained, hotel and tourism development follows closely.

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Developers are more environmentally conscious because it can cost far more not only to build a lodging facility but also to run it if it is not sustainable.

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The cost of energy has increased so much in recent years that lodging construction now incorporates ways of using natural lighting and building energy efficient buildings.

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Lighting can account for 30 to 40 percent of commercial electricity consumption.

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Water conservation is another method that can greatly reduce waste. Today, many hotels are replacing showerheads, toilets, and faucets with low-flow water devices.

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Sustainability

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Career Information There are variety of career options related to hotel development and classification. Some examples would be working in corporate offices or consulting firms. In any case, a variety of positions in hotels will benefit the person wanting to go into management.

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Current Issues in Hotel Development and Management Room Service: Many hotels have stopped offering room service due to its high cost. Instead, they offer a grab and go marketplace in the lobby.

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Mergers: The merger of Marriott and Starwood makes for the largest lodging company. Other mergers are sure to follow, unless Marriott gets there first!

Micro rooms: Micro hotels are increasingly popular as some guests like smaller and cheaper hotel rooms.

Airbnb: Airbnb is a less expensive alternative to a hotel. So is Booking.com and others that offer rooms and small apartments in good locations for much less than a hotel.

Additional topics include capacity control, safety and security, technology, assets and capital, new management, globalization, consolidation, diversification within segments of the lodging industry, rapid growth in vacation ownership, increase in the number of spas and treatments, gaming, mixed-use properties, sustainable lodging development, and culinary selectiveness.

III. Teaching Techniques/Classroom Exercises Note: The content of these exercises is such that they may also be used as essay questions.

Exercise One: Ask students to generate a list of hotels in the area using an Internet search site such as Hotels.com. As needed, facilitate the list development by adding to the list properties that they omit, such as Mom and Pop motel properties, residential hotel properties, etc. Once a comprehensive list has been generated, ask students to classify the hotel properties using the categories from the text. Through discussion, analyze the list. Which hotel types are most prevalent? Why? Which are omitted from the list? Why? Has the lodging industry in the area gone through changes in the past 20 years? 30 years? etc.? If so, why?

Exercise Two: Send students on a scavenger hunt using the Internet. Have them search for articles that highlight unusual worldwide hotel properties and/or important hoteliers, in addition to those listed in the text. Have students share findings. This activity could easily be turned into a contest, with “points” being earned for articles that are the most unusual.

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Exercise Three: Have students identify which type of hotel they would like to work for and why. Which type of hotel would they like to own? What characteristics make this hotel ideal for their career?

Exercise Four: Give students a specific list of hotels that have a broad range of classification. Have students access websites or other sources to find information on the hotels. Most hotel chain websites will offer details on specific hotels, including rates, amenities, and services at each property. Using the text have students work independently to classify each hotel. This can be used for a discussion and/or debate on how hotels are classified.

IV. Answers to Chapter 2 Review Questions 1. Describe how franchising and management contracts changed the face of the modern hospitality industry.

The concept of franchising allowed for the rapid expansion of hotels and motels. Franchising allows franchisees to use the brand names and services of a franchisor in exchange for a fee. This has the advantages of involving less up-front capital, a centralized reservation system, national advertising, and increased market recognition, but it also includes the challenges of maintenance of quality standards and avoidance of financial failure on the part of the franchisee. Holiday Inns were among the early franchisors and proved successful at it.

Management contracts have the advantage of requiring little up-front financing and usually allow the hotel company to manage the property for several years, whereby the company receives a percentage of the net operating profit as a management fee. This allows for the rapid expansion of the hotel market, especially since increased competition among management companies has decreased the management contract fees. All the major hotel companies have management contracts where they do not own the hotel but have a contract to operate it.

2. Hotels must cater to the needs of business and leisure travelers to be successful. Explain how the following different concepts do that: airport hotel, resort, and casino. a. Airport hotels offer the convenience of accommodation near the airport so guests can fly in late and fine a comfortable place to stay, and maybe have a meeting or travel on to their destination. For example, if you fly into Orlando from Europe or Asia you would likely be too tired to drive four hours to your home.

Similarly, if you have an early morning flight you may prefer to stay and an airport hotel to save time. They cater to both business and leisure travelers. Airport hotels offer extended room service and restaurant hours to accommodate early and late arriving and departing guests. b. Resorts are usually located at exotic places with spectacular scenery, offering relaxation and recreational activities. The Treetop hotel located in one of Kenya's wild animal parks is architecturally built on the tops of trees, whereas the Cocoon Hotel in Japan offers guests an affordable alternative space of about seven feet by four feet with just a bed and television. c. Casinos offer both business and leisure travelers, entertainment and accommodation along with spectacular bars and restaurants. They cater to conventions, meetings and elaborate shows and sporting events.

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V. Mini-Case Discussion Question Answer Case: Is a Franchise Right for Me? Question: Based on the projected occupancy, average rate, and the fees associated with the franchise, should Tom become a franchisee, or should he pursue other options? Why did you make that decision?

Feedback: Yes: Tom has already paid the initial licensing fee and with projected occupancy of 60 percent nightly, investing in this franchise could be profitable because he only must pay the royalty fee of 5 percent of revenue and the program fee of 4 percent of revenue. The initial up front costs have been covered and there will be no additional franchise fees because it is a budget property.

No: Nine percent in fees at a budget hotel can eat into profit. With an average rate of $55 per night, $4.95 immediately goes towards paying franchise fees. Tom will then have to cover all other expenses and make a profit to stay in business. If occupancy dips below the projected 60 percent he may have a hard time paying his bills.

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Chapter Three Rooms Division I. Chapter Objectives After reading and studying this chapter, the student should be able to do the following: 1. Outline the duties of the general manager and executive committee.

2. Summarize the main functions of the room’s division.

3. Discuss revenue management and calculate key operating ratios.

II. Key Teaching Elements/Chapter Outline/Lecture Suggestions The Functions and Departments of a Hotel

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Object.

The primary function of a hotel is to provide lodging accommodations.

A hotel is comprised of several business or revenue centers and cost centers. Each business center must be committed to quality and cooperation throughout the hotel operation. Hotels exist to provide service and to generate a profit for the owners. Hotels sell thousands of products and services every day.

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Hotels are people places. They are intended to provide all the comforts of a home away from home.

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The hotel General Manager (GM) has a multitude of responsibilities.

He/she must ensure a reasonable return on investment, keep guests satisfied, and keep employees happy.

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The GM not only focuses on leading and operating the hotel departments but also on aspects of the infrastructure, from room atmosphere to security.

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Management Structure Management structure differs among larger, midscale, and smaller properties. The midscale and smaller properties are less complex in their management structures than are the larger ones. However, someone must be responsible for each of the key result areas that make the operation successful. For example, a small property may not have a director of human resources, but each department head will have general day-to-day operating responsibilities for the human resources function.

The Hotel General Manager

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Larger hotels can be more impersonal. Here, the GM may only meet and greet a few VIPs. In the smaller property, it is easier—though no less important—for the GM to become acquainted with guests to ensure that their stay is memorable and to secure their return.

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The GM is ultimately responsible for the performance of the hotel and the employees. The GM is the leader of the hotel. As such, she or he is held accountable for the hotel’s level of profitability by the corporation or owners.

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Effective GMs hire the best people and set the tone, a structure of excellence. GMs must also be familiar with the cultures of guests staying in the hotel and the employees working in the hotel. Progressive GMs empower associates to do anything legal to delight the guest.

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The executive committee is comprised of key managers of the hotel.

Typical members of the executive committee would be directors of the following departments: human resources, food and beverage, rooms division, marketing and sales, engineering, and accounting.

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Executive Committee meetings usually last 1 to 2 hours, once a week.

Typical topics of discussion will focus on occupancy percentage, Total Quality Management, forecasts, guest and employee satisfaction, training, etc. (see list, text p. 57).

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These senior executives determine the character of the property and determine the goals and objectives for the hotel. If the hotel is a chain, goals and objectives must support the corporate mission.

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Cesar Ritz began at the bottom and quickly brought himself to the top of the hotel industry by learning the tricks of the trade at an early age. By 38, Ritz was manager of one of the most famous and luxurious hotels in the world. After starting his own hotel, the Ritz name became synonymous with refined, elegant hotels and service.

The Executive Committee

Rooms Division Rooms Division Director The rooms division director is held responsible by the GM for the efficient and effective leadership and operation of all the rooms division departments. The rooms division is comprised of the front office, reservations, housekeeping, concierge, guest service, security, and communications. Main concerns of the department are financial performance, employee satisfaction, guest satisfaction, guest services, guest relations, security, and gift shop.

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Front Office The main duty of the front office manager is to enhance guest service by developing services to meet guest’s needs. He/she supervises Guest Service Associates (GSAs), who interact directly with the guest during check-in, check out, etc. (see list of typical responsibilities on text p. 59).

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Often, the front office is described as the hub or nerve center of the hotel.

The guest relies on the desk for information and service throughout his/her stay.

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The main functions of the front office are: (a) to sell rooms, (b) to maintain balanced accounts, (c) to offer services such as handling mail, faxes, messages, and local and hotel information.

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In selling rooms, the front office attempts to achieve 100 percent occupancy.

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Upselling and yield management can help increase room sales. The interaction of supply and demand also impacts the ability to sell rooms.

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Maintaining balanced guest accounts begins with advanced deposits and opening the guest account, called a folio. As appropriate, charges from the various departments of the hotel are posted to the guest folio. Payment is either received on guest check-out or transferred to the city ledger (a special account for a company that has established credit with the hotel).

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Because the front office is staffed 24 hours a day, it is the logical center to handle guest information needs such as mail, faxes, messages, and local and hotel information.

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The evening shift’s responsibilities include—checking the logbook, checking of room status, handling guest check-ins, and reservation functions once the reservation office closes for the day.

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A hotel must balance its accounts on a daily basis. At approximately 1:00 a.m., when the hotel has “quieted” down, the night auditor begins the task of balancing the guest accounts receivable.

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The daily report contains a key operation ratio—room occupancy percentage (ROP). This is calculated by dividing the number of rooms occupied by the number of rooms available.

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The average daily rate (ADR) is, together with the occupancy percentage, one of the key operating ratios that indicates the hotel’s performance. ADR is calculated by dividing the total of rooms revenue by the total number of rooms sold.

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Night Auditor

A more recently popular ratio to gauge a hotel rooms division’s performance is the percentage of potential room’s revenue, which is

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calculated by determining potential rooms revenue and dividing the actual revenue by the potential revenue.

While these figures are of great importance to running a successful hotel, the most important of the lodging ratios is revenue per available room (RevPAR), which is discussed in the next section.

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Revenue Management Revenue management is used to maximize room revenue at the hotel. It is based on the economics of supply and demand, which means that prices rise when demand is strong and drop when demand is weak.

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Although management would like to sell every room at the highest rack rate, this is not possible. Conventions, groups, and organizations are often granted a reduced room rate as an incentive to stay at a particular property.

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Group reservations tend to be made months in advance, whereas individual reservations are usually made a few days before arrival.

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With revenue management, not only will the time before arrival be an important consideration in the pricing of guest rooms, but also the type of room to be occupied.

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Revenue per available room, or RevPAR, was developed by Smith Travel Research. It is calculated by dividing room revenue by the number of rooms available. For example, if room sales are $50,000 in one day for a hotel with 400 available rooms, then the RevPAR formula is $50,000 divided by 400, or a RevPAR of $125.

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Hotels use RevPAR to see how they are doing compared to their competitive set of hotels. Hotel operators use RevPAR as an indicator of a hotel’s revenue management program.

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Smith Travel Report is the publisher of the STAR reports, a benchmarking suite that tracks one hotel’s occupancy, average daily rate, and RevPAR against a competitive set of hotels for comparison purposes. The information provided helps identify if a particular property is gaining or losing market share and helps the organization make necessary corrections to its management, marketing, and sales strategies.

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Revenue management will monitor reservations and based on previous trends and current demand, will determine the number and type of rooms to sell at what price to obtain the maximum possible.

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Energy Management Systems 78

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Airlines were the first industry to start using global distribution systems (GDS) for reservations. Global distribution systems are electronic markets for travel, hotel, car rental, and attraction bookings.

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A central reservation system (CRS) houses the electronic database in the central reservation office (CRO). Hotels provide rates and availability information to the CRO usually by data communication lines. This automatically updates the CRS so that guests get the best available rate when they book through the central reservation office. Guests instantly receive confirmation of their reservation or cancellation.

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With such a system, hotels can avoid overselling rooms by too large a margin. The CRS database can also be used as a chain or individual property marketing tool because guest information can easily be stored. A CRS can also provide yield management information for a hotel.

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A CRS can be used in several areas of a hotel. If a hotel has a reservations department, the terminals or personal computers in that department can be connected to the CRS.

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Another form of technology is an application service provider (ASP) delivering a booking system tied to hotel inventory in real time via the Internet.

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Passive infrared motion sensors and door switches can reduce energy consumption by 30 percent or more by automatically switching off lights and air-conditioning, thus saving energy when the guest is out of the room.

They also can keep tabs on room occupancy, lighting, minibar, smoke detectors, locks, and guest amenities.

Some software programs cut out non-essential equipment during peak billing times.

Call Accounting Systems Call accounting systems (CAS) are systems that can track guest room phone charges working in conjunction with PBX and PMS. They can be used to offer different rates for guest calls.

Guest Reservation Systems

Billing Guests Billing guests has become much easier with the aid of computers. Billing guests can be a long process if information technologies are not used to complete transactions. PMSs aid large hotels to make faster transactions and provide a more efficient service to their guests. These systems help the hospitality associates bill their guests within seconds.

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Security Technology Peace of mind that the hotel or restaurant is secure is a key factor in increasing guest satisfaction. Security is one of the highest concerns of guests who visit hospitality businesses.

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Hospitality information technology systems include surveillance systems, electronic door locking systems, and in-room safes some with using biometric technology.

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Guest Comfort and Convenience In order to provide a homey and convenient experience for the guest, hotels provide such services and amenities as dining, televisions, telephones, Internet connections, minibars, hygiene products, pools, meeting space, and business and concierge service.

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Reservations The reservations manager is the head of the reservations department. He/ she reports directly to the rooms division manager. This department is often the first one that a prospective guest has contact with and therefore impressions made are lasting. Quality service and attention to detail are critical.

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The reservations department is responsible for selling hotel rooms for the maximum dollar amount while exceeding guest expectations. Reservations may originate from a telephone call to the property, corporate 1-800 numbers, travel agents, Internet, meeting planners, tour operators, referrals, airport telephones, and walk-ins.

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The corporate central reservations system interfaces with hotel inventory and allows reservations by individual hotel reservations personnel.

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Once a reservation has been made, the room is immediately deducted from the inventory of rooms for the duration of the guest’s stay. Important details are recorded when the reservation is made, such as name, billing information, duration of stay, special requests, etc.

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Guaranteed reservations are made when the person making the reservation wants to ensure the room will be held until arrival. This usually occurs when the guest will be arriving late. The room is held until the guest arrives. In the event the guest does not show, the credit card is charged for one night’s room and tax.

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Communications CBX or PBX The CBX or PBX includes in-house communications, guest communications, voice mail, messages, and emergency centers.

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It is a profit center for the hotel because hotels generally add a fee of 50 percent to all long distance calls and may charge fees as high as $1.25 for local calls.

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The communications center is staffed 24 hours a day. Staff should be well versed in guest service techniques and emergency procedures.

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First impressions are very important. The guest service staff has the unique opportunity to make or break that first image of the hotel and the experience the guest will have. The staff of this department consists of door attendants, bell persons, and the concierge.

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Door attendants are the hotel’s unofficial greeters. These tipped positions can be very lucrative. Their job requires them to greet guests, assist with the opening and closing of doors, handling luggage, and providing information.

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The bell person is responsible for escorting the guests and transporting luggage to their rooms. He/she must have knowledge about the area as well as the hotel and its services.

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The concierge is a uniformed employee of the hotel who has a separate desk in the lobby or on a separate concierge floor.

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Some of the ways the concierge may assist guests are by arranging tickets to popular events/shows in town, making reservations at restaurants, providing advice on local activities, reserving airline tickets and reconfirmation of flights, and special requests such as shopping.

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It is important that the concierge has excellent knowledge of the hotel, the city, and international details. It is a definite strength if the concierge is able to speak several foreign languages.

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The concierges’ organization is the Union Professionelle des Portiers des Grands Hotels (UPPGH).

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The housekeeping department employs the largest number of employees in the hotel. The executive housekeeper is the head of the department. It is necessary for the executive housekeeper to have exceptional leadership, organizational, motivational skills, and a high level of commitment to maintaining high standards.

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By far, the greatest challenge for the executive housekeeper is the leadership of the department. Often the employees in this department are of different nationalities.

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Guest Services/Uniformed Services

Concierge

Housekeeping

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One of the first tasks to be completed each workday is to break the hotel into sections to allocate the room attendants’ work schedules.

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Some hotel corporations have empowered the best daily attendants to check their own rooms, enabling them to become “stars” and reducing the need for supervisors.

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The executive housekeeper is responsible for a substantial amount of record keeping. In addition to the scheduling and evaluation of employees, an inventory of all guest rooms and public area furnishings must be accurately maintained with the record of refurbishment. Most of the hotel’s maintenance work orders are initiated by the housekeepers who report the maintenance work.

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Productivity in the housekeeping department is measured by person hours per occupied room. The labor cost per person hour for a full service hotel ranges from $2.66 to $5.3 per occupied room. Labor cost is expected to be 5.1 percent of room sales.

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The spa business has four mantras: decompression, revitalization, beauty, and spiritual uplift, not necessarily in that order. The objective is to achieve maximum relaxation, renewal, and recreation for the client.

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Many people, perhaps most, see the spa as a time of renewal or decompression chambers and for pampering and mental adjustment, increase in physical strength, and intellectual and spiritual enrichment.

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Spas

Laundry Nowadays, more hotels are operating their own laundry services. Modern laundry operates computerized washing/drying machines and presses. Some smaller hotels contract out their laundry services.

On Sustainability Green Hotel Initiatives This sub-department generally reports to the executive housekeeper.

Environmentally conscious companies are helping to avoid environmental degradation and are saving money while being good corporate citizens.

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Ecoefficiency, also generally termed green, is based on the concept of creating more goods and services while using fewer resources and creating less waste and pollution. In other words, it means doing more with less. So what does this have to do with your bottom line? Ecoefficiency helps hotels provide better service with fewer resources; reducing the materials and energy-intensity of goods and services lowers the hotel’s ecological impact and improves the bottom line.

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Triple bottom line, sometimes called the TBL or 3P approach (people, planet, and profits), requires thinking in three dimensions, not one. It takes into account ecological and societal performance in addition to financial.

Today, quantifiable environmental impacts include consumption of finite resources, energy usage, water quality and availability, and pollution emitted. Social impacts include community health, employee and guest safety, education quality, and diversity.

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Sustainable lodging, also known as green hotels, has become a powerful movement. The American Hotel and Lodging Association (AHLA) and various state associations are leading the way with operational suggestions for best practices that lead to a green certification.

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Being green is also financially good for certified properties. By saving energy and water, reducing waste, and eliminating toxic chemicals, green properties lower their operating costs, which allows them to provide enhanced services to their guests and a healthier environment for both their guests and employees.

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Security/Loss Prevention Hotels are responsible for the safety of their guests. Protection of guests and their property is a key element of hotel operations.

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Security/loss division is responsible for maintaining security alarm systems and implementing procedures aimed at protecting property of guests, employees, and the hotel itself.

A comprehensive security plan must include security officers, equipment, safety procedures, and identification procedures.

Trends in Hotel and Rooms Division Operations Some trends include diversity in workforce, increases in use of technology, security, and diversity of guests. (Complete list pp. 141-142)

III. Teaching Techniques/Classroom Exercises Note: The content of these exercises is such that they may also be used as essay questions.

Exercise One: Invite a guest speaker from a local hotel property or a guest industry panel of at least 3 persons—a General Manager, a Front Office Manager, and an Executive Housekeeper. Have students prepare 3 questions each prior to the guest lecture.

Exercise Two: Organizational Chart Scramble: Copy the Overhead Master for the Hotel Organizational Chart (text p. 59). Cut the chart up into individual positions and place in a bowl. Have students draw a position (have as many cut up charts as necessary to allow all students to draw a position) and research information about the position. Students should research education background 33 ..

needed, salary, and responsibilities. This assignment can be given at the end of a class period. At the next class meeting, assign the students to “find” the rest of their hotel. Have students assemble the organizational chart correctly and share information about their position.

Note: This exercise is an excellent lead-in to exercise number three.

Exercise Three: Hold a mock Executive Committee meeting. Provide students with parameters about the hotel they manage and assign each student a management role (may be used in combination with exercise two). Provide students with topics to discuss or have like positions “meet” in a mock department meeting—i.e., all students assuming the role of Rooms Division Manager together, F&B Directors together, etc.—and determine the information they will report/need to gather at the EC meeting.

IV. Answers to Chapter 3 Review Questions 1. Compare the duties of the general manager and department heads at a small or mid-sized hotel to those of a larger hotel. List at least three differences and similarities.

Title/Property Size Differences in Role Similarities in Role General Manager/mid-size • Interact with guests daily • May be responsible for hiring • May assist in operational duties • Provide owners return on their investment • Lead and set the standard for all departments • Focus on areas such as infrastructure, atmosphere, and security • Works with executive committee to direct hotel operations General Manager/large • Interact with VIPs or upset guests and delegate other interactions to leadership team • Responsible for larger budgets and more staff Department Head/mid-size • May be more hands-on day to day • Responsible for hiring and training team • Daily guest contact • May work a station if needed • Responsible for guest satisfaction in the department • Responsible for department profitability • Responsible for overall day to day operations Department Head/large · • Works through leadership team • Sets direction of the department • Limited direct guest contact • Rarely works a station.

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2. Describe the responsibilities of the housekeeping department as they relate to the guest experience and the rooms division.

The housekeeping department is frequently the largest department in the hotel and is the backbone of the rooms division. Servicing the rooms, keeping the front desk and engineering (maintenance) informed of room status, and maintaining the highest quality standards all are part of housekeeping’s role in the guest experience within the rooms division.

3. Describe yield management and how it is used in the hotel industry to achieve revenue goals.

Yield management is the practice of maximizing revenue by using a variable pricing structure.

The goal is to keep the hotel as close to 100 percent occupancy with rooms the provide the highest possible room rate. Yield management analyze the types of groups, individuals, and rates to determine the number of rooms that should be sold at specific price points during specific time frames.

V. Mini-Case Discussion Question Answer Case: The Overbooking Case Question: Keeping guest service a priority, detail a plan for how you would approach this situation and your strategy for explaining each decision to each guest. Why did you make your decision?

Feedback: There is no set right or wrong answer for this case…..Possible solutions include: The suite is available leaving the hotel overbooked by two rooms. Place Dr. Thomas in one bedroom of the suite and Ms. Rivers in the other and give one of them the living room. Give them both fruit and flowers.

There may be a no show but if necessary, call and plan so that if Mr. Smith needs to be “walked.” “Walk” Mr. Smith and any other late arrival with no guarantee.

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Chapter Four Food and Beverage I. Chapter Objectives After reading and studying this chapter, the student should be able to do the following: 1. Describe the responsibilities of a food and beverage director and other key department heads.

2. Explain the management of the kitchen and the responsibilities of kitchen leaders.

3. Explain the management of food outlets and the responsibilities of their leaders.

II. Key Teaching Elements/Chapter Outline/Lecture Suggestions Page

Object.

The director of food and beverage is responsible for the efficient operation of the Kitchen/Catering/Banquet departments, Restaurants/ Room Service/Mini bars, and Lounges/Bars/Stewarding.

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1

Among the skills needed by food and beverage managers are: leadership, identifying trends, finding and keeping outstanding employees, training, budgeting, cost control, and exceeding guest expectations.

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1

About 20 percent of a hotel’s operating profit comes from the food and beverage division. An acceptable profit margin for a hotel’s food and beverage division is generally considered to be 25 to 30 percent.

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1

Food and beverage (F&B) directors usually start the day at 8:00 a.m. and the workweek is usually Monday through Saturday, unless special events/functions are scheduled. The F&B director stays in close contact with the sales department. Also, it is important for the director to attend staff meetings, executive committee meetings, and profit and loss statement meetings.

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1, 2

It takes years of experience and dedication to become an F&B director.

Experience should include practical kitchen work, dining room service, purchasing, stewarding, and room service.

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1

Food and Beverage Management

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Kitchen The executive chef who reports to the F&B manager manages the hotel kitchen. The executive chef is responsible for efficient kitchen operations, exceeding guest expectations for quality and quantity of food, temperature, presentation, and portion size. He/she must maintain company standards and achieve desired financial results.

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2

Some executive chefs are now called kitchen managers. In many smaller and even in some larger streamlined hotel properties, the executive chef may also serve as the F&B director.

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2

Cooperation of kitchen staff is important to maintain operational controls.

Software that costs out standard recipes, establishes perpetual inventories, and calculates potential food cost per outlet can assist in this process.

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2

Chefs not only examine the food cost of particular items, but also examine the contribution margin of food items. The contribution margin is the difference between the cost and the sale price of an item. Labor costs are also important and must be carefully monitored.

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2

Financial performance of the F&B department is often measured by performance ratios. Food cost percentage—food cost dollars divided by sales—averages about 30 percent for hotels. Labor cost percentage— labor dollars divided by sales dollars—varies significantly by operation.

One significant influence is the amount of food made from scratch.

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2

The executive chef has one or more sous (under) chefs reporting to him/her.

The sous chef is responsible for the day-to-day operations of the kitchen.

Depending on the size of the operation, there may be several “chefs de partie,” who rotate through the various stations in the kitchen to relieve the station chefs, who in turn report to the sous chef, all of whom have definite position responsibilities. In a nutshell, this process or concept is known as the Brigade system. The Brigade system was developed by the great Escoffier, and a kitchen includes sous chefs, banquets chefs, fish chef, roast chef, vegetable chef, soup chef, sauce chef, and pantry chefs.

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A hotel may have several restaurants or none at all. A major hotel chain generally has two restaurants—a signature or upscale restaurant and a casual coffee shop restaurant. Guests expect more and more from these operations.

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3

Restaurant managers are responsible for quality guest service, hiring, training, and developing employees, setting and maintaining quality standards, and presenting annual, monthly, and weekly forecasts and budgets to the F&B directors. In some hotel restaurants, managers may also be responsible for room service minibars and/or cocktail lounges.

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Food and Beverage Departments

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Forecasting the number of guests at hotel restaurants is difficult because hotel guests are unpredictable. They may prefer to eat outside of the hotel, rather than dining in one of the property’s restaurants. Careful records should be kept to determine the projected number of guests who might eat at the restaurants on a given day. Other factors to consider would be functions scheduled for a convention group and any special needs/desires they might have. The number of guests staying in the hotel who dine in the hotel’s restaurant is referred to as the capture rate.

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3

In order to increase profitability, many hotel restaurants create incentives for guests to dine in their restaurants, such as meal discounts for people staying in the hotel and promoting the restaurant and menu at check in, as well as having cooking demonstrations. Still other properties make restaurants responsible for their own profit and loss statements. In any event, it is difficult for hotel restaurants to generate a profit.

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3

Hotel bars allow guests to relax and socialize for business or pleasure. Bars can also generate important profits for the hotel operation and for the hotel.

Bars are run by bar managers.

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3

The cycle of beverages is complex. It involves the following steps— ordering, receiving, storing, issuing, bar stocking, serving, and guest billing. Beverages are not perishable—they may be held over if not sold.

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3

Bar efficiency is measured by the pour/cost percentage. The pour cost is determined by dividing the cost of the depleted inventory by the sales over a period of time. A pour cost of 16 to 24 percent is considered appropriate for most operations.

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3

Automated control systems are expensive. They can, however, provide greater accuracy and protect companies from losses due to over pouring, pilferage, and other problems.

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Operators must ensure responsible alcohol service. If the guest becomes intoxicated and is involved in an accident, the server of the beverage, the bar person, and the manager may be held liable.

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3

Typical bar types in hotels are: lobby bars, restaurant bars (used as a holding area), the service bar (backstage bar), the catering and banquet bar (for functions), pool bars, mini-bars (in the guest room), night clubs, and sports bars.

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3

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Beverage Operations

Stewarding Department The chief steward reports to the F&B manager and is responsible for: cleanliness of the back of the house, maintaining clean glassware, china, etc., maintaining strict inventory controls, maintaining dishwashing machines, pest control and coordination with exterminating company, and forecasting labor and cleaning supplies.

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The department is extremely important to the efficient operation of the food and beverage department; however, it is often an unsung hero of the operation.

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3

Strict inventory control and attention to detail helps to keep pilferage to a minimum.

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3

Banquets and functions bring people together to celebrate and honor various events. Events may center on anniversaries, weddings, political events, conventions, state dinners, etc.

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3

The term banquet refers to a group of people who eat together at one time and in one place. Catering includes a variety of occasions when people may eat at various times. Catering may be subdivided into on-premises and off-premises.

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3

The director of catering (DOC) reports to the F&B director and is responsible for selling and serving, catering, banquets, meetings, and exhibitions. These events must exceed guest expectations for quality and produce a reasonable profit.

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1, 3

A close relationship must be maintained with the executive chef to ensure that the menus are suitable for the client and practical for service.

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The director of catering must be able to sell functions, lead a team of employees, set and maintain department sales and cost budgets, set service standards, be creative, and be knowledgeable of the likes and dislikes of various ethnic groups.

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3

Over the years, the director of catering builds a list of clients and a wealth of experience with various events. The main sales function of the department is conducted by the director of catering (DOC) and the catering sales managers (CSMs). They obtain business leads from convention and visitors bureaus, corporate office sales departments, hotel’s director of sales, general managers, competitive hotels, rollovers (groups re-booking at the same properties), and cold calls.

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3

Room set-ups are determined based on client needs.

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Banquets and Catering Department

Catering Event Order The catering event order (CEO), or banquet event order (BEO), is prepared and completed for each function to inform the client and the hotel personnel. It communicates essential information about the function—what needs to happen and when.

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The CEO/BEO is based on correspondence with the client and notes taken during meetings. It specifies the room layout and decor, time of arrival, VIPs, special attention required, bar times, cash or credit bar, time of meal service, menu, and service details.

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3

A guaranteed number of guests are agreed to prior to the function.

Catering managers closely monitor the final numbers for each function. A final number is usually required anywhere from 7 days to 72 hours before the function. This ensures that the hotel will have “prepped” sufficiently and that the client will not end up paying for a large number of “no-shows.”

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The catering services manager (CSM) is responsible for delivering service that exceeds the expectations of guests and the client.

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3

He/she is responsible for directing the service of all functions, supervising catering house-persons, who set up the room, cooperating with the banquet chef, checking that the client is satisfied, making out client bills immediately after the function, calculating and distributing gratuities and service charges, and coordinating special requirements.

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3

A survey by the American Hotel and Lodging Association revealed that 56 percent of all properties offer room service and 75 percent of airport hotel properties offer room service.

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Economy and many mid-priced hotel properties offer vending machines or food deliveries from local pizza or Chinese restaurants. This allows them to provide a desired service to the guest without additional expense to the operation.

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Challenges to address in providing room service include—delivering orders on time, making room service profitable for the food and beverage department, avoiding complaints of excessive charges for room service, and forecasting demand.

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3

Some hotels have a policy of preparing a percentage (usually 3-5 percent) over the guaranteed number of guests.

The director of catering holds weekly meetings with key individuals who will be responsible for upcoming events.

Catering Coordinator The catering coordinator is responsible for managing the office and controlling the function diary. The function diary is often referred to as the “bible.” Today, many hotels use a brand name computer program such as Delphi.

Catering Services Manager

Room Service/In-Room Dining

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Room service managers analyze the front desk forecast, which gives details of the house count and guest mix. Convention resumes show if a convention breakfast is scheduled, which would affect the level of room service orders.

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3

Training is critical for the staff that will provide room service. The aim is to transform an order taker into a salesperson.

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3

Sustainable Food and Beverage Guests are increasingly aware of the importance of sustainable operations of a food and beverage facility. They are pleased to see the greening of food and beverage operations and the use of local natural products, which helps reduce the cost of transportation and adds local flavor.

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The best way to start the process of making food and beverage more sustainable and profitable is to conduct a comprehensive audit or evaluation of your food and beverage operation in order to provide a baseline in terms of energy efficiency and carbon footprint; they should be part of an overriding strategy that will provide an in-depth analysis of the organization’s sustainable position.

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Current Issues in Lodging Food and Beverage Operations Changes in food service operations—some hotels have eliminated their restaurants and others have installed a grab and go market in the lobby.

Beverage service—craft cocktails and beers are popular.

Controlling rising costs such as energy, water, wages and benefits.

Use of branded restaurants instead of privately owned, hotels not opting to offer F&B outlets, more casual restaurants, using themes, standardized chain restaurant menus, sports theme, technology used to enhance areas such as guest ordering, payment, food production, refrigeration, marketing, management control,communication, and more low-fat, low-carb items added to menus.

102

III. Teaching Techniques/Classroom Exercises Note: The content of these exercises is such that they may also be used as essay questions.

Exercise One: Invite guest speakers from the food and beverage department of a local hotel property, i.e., Food and Beverage Director, Assistant Food and Beverage Director, Executive Chef, Restaurant Manager, etc. An ideal individual would be the Food and Beverage Manager. He/she should be able to speak about career paths as well as the interaction of departments within Food

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and Beverage as well as throughout the hotel property. Have students prepare 3 questions each prior to the guest lecture.

Alternative: Assign students to groups and have them visit properties and report back.

The students can even help develop the criteria for the visit.

Exercise Two: Organizational Chart Scramble: Copy the Overhead Master for the Food and Beverage Organizational Chart (p. 85). Cut the chart up into individual positions and place in a bowl.

Have students draw a position (have as many cut up charts as necessary to allow all students to draw a position) and research information about the position. Students should research educational background needed, salary, and responsibilities. This assignment can be given at the end of a class period. At the next class meeting, assign the students to “find” the rest of their food and beverage department. Have students assemble the organizational chart correctly and share information about their positions.

IV. Answers to Chapter 4 Review Questions 1) Food cost percentage, challenging because some people steal food, others waste food during production, the inventory and sales were not properly calculated. labor cost percentage: because too many people were scheduled, or wages too high or low, food sales percentage: because the sales may not be high enough to cover all the costs of operation and costs may be too high, so they detract from sales.

2) Escoffier developed the brigade system to better organize the kitchen food production. The brigade logically separates each area of production so that it is under control.

3) Catering is broader in scope than banquets. Banquets are genially large dinner parties, whereas catering implies other activities such as meetings with luncheon, conferences, sales meetings and so on.

The catering sales manager must convince the guests that they can deliver the exceptional service, food and beverage and ambiance. They must be available at the beginning of the even and introduce the services manager or Maître d to the guests. They also follow up after the event and look for a re-booking next time or year.

V. Mini-Case Discussion Question Answer Case: Communication at Harper Hotels, Inc. Question: What meetings, if any, are needed daily, weekly, and monthly? Give names to these different meetings, time frames, and describe the objectives of these meetings.

Feedback: Answers will vary. A sample response is: Daily meetings—pre-shift with servers and bartenders a.m and p.m.; pre-shift with culinary staff a.m. and p.m.; pre-shift with dishwashers and stewarding department.

Pre-shift meetings will focus on upcoming guests, daily specials, operational updates, recap of previous shift—anything special that happened, and praise and recognition of employees as appropriate. The chief steward will run the dishwasher pre-shift meetings. Pre-shift meetings should last no longer than 15 minutes and take place before breakfast/lunch/dinner shifts begin.

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Weekly meetings:

− chefs meeting + chief steward; managers meeting; sales meeting. The weekly chefs’ meetings will include the chief steward and all sous chefs including conference and banqueting and the conference and banqueting manager, coordinator, and services manager. It will be led by the Food and Beverage manager or executive chef and last 45 minutes. The meeting will review purchases, upcoming events, specials, and include any observations regarding the departments.

A weekly managers or guidance team meeting will be held and last up to 60 minutes. It will include executive committee members and all managers including accounting, sales, executive chef, and department heads. The meeting will cover past business, new business, updates from each area, and additional topics as the food and beverage manager identifies.

A weekly sales meeting will be attended by all the sales department and the executive committee.

It will last for up to one hour and cover the state of the business, new business, guest comments, revenue management and the STAR Report and future marketing plans.

Monthly meeting: − Each department will hold a monthly team meeting. Team meetings will include training, praise and recognition, new promotions for the next month, guest feedback, employee Q and A. Time up to one hour.

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Chapter Five Beverages I. Chapter Objectives After reading and studying this chapter, the student should be able to do the following: 1. Explain the characteristics of wine relevant to the hospitality industry.

2. Explain characteristics of beer relevant to the hospitality industry.

3. Explain the characteristics of spirits relevant to the hospitality industry.

4. Explain the characteristics of nonalcoholic beverages relevant to the hospitality industry.

5. Summarize bar and beverage operations and the responsibilities of management.

II. Key Teaching Elements/Chapter Outline/Lecture Suggestions Page

Object.

Wine is the fermented juice of freshly gathered ripe grapes or sugarcontaining fruit such as blackberries, cherries, etc.

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1

Wine may be classified by color (red, white, or rose) or by type (light beverage wines, sparkling wines, fortified wines, and aromatic wines).

106

1

106

1

Champagne, sparkling rose wine, and sparkling white wine are called sparkling wines. The wine gets its unique sparkling quality because it contains carbon dioxide.

106

1

Champagne became the drink of fashion in France and England in the seventeenth century. Originating in the Champagne region of France, the wine owed its unique sparkling quality to a second fermentation— originally unintentional—in the bottle itself. This process became known as Méthode Champenoise.

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1

Champagne may, by law, only come from the Champagne region of France. Sparkling wines from other countries have Méthode

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1

Wine

Light Beverage Wines These wines are also referred to as “still” table wines (no CO2). In the United States, premium wines are named after the grape variety (Chardonnay and Cabernet Sauvignon). In Europe, they are primarily named after the grape variety and their region of origin (Pouilly-Fuissé and Chablis), however some producers are beginning to use the name of the grape varietal.

Sparkling Wines

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Champenoise written on their labels to designate that a similar method was used to make that particular sparkling wine.

Fortified Wines Sherries, ports, Madeiras, and Marsalas are fortified wines. This means that they have had brandy or wine alcohol added. This increases the alcohol content to about 20 percent. They are usually sweeter than regular wines.

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1

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1

Wine has been produced for centuries. The first records of wine making date back about 7,000 years. Because the wines were often young and very acidic, they were often flavored with spices and honey. The ancient Egyptians and the Babylonians were the first ones to record the fermentation process.

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1

The quality of the wine depends upon the quality of the grape variety, the type of soil, the climate, the skill of the wine-maker, the vineyard, and the method of wine making. The most important winemaking grape variety is the Vitis vinifera.

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1

Traditions have developed to “govern” the combination of food and wine.

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2

In general, the following traditions apply—white wine is served with “white meat,” whereas red wines are best with “red meats.” The heavier the meal, the more robust the wine should be. Champagne can be served throughout the meal. Regional wines are best with food of the region. Sweet wines should be served with foods that are not too sweet.

Port and red wines go well with cheese. (See list on text p. 108.)

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Food and wine are described by texture and flavor. However, the most important factors to consider are the richness and lightness of the meal and the wine.

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2

Aromatic Wines Vermouths and aperitifs are aromatic wines. They have been flavored with herbs, roots, flowers, and/or barks. The wines may be sweet or dry and are reputed to serve as digestive stimulants when sipped before a meal.

The History of Wine

Matching Wine with Food

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Major Wine-Growing Regions Germany, Italy, Spain, Portugal, and France are the main European wine-producing countries.

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1

France is the most notable of the European countries—not only for wine, but also for Cognac and Champagne. Wines are named for the village in which the wine is produced and are an important part of the French culture and heritage.

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1

In the United States, California is the major wine-producing region.

There are three principal regions in which they produce wine in California: north and central coastal region, great central valley region, and southern California region. The Napa and Sonoma Valleys are the two major centers.

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1

New York, Oregon, and Washington are other major wine-producing states, as well as are some Canadian provinces.

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1

Australia, New Zealand, Chile, Argentina, and South Africa are other parts of the world that produce wines.

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1

How to Read a Wine Label Labeling requirements vary from country to country. In the United States wines are typically labeled by their varietal grape and include the name of their region. In Europe, wines tend to be labeled regionally rather than by varietal. Wine labels are helpful in telling a lot about what is in the bottle.

Wine and Health A glass of wine may be beneficial to health. This perspective was featured in the CBS news magazine program 60 Minutes, which focused on a phenomenon called the French paradox.

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Sustainable Wine Production Organic is a term given to environmentally friendly methods that use no chemicals or pesticides. Sustainability is defined as a holistic approach to growing and food production that respects the environment, the ecosystem, and even society.

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The California Association of Wine Grape Growers has prepared a “Code of Sustainable Winegrowing Practices”; this is a 490-page voluntary self-assessment workbook covering everything from pest management to wine quality to water conservation to environmental stewardship.

111

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Beer Beer is a brewed and fermented beverage made from malted barley and other starchy cereals and flavored with hops.

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2

Beer is a generic term for a variety of mash-based, yeast-fermented brewed malt beverages that have an alcohol content mostly between 3.8 and 8 percent.

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2

The term “beer” includes the following: lager, ale, stout, and pilsner.

Pilsner is not really a beer but named after Pilsen, Czech Republic.

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2

Beer is brewed from water, malt, yeast, and hops. The first ingredient is water. Water accounts for up to 85-89 percent of the finished beer.

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2

Next, grain is added in the form of malt, which is barley that has been ground to a coarse grit. The grain is germinated, producing an enzyme that converts starch into fermentable sugar. The yeast is the fermenting agent. Breweries typically have their own cultured yeasts, which to a large extent determine the type and taste of the beer. Mashing is the term for grinding the malt and screening out any bits of dirt. The malt then goes through a hopper into a mash tub, which is a large stainless steel or copper container. Here the water and grains are mixed and heated.

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2

The liquid is now called wort and is filtered through a mash filter or lauter tub. This liquid then flows into a brewing kettle, where hops are added and the mixture is boiled for several hours. After filtering, yeast is added and the liquid undergoes fermentation. After lagering, it is then bottled.

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2

The USDA established the National Organic Program in 1997, opening the door for organic beer.

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Brewers methods for reducing their ecological footprint are: building efficient brewhouses, providing water treatment reducing water usage, recycling all paper products, and many other sustainable practices.

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The Brewing Process

Organic and Craft Beers, Microbreweries, and Brewpubs

Sustainable Brewing Brewers are reducing their carbon footprints in a variety of ways, including energy efficient lighting and equipment, adding waste-water treatment facilities, using recycled paper products, using wind and solar power, and using renewable energy wherever possible.

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Spirits A spirit or liquor is made from liquid that has been fermented and distilled and has a high level of alcohol. The level of alcohol is gauged by the proof. The proof is equal to twice the percentage of alcohol in the beverage.

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Spirits are usually consumed before or after the meal rather than with the meal. They are served straight or neat, or mixed with water, soda water, juice, or cocktail mixes.

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Fermentation of spirits takes place by the action of yeast on sugarcontaining substances, such as grain or fruit. Distilled drinks are made from a fermented liquid that has been put through a distillation process.

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Whiskey is a generic name for the spirit that was originally brewed in Scotland and Ireland. It is made from a fermented mash of grain to which malt (barley) is added.

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3

Spirits are naturally white or pale in color. Whisky’s color comes from the charred oak barrel in which it is stored. It is stored for a maximum of 12 to 15 years. Many whiskies are aged only three to five years. To achieve a quality and distinctive taste, whiskies are blended according to the “secret recipe” of the distillery.

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3

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3

Whiskies

Scotch Whiskey Scotch Whiskey is also referred to as “Scotch.” It became popular in the United States during Prohibition (1919 to 1933), when it was smuggled into the country via Canada. It is produced like other whiskies, except that the malt is dried in special kilns that give it a smoky (peaty) flavor.

Irish Whiskey Irish Whiskey is produced from malted barley, unmalted barley, corn, rye, and other grains. This whiskey is milder than Scotch.

Bourbon Whiskey This liquor was introduced to America by the first settlers, who used it primarily as a medicine. Bourbon whiskey is produced mainly from corn. Charred barrels provide bourbon with its distinctive taste.

Bourbon can only be made in the United States.

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Canadian Whiskey Canadian Whiskey is made mainly from corn. It must be at least four years old before it can be bottled and marketed. It is characterized by a delicate flavor that pleases the palate.

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Gin, vodka, rum, and tequila are the most common types of white spirits.

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Gin is made from juniper berries. It was widely produced in the United States during Prohibition and forms the base of many cocktails.

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3

Rum can be light or dark in color. It is distilled from the fermented juice of sugarcane (light rum) or molasses (dark rum). It comes primarily from the Caribbean Islands of Barbados, Puerto Rico, and Jamaica.

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Tequila is distilled from the Agave tequilana (a cactus). Mexican regulations require that tequila be made in the area around the town of Tequila. Tequila may be white, silver, or gold in color.

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3

Vodka can be made from many sources including barley, corn, wheat, rye, or potatoes. It lacks color, odor, and flavor and is usually mixed with juices or other mixes.

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Brandy is distilled from wine.

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Cognac is considered to be the best brandy in the world. It is made only in the Cognac region in France. Blending brandies of various ages makes Cognac.

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Cocktails were first developed in England in the Victorian Era and became popular during the 1920s and 30s. Cocktails are intended to stimulate the appetite or provide the perfect ending to a meal.

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3

Cocktails are usually drinks made by mixing two or more ingredients (wines, liquors, fruit juices).

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White Spirits

Other Spirits

Cocktails

Nonalcoholic Beverages Nonalcoholic beverages have increased in popularity. Lifestyles have become more healthful, and organizations like MADD (Mothers Against Drunk Driving) have raised awareness.

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4

Nonalcoholic Beer Guinness, Anheuser-Busch, and Miller, along with many other brewers, have developed beer products that have the same appearance as regular beer, but have lower calorie content and 95-99 percent alcohol removed.

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4

Coffee is increasing in popularity. Sales of specialty coffees exceed $4 billion with more than 17,400 coffee houses nationwide.

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4

Coffee originally came from Ethiopia and what is now the Yemen Republic. Coffee made its way to Europe through Turkey. Eventually coffee became the social beverage of Europe’s middle and upper classes.

The Dutch introduced coffee to the United States.

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4

Brazil produces more than 30 percent of the world’s coffee.

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4

Coffee may be roasted from light to dark according to preference. Light roasts are usually used in canned or institution roasts. Most people prefer medium roasts, generally considered to be all purpose. Specialty stores prefer full, high, or Vienna roast. Dark roasts have a rich flavor.

Espresso is the darkest of all roasts.

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Decaffeinated coffee has had the caffeine removed by either water or solvents.

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Steeping the leaves of the tea plant in boiling water makes tea. It is consumed hot or cold and is second to coffee in terms of commercial importance. Tea leaves have more than twice the caffeine of coffee beans.

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Popular types of tea are Oolong, Darjeeling, Dooars, Orange Pekoe, Sumatra, and Java.

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Coca-Cola and Pepsi are the dominant brands in the soft drink market. In the early 1970s diet colas were introduced and soon took command of 10 percent of the market.

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Energy drinks are beverages that are designed to give the consumer a burst of energy by using a combination of caffeine, B vitamins, and herbal ingredients.

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Coffee

Tea

Carbonated Soft Drinks and Energy Drinks

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Juices Non-alcoholic cocktails (Virgin Cocktails) have been popular for years.

The Juice bars are a relatively new development. They specialize in quick, healthful drinks. Some offer “smart drinks” that are supposed to boost energy and concentration.

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Sports enthusiasts also find drinks that professional athletes use and advertise available in stores. These specially formulated isotonic beverages are intended to help the body regain the vital fluids and minerals that are lost during heavy physical exertion.

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Bottled Water Bottled water was popular in Europe when water was not safe to drink. It has gained popularity in the United States and other developing countries.

Bars and Beverage Operations Bar and beverage management requires the same sequence of steps as foodservice management (See list on text p. 123).

Bar Setup The physical setup of a bar is critical to its overall success. The area must be designed to be pleasing to the customer as well as efficient and smooth in operation.

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Inventory Control A program of inventory control accomplishes the following: safeguarding the company’s assets, providing reliable accounting records, promoting operational efficiency, and adhering to company policies. Training is an important element in implementing inventory control.

Theft may occur in many ways—giving away drinks, over-pouring, mischarging for drinks, and stealing of drinks by employees. A good control process will have systems to detect these problems.

All inventory control systems require an actual physical count of the existing inventory, which may be done on a weekly or monthly basis, depending on the needs of management. This physical count is based on units. For liquor and wine, the unit is a bottle, either 0.750 or 1.0 liter; for bottled beer, the unit is a case of twenty-four bottles; for draft beer, the unit is one keg. The results of the most current physical count are then compared to the prior period’s physical count to determine the actual amount of beverage inventory consumed during the period.

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Using Technology to Control Beverage Costs 124

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A key component of internal control is having procedures in place for screening and hiring bar personnel. Bar managers must implement several other procedures to control inventory and reduce the likelihood of employee theft.

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“Spotters” is one method often used by managers. “Spotters” are hired to act like normal bar customers, but are actually observing the bartender.

Another method is a “bank switch” in the middle of a shift.

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The bar in restaurants is often used as a holding area to manage the flow of guests into the dining room. This prevents the kitchen from getting backed up with too many orders at one time and can generate substantial profits.

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Beverages generally account for 25 to 30 percent of total sales of the restaurant.

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Bars carry a range of each spirit. The well package is the least expensive pouring brand used at the bar. The call package is the group of spirits that the bar offers to guests who ask for a particular brand name. These spirits are more expensive. The total sales mix should provide a pour cost of 16 to 20 percent.

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There are several types of night clubs. Some offer one type of music while others offer several different types of music.

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Clubs charge an entrance fee and a higher fee for drinks than do restaurants. The nightclub business tends to fluctuate with trends. What is in this year may be out next year.

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Technology for beverage management has improved with products from companies such as Scannabar (www.scanbar.com), which offer beverage operators a system that accounts for every ounce, with daily, weekly, or monthly results. The ongoing real-time inventory allows viewing results at any time and place, with tamperproof reliability interfaced with major point-of-sale (POS) systems.

Personnel Procedures

Restaurant and Hotel Bars

Nightclubs

Brewpubs and Microbreweries Microbreweries brew their own beer on-site to meet the taste of local customers. These craft breweries produce up to 15,000 barrels of beer a year. One reason for success is the wide variety of styles and flavors of beer they produce.

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Microbreweries can produce a wide variety of ales, lagers, and other beers, the quality of which depends largely on the quality of the raw materials and the skill of the brewer.

Sports Bars Sports bars have always been popular and have become more so in recent years. Satellite television coverage of top sports events has helped to draw large numbers of guests.

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Today’s sports bars are attracting a much more diverse clientele. Now, more women and families are frequenting these venues, which provide a new prospect for revenue for bar owners.

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Liquor Liability and the Law Owners, managers, bartenders, and servers may be liable under the law if they serve alcohol to minors and/or to people who are intoxicated.

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Dram shop laws govern the sale of alcoholic beverages. These laws were enacted in the 1850s and specify that owners and operators of drinking establishments are liable for injuries caused by intoxicated customers.

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Other prevention programs include “designated drivers” who drink nonalcoholic beverages to be sure that their friends get home safely.

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Coffee Shops Coffeehouses were originally based on the Italian bars, which were deeply rooted in the Italian espresso tradition. This concept was recreated in the United States. The original concept, however, was modified to include a wider variety of beverages and styles of coffee to meet customer taste.

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Cyber or wireless cafes, a new coffeehouse trend, offer the use of computers, with Internet capabilities, for about $6 an hour.

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III. Teaching Techniques/Classroom Exercises Note: The content of some of these exercises is such that they may also be used as essay questions.

Exercise One: Using non-alcoholic wine (with corks), demonstrate proper wine service. Have students practice this skill.

Exercise Two: Have students research trends in the beverage industry. Brew Pubs, Wine Bars, Coffeehouses, and Juice Bars have gained in popularity in recent years. Assign students one of the growing segments of the industry to research both in terms of the anticipated profits/growth to 53 ..

be gained as well as the career options in this field. Is this an area of the industry they are interested in exploring? Have students generate a list of pros and cons for the industry.

Exercise Three: Complete a confidential survey of the class. (See collateral materials below.) Tabulate the class responses and use the data as a catalyst for discussion on the subject of restaurant liability and the implications for managers.

Class Survey 1. Do you know anyone who has attempted to purchase alcoholic beverages when he/she was under age 21? _______ Yes

______ No

2. If you answered yes to question number 1, was the person successful? _______ Yes

______ No

3. Do you know anyone who has a false ID that indicates that he/she is age 21 or over? _______ Yes

______ No

4. Are you aware of anyone of age knowingly supplying alcohol to people under age? _______ Yes

______ No

5. With which statement do you agree? ________ I am always asked for proof of age when I try to purchase alcohol. ________ I am often asked for proof of age when I try to purchase alcohol. ________ I am seldom asked for proof of age when I try to purchase alcohol. ________ I am never asked for proof of age when I try to purchase alcohol.

IV. Answers to Chapter 5 Review Questions 1. Compare the production of wine in Europe to production of wine in other parts of the world.

Include labeling requirements and types of varieties produced.

Country/Region Production Labeling Requirements Varieties Europe • Germany known for Riesling • Italy known for Chianti • Spain known for Sherry • Portugal known for Port • France must notable producing fine wines plus champagne and cognacs • Bordeaux and Burgundy most famous wine producing areas in France • Labeled regionally rather than by varietal • Typical headings: Name of vineyard; Grape varietal; Growing area; Vintage; Producer • Semillon

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• Sauvignon blanc • Merlot • Pinot Noir • Riesling United States & Canada • California is a major producer with 3 main areas: North and central coastal; Great central valley; Southern California • Napa and Sonoma are best known California regions • New York, Oregon, and Washington are • Labeled by grape variety and name of the region • Chardonnay • Sauvignon blanc • Riesling • Chenin blanc • Cabernet sauvignon • Pinot noir • Merlot • Syrah • Zinfandel also known as major producers • British Columbia’s Okanagan Valley and Ontario’s Niagara peninsula are known for their wine production Australia • 60 wine growing regions • New South Wales, Victoria, and South Australia provide much of the wine • Chardonnay • Semillon • Sauvignon blanc • Cabernet sauvignon • Merlot • Shiraz 2. Describe how beer is brewed and explain the difference between ale, lager, and stout.

Beer is brewed from water, malt, yeast, and hops.

1. The process begins with water.

2. Grain is added in the form of malt. The grain is germinated to produce and enzyme that converts starch into fermentable sugar.

3. Yeast is added next.

4. Mashing takes place.

5. The liquid wort is filtered and flows into a brewing kettle.

6. Hops are added.

7. Mixture is boiled for several hours.

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8. Hop wort is filtered.

9. Mixture is placed in fermenting vat.

10. After aging, it is ready for bottling.

3. Identify the similarities and differences of the four types of whisky.

Type Similarities Differences Scotch Whiskey • Barrel aged • Made from grains such as corn, barley, rye, etc. Malt is dried in special kilns · • Must conform to the Scotch Whiskey Act standards • Single Malt—comes from one specific distillery and not mixed with whiskey from other distilleries Irish Whiskey • Produced from malted or unmalted barley • Malt is not dried • Some aged up to 12 years Bourbon • Produced mainly from corn • Produced in the United States • Charred barrels provide the unique taste • Barrels can only be used once • Can be aged up to six years Canadian Whiskey • Produced mainly from corn • Must be aged at least four years before bottling • Distilled to be 70-90 percent alcohol by volume 4. Discuss the rise in popularity of nonalcoholic beverages and reasons for this change.

Nonalcoholic beverages have experienced a rise in popularity as people became more conscious of alcohol consumption. Some factors leading to this include adopting healthier lifestyles, stricter laws regarding drinking and driving, and a wider variety of nonalcoholic beverages.

5. Summarize the difficulties a manager may face when serving alcoholic beverages.

Managers must be aware of dram shop laws and the liability that comes with serving alcoholic beverages. Some of the difficulties faced by a manager include: • Service of underage guests • Service of already intoxicated or impaired guests • Theft by servers/bartenders • Potential fines, jail term, loss of liquor license and more depending on offense and state

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V. Mini-Case Discussion Question Answers Case: Testing the Legal Limits Question: In a very busy bar, how would you prevent a minor from obtaining an alcoholic beverage, determine who is liable for the incident, minimize the possibility of losing your license, and mitigate the chances of this happening again?

Feedback: Possible solutions include: − Prevent minor from obtaining an alcoholic beverage card: card all patrons under the age of 30, educate staff (all to pass Serve Safe certification) on how to recognize a fake ID, observe who is drinking at tables (conduct table visits by the manager). −

Determine who is liable: Monitor all alcohol service, train staff on safe alcohol service, use video cameras.

−

Minimize losing license: Train staff on proper alcohol service, on-going training and education, monitor service.

Mitigate chances of happening again: Monitor, educate, train, enforce.

−

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Chapter Six The Restaurant Business I. Chapter Objectives After reading and studying this chapter, the student should be able to do the following: 1. Discuss the development of our culinary heritage, trends in the industry, and how to develop the skills necessary for a career in the restaurant business.

2. Design a menu.

3. Summarize the different classifications of restaurants.

II. Key Teaching Elements/Chapter Outline/lecture Suggestions Page

Object.

Restaurants are a vital part of our everyday lifestyles; because we are a society on the go, we patronize them several times a week to socialize, as well as eat and drink.

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Restaurants offer a place to relax and enjoy the company of family, friends, colleagues, and business associates and to restore our energy level.

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The word restaurant derives from the word restore.

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There are more than 990,000 restaurants in the United States, with Sales of $683.4 billion and 13.5 million employees. The restaurant’s share of the food dollar has risen to 47 percent. On a typical day, more than $1.8 billion is spent in the United States visiting a restaurant or foodservice operation.

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Two events were responsible for our culinary legacy coming from France. First was the French revolution which caused all the best French chefs to lose their jobs and the second was Thomas Jefferson installing a French chef in the White House when he became president.

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North America gained most of its culinary legacy from France.

Marie-Antoine Carême and Auguste Escoffier are credited as the founders of classical cuisine.

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One of the main foundations of classical French cooking is the five mother sauces: béchamel, velouté, espagnole, tomato, and hollandaise.

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The Restaurant Business

Classical Cuisine

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Nouvelle cuisine, which became popular in the early 1970s and late 1960s, is a lighter cuisine than French and is based on simpler preparations—instead of thickening a sauce with roux, a puree of vegetables would be used instead. Nouvelle cuisine combined classical techniques and principles with modern technology and scientific research.

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The bounties of regional cuisine cooking from the United States and Canada has flourished nationally, particularly due to the popularity of infusion—the blending of flavors and techniques from two cuisines.

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Today, to meet the challenges of the industry, it is essential for modern chefs to be well educated and highly diversified, rather than merely keeping up with current trends.

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The level of professionalism is rising for chefs of the twenty-first century and they will need a strong culinary foundation with a structure that included multicultural cooking skills and strong employability traits such as passion, dependability, cooperation, and initiative.

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Back to basic cooking has been redefined to mean taking classical cooking methods and infusing modern technology, and science to create healthy and flavorful dishes.

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Today, being a chef is considered a profession that offers a variety of opportunities in every segment of the hospitality industry and anywhere in the world.

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Food Trends and Practices

Culinary Practices To be a good cook, one must understand the basic techniques and principles of cooking. There are six skill areas that are important to becoming a successful chef: cooking skills, strong employability traits, people skills, menu development skills, nutrition knowledge, sanitation/safety knowledge, accounting skills, and computer skills for the new millennium.

One of the most important things to learn about the industry is that you can’t do it alone; it’s a team effort.

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Franchises Franchising is a great method for growing a particular business to multiple locations with the same or similar products or service. This is especially true for individuals who wish to run a business but prefer not to go through the process of starting a concept from scratch.

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Through a contractual agreement, the franchisor grants the franchisee the rights to use their designs and plans, sell their products, and use their logos, promotional materials, and operational services. The franchisor normally supplies the operational systems, menus and recipe design, and management expertise. The franchisee must agree to maintain the standards set by the franchisor, who will also want the franchisee to meet minimum qualifications.

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The franchisee benefits by joining a proven successful restaurant concept, which is more likely to succeed than an unproven concept.

However, the increased likelihood of success does incur costs.

Franchise costs include a franchising fee, a royalty fee, and advertising royalties and requires lots of personal net worth.

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Chain restaurants are a group of restaurants, each identical in market, concept, design, service, food, and name—the largest concentration is found in the quick service segment. Chains grew out of successful independent restaurants, first into a small group, and then, often by franchising, into a concept “with legs” (as they say in the industry) that spread across several states and eventually nationwide. Chain restaurants have proven more successful and more numerous with quick-service or fast casual concepts. A chain restaurant is owned by the parent company, a franchise company, or an independent operator sometimes called an operating partner.

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Being associated with a chain has several benefits. First, if managed correctly, the chain can have outlets in various geographic locations.

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There is also a disadvantage to becoming a franchisee. Because they must adhere to the franchisor’s policies, procedures, and standards, the franchisee may feel a loss of operational independence.

Chain Restaurants

Second, a chain operation allows a parent company to have multiple streams to generate revenue.

Independent Restaurants Independent restaurants (also called indies) are typically owned by one or more owners who are usually involved in the day-to-day operation of the business. Even if the owners have more than one store (restaurant-speak for a “restaurant”), each usually functions independently. These restaurants are not affiliated with any national 60 ..

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brand or name. They offer the owner independence, creativity, and flexibility, but are generally accompanied by more risk.

Sustainable Restaurants The average American meal has a shockingly large carbon footprint, usually travelling 1,500 miles to the plate and emitting large amounts of CO2. Each meal produces 275 pounds of waste a day, making restaurants the worst aggressors of greenhouse gas emissions in retail history.

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Utility costs are a big line item for restaurants, accounting for a median of between 2.3 and 3.6 percent of sales.

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According to Zagat’s America’s Top Restaurants, 65 percent of surveyors said they would pay more for food that has been sustainably raised or procured.

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The Menu The menu may be the most important ingredient in the restaurant’s success. The menu must agree with the concept and exceed guest expectations. There are several types of menus (see text page 138).

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Cook capabilities must harmonize with the menu and concept. An appropriate level of expertise must be employed to match the demands of the guest. This will affect many other aspects of the operation like, equipment needs, purchasing, salaries, etc.

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Menus must be developed with regard to the capacity and layout of the equipment, or, the menu more or less dictates the competency of labor to hire and type of equipment necessary.

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Needs and Desires of Guests Guest needs and desires are what is important when planning a menu, not what the owner thinks. The menu must harmonize with the theme, concept, guest expectations, etc.

Capabilities of Cooks

Consistency and Availability of Menu Ingredients In the United States most ingredients are available year-round.

Some may be more expensive at certain times of the year due so seasonality.

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Price and Pricing Strategy The target market generally determines the menu pricing strategies.

Factors to consider include competition, food cost, labor cost, other overhead costs, expected profit, and contribution margin.

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The two main ways to price a menu are the comparative approach, analyzing price ranges of local competition. The second method is to cost each menu item and multiply it by a ratio amount necessary to achieve the desired food cost percentage.

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Menu Engineering Menu engineering is an approach to setting menu prices and controlling costs. It is also used to determine the performance of menu items relative to profitability and cash flow. Menu Engineering operates on the principle that contribution margin is more important than food cost percentage.

Menu Design and Layout Menu presentation varies depending on concept; from verbal descriptions to chalk boards to formally presented menus. Menus are sales tools and motivational devices and play an important role in influencing guest decisions and help to establish a restaurant’s image and ambiance.

Classifications of Restaurants There is not a single definition of restaurant classification. Most experts agree there are two main categories—independent and chain restaurants. Other categories include fine dining, quick service, ethnic, family, dinner house, occasion, casual, etc.

Some restaurants may fall into more than one category. For instance, a restaurant can be both ethnic and quick service, such as Taco Bell.

Americans are eating out up to five times a week as well as on special days such as Mother’s Day, Valentine’s Day, birthdays, and anniversaries. The most popular meal to eat away from home is lunch.

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Fine Dining A fine dining restaurant is one where a good selection of menu items is offered—at least fifteen or more different entrees cooked to order and nearly all the food being made on the premises from scratch or fresh ingredients.

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Most fine-dining restaurants are independently owned and operated by an entrepreneur or a partnership. These restaurants are in almost every city. In recent years, fine dining has become more fun because creative chefs offer guests fine cuisine as an art.

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The types of restaurants that can be included in the casual dining restaurants category are: midscale casual restaurants, family restaurants, ethnic restaurants, theme, and quick-service/fast-food.

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Casual dining is relaxed and could include restaurants from several classifications: chain or independent, ethnic, or theme.

Hard Rock Cafe, TGI Friday’s, The Olive Garden, Houston’s, Romano’s, Macaroni Grill, and Red Lobster are good examples of casual dining.

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Celebrity-Owned Restaurants Celebrities who may or may not have F&B backgrounds own these operations. The operations are designed to be entertaining, drawing heavily on the notoriety of their owners. Celebrity restaurants generally have an extra zing to them…a winning combination of design, atmosphere, food, and perhaps the thrill of an occasional visit by the owner(s).

Steak Houses The steak restaurant is still strong in spite of recent nutritional concerns. To remain more competitive, many operations are adding “value priced items” such as chicken or fish. These items serve to attract more customers.

The upscale steak house, like Fleming’s, Ruth Chris’s, and Houston’s, continue to attract the expense account and “occasion” diners.

Casual Dining and Dinner-House Restaurants

Over the past few years, the trend in dinner house restaurants has been toward more casual dining. Many dinner house restaurants have a casual, eclectic décor that may promote a theme. Charter House is a steak and seafood chain that has a nautical theme.

Friday’s is an American bistro dinner house.

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Family Restaurants Family restaurants evolved from coffee shop restaurants. Many are individually or family operated.

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Most often they offer an informal setting with a simple menu and service designed to please all of the family.

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The lines separating the various restaurants and chains in the family segment are blurring as operators upscale their concepts.

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The majority of ethnic restaurants are family owned and operated and sprang up to cater to tastes of various ethnic groups. The fastest growing segment of ethnic restaurants is Mexican.

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Taco Bell is the Mexican quick-service market leader with a 60 percent share. Other large Mexican food chains are Del Taco, La Salsa, and El Torito.

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The value-oriented operator in the family dining segment is Denny’s. The more upscale family concepts include Perkins, Marie Callender’s, and Cracker Barrel, all of which are sometimes referred to as the “relaxed” segment.

Ethnic Restaurants

Theme Restaurants Many theme restaurants are a combination of a sophisticated specialty and several other types of restaurants. They generally serve a limited menu but aim to wow the guest by the total experience. People are attracted to theme restaurants because they offer a total experience and a social meeting place.

Quick-Service/Fast-Food Restaurants This quick-service sector really drives the industry. Quick-service or fast-food restaurants offer limited menus.

In an attempt to raise flat sales figures, more quick-service restaurant (QSR) chains are using cobranding at stores and nontraditional locations, including highway plazas and shopping centers.

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Hamburgers The world’s greatest fast food success story is undoubtedly McDonald’s. McDonald’s story is amazing because it’s larger than the next three megachains combined—Burger King, KFC, and Pizza Hut. McDonald’s is now in 118 countries.

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Chicken has always been popular, in part because it is inexpensive to prepare, readily available, versatile, and perceived as a healthier alternative to burgers.

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KFC dominates the chicken segment with a worldwide total of more than 14,000 units.

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Each of the hamburger restaurant chains has a unique positioning strategy to attract their target markets. Burger King hamburgers are flame broiled, and Wendy’s uses fresh patties.

Pizza The pizza segment continues to grow due to delivery services. The segment continues to grow by marketing discounts and continuing its very successful delivery business.

Chicken

Sandwiches Sandwich restaurants are a popular way for entrepreneurs to enter the restaurant business. Subway is a particularly successful chain in this segment. Part of its success may stem from the strategy of investing half of the chain’s advertising dollars in national advertising.

Bakery Café

Headed up by Panera Bread with the mission of “a loaf in every arm” and the goal of making specialty bread available to consumers across the country. Panera focuses on the art and craft of breadmaking.

Trends in Restaurant Business Social media, sustainability and local foods, concerns over public health, environmental responsibility, global menus, locally sourced foods, and healthful kids menus.

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III. Teaching Techniques/Classroom Exercises Note: The content of these exercises is such that they may also be used as essay questions.

Exercise One: Have students recount a memorable dining experience. What made the experience memorable?

Lead the students through discussion of elements of location, atmosphere, service, menu, food, etc. Which elements were most important? Were any of the experiences negative? How could things have been improved?

Exercise Two: Have students obtain a menu from a restaurant, with permission from the manager of the restaurant. Ask them to analyze the menu using the criteria outlined in the text. Do they feel the menu supports the concept of the restaurant? What type of menu is it? Is the menu well planned?

Is it visually attractive? Is there enough variety offered for guests? Is the method of preparation varied enough to avoid overwhelming the kitchen?

Exercise Three: Assemble students into groups and assign each group a restaurant segment—dinner house, ethnic, seafood, etc. Have students research the restaurant by eating at the establishment (if possible— this provides an excellent opportunity for observation), meeting with the manager, identifying the competition and for franchise/national chains, through reviewing the company prospectus/franchise agreement. This exercise is ideal for class presentations.

Check Your Knowledge, p. 238 1. Question: Discuss the significance of classical cuisine.

Answer: French cuisine was considered the standard in the New World because many French Chefs came here after the French Revolution. French cuisine became the standard for highend dining due in large part to Auguste Escoffier and Marie-Antoine Carême who is considered the founder of classical French cuisine.

2. Question: From what country did North America gain most of its culinary legacy?

Answer: North America gained most of its culinary legacy from France. The French Revolution in 1793 caused many chefs to come to North America. Thomas Jefferson, who spent five years as an envoy to France, brought a French chef to the White House when he became president.

Check Your Knowledge, p. 244 1. Question: Give examples of food trends and culinary practices.

Answer: chefs will need a strong culinary foundation with a structure that includes multicultural cooking skills and strong employability traits, such as passion, dependability, cooperation, and initiative. Additional management skills include strong supervisory training, sense of urgency, accounting skills, sanitation/safety knowledge, nutritional awareness, and marketing/merchandising skills. With trans-fats being banned, culinary skills are also trending toward the more healthy menu. Back-to-basics have fused classic techniques with modern technology to create healthy and flavorful dishes. More education has become the norm and after plenty of experience, chefs are enjoying a respectable place at America’s table.

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2. Question: What were Escoffier’s most important culinary contributions?

Answer: Escoffier simplified much of the French complexity and aimed for a balance of ingredients. His Le Guide Culinaire became the cook’s bible when published in 1903. His refinements became known as Cuisine Classique.

3. Question: Describe how Richard Melman became so successful in operating restaurants.

Answer: Melman grew up in the food industry and, with a partner, developed a hip burger joint that became the basis for a chain of restaurants. He had a firm belief based on the importance of partners, of sharing responsibilities and profits with them, and of developing and growing together.

Check Your Knowledge, p. 246 1. Question: Summarize the different characteristics of franchise restaurants.

Answer: Through a contractual agreement, the franchisor grants the franchisee the rights to use their designs and plans, sell their products, and use their logos, promotional materials, and operational services. The franchisor normally supplies the operational systems, menus and recipe design, and management expertise. The franchisee must agree to maintain the standards set by the franchisor, who will also want the franchisee to meet the following qualifications: a. Share their vision, mission, values, and business practices b. Have been successful in other business or aspects of life c. Have the motivation to succeed d. Have enough money e. Be prepared to undergo training f. Have the time to devote to the franchise The franchisee benefits by joining a proven successful restaurant concept, which is more likely to succeed than an unproven concept. There is also a disadvantage to becoming a franchisee. Because they must adhere to the franchisor’s policies, procedures, and standards, the franchisee may feel a loss of operational independence.

Check Your Knowledge, p. 250 1. Question: Summarize menu planning.

Answer: The menu may be the most important ingredient in a restaurant’s success. A restaurant’s menu must agree with the concept; the concept must be based on what the guest in the target market expects; and the menu must exceed those expectations. The type of menu will depend on the kind of restaurant being operated.

A menu generally consists of perhaps six to eight appetizers, two to four soups, a few salads—both as appetizers and entrées—eight to sixteen entrées, and about four to six desserts.

The many considerations in menu planning attest to the complexity of the restaurant business. Considerations include the following: a. b. c. d.

Needs and desires of guests Capabilities of cooks Equipment capacity and layout Consistency and availability of menu ingredients

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e. f. g. h. i. j. k.

Price and pricing strategy (cost and profitability) Nutritional value Accuracy in menu Menu analysis (contribution margin) Menu design Menu engineering Chain menus

2. Question: Select a popular restaurant and identify its pricing strategy.

Answer: The target market and concept will, to a large extent, determine the menu price ranges. An example might be a neighborhood restaurant where the appetizers are priced from $3.25 and $6.95 and entrées are in the $6.95 and $11.95 price range. The selling price of each item must be acceptable to the market and profitable to the restaurateur. Factors that go into this decision include the following: • • • • • •

What is the competition charging for a similar item?

What is the item’s food cost?

What is the cost of labor that goes into the item?

What other costs must be covered?

What profit is expected by the operator?

What is the contribution margin of the item?

There are two main ways to price menus: A comparative approach analyzes the price ranges of the competition and determines the price range for appetizers, entrées, and desserts. The second method is to cost the individual dish item on the menu and multiply it by the ratio amount necessary to achieve the desired food cost percentage.

Check Your Knowledge, p. 263 1. Question: Name the different classifications of restaurants, and give examples of each Answer: There are two main categories: independent and chain restaurants.

Other categories include designations as full-service, casual, and quick-service restaurants.

Some may fall into two categories – i.e., Taco Bell, which is both ethnic and quick-service.

Independents are typically owned by one or more owners usually involved in the day-to-day operation of business. Chain restaurants comprise a group of restaurants, each identical in market, concept, design, service, food, and name. Full-service = fine dining, casual, theme, celebrity, steak houses, and ethnic. Casual = mid-scale, family, ethnic.

2. Question: Highlight some of the characteristics that make up the specific restaurant types.

Answer: A fine-dining restaurant is one where a good selection of menu items is offered; generally at least 15 or more different entrées can be cooked to order, with nearly all the food being made on the premises from scratch using raw or fresh ingredients.

Celebrity-owned restaurants have been growing in popularity. Some celebrities, such as Wolfgang Puck, come from a culinary background. Celebrity restaurants generally have an extra zing to them—a winning combination of design, atmosphere, food, and perhaps the thrill of an occasional visit by the owner(s).

The upscale steak dinner houses, such as Fleming’s Prime Steakhouse & Wine Bar of Chicago, Ruth’s Chris, and Houston’s, continue to attract the expense account and “occasion” diners. Some restaurants are adding additional value-priced items such as chicken and fish to their menus to attract more guests.

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IV. Answers to Chapter 6 Review Questions 1. Describe the evolution of American culinary arts from the eighteenth century to the present.

1. Until approximately the 1900s all menus were written in French 2. Classical French cooking is based on the five mother sauces 3. Classical French cuisine was the norm until the late 1960s 4. The early 1970s saw the introduction of nouvelle cuisine 5. Simpler preparations used 6. Lighter ingredients used 7. Combined classical techniques with modern technology 8. Fusion cuisine became popular blending different flavors and techniques from two different cuisines 9. Rise of the celebrity chef 10. (pp. 134-5) 11. Discuss the importance of menu engineering and menu design as it applies to the successful operation of a casual or fine-dining restaurant.

12. Menu engineering is important to the successful operation of casual and fine-dining restaurants because it looks at the contribution margin of the entire menu not the food cost percentage of specific menu items. This makes it easier to identify items on the menu that should be repositioned, dropped, repriced, or left alone.

13. The design of the menu is important because it is used to guide the diner’s decisions and items that have a higher contribution margin or lower food cost percent can be placed strategically to catch the diner’s eye.

14. (p. 139) 15. 3. Explain how restaurants are classified and why most restaurants can be classified as more than one type of restaurant.

16. Restaurants can be classified in a variety of ways and there is no one specific classification. Restaurant categories include fine dining, casual dining, dinner house, family style, fast-casual, and quick-service. Restaurants can also be classified by the type of cuisine served such as ethnic food, burgers, chicken, pizza, sandwiches, etc.

Restaurants can be also be classified by price point.

17. (pp. 140-6)

V. Mini-Case Discussion Question Answer Case: Can This Restaurant Be Saved?

Question: Based on the financial information provided, share how you will prioritize the areas for improvement and your rationale for that decision.

Feedback: Possible strategies include: 1. Exploring why labor costs are 35 percent of total—look at staffing, salaries, scheduling and skill sets.

2. Food cost is 35 percent—explore this—look at purchasing practices, possible theft, menu pricing, waste, and cost of menu items.

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3. Beverage cost is 45 percent—explore this—look at theft, pricing, training, percentages of beer, wine, and spirits sold to food sold.

4. Take daily and or weekly inventory and hire “spotters.”

After looking at options create a plan with focus on bringing labor costs in line first.

This could include: staggered scheduling, cross-training of employees, using more servers and fewer higher salaried employees during slow periods.

Second priority: Beverage costs—from a percentage standpoint beverage costs are higher but this could be offset by improved inventory taking and ensuring all sales are accounted for. Hiring a spotter to check on bartenders and taking inventory as often as necessary will reduce the beverage costs.

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Chapter Seven Restaurant Management I. Chapter Objectives After reading and studying this chapter, the student should be able to do the following: 1. Describe the responsibilities of a restaurant’s front of the house.

2. Describe the responsibilities of a restaurant’s back of the house.

3. Summarize the responsibilities of restaurant management.

II. Key Teaching Elements/Chapter Outline/Lecture Suggestions Page

Object.

Operations are divided into two sections: the front of the house anyone with guest contact (dining room manager/hostess/bus persons/servers)— and the back of the house (kitchen manager/ cooks/prep cooks/expediter/receiving/dishwashing).

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The restaurant is run by the general manager, or restaurant manager.

Depending on the size and sales volume of the restaurant, there may be more managers with other responsibilities. Managers should all be crosstrained to relieve each other.

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The hostess’ job is to greet the guests and to manage seating in the dining room sections. Tools such as seating charts and reservations books help the hostess to control the flow of seating.

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The front of the house must create and maintain a curbside appeal, meaning keep the restaurant looking attractive both inside and out

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In addition to the seven steps of the table service (see list on pp. 154-5), servers are expected to be NCO—neat, clean, and organized and to help ensure that the food is served at the appropriate temperature.

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Most businesses, including restaurants, operate by forecasting a budget of estimated sales and costs for a year. These expenses are broken down in a weekly and monthly basis. Sales budgets are forecasts of expected business.

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The two components used in forecasting are guest counts (covers) and the average guest check. The guest count reveals the number of guests patronizing the restaurant over a period of time. The number of guests will vary during the week. Mondays are usually the slowest. Friday, Saturday, and Sunday usually provide up to 50 percent of the operation’s revenue. Day of the week, meal period, previous forecast

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Front of the House

Restaurant Forecasting

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materializations, and special holidays are all factors of forecasting.

The average guest check is calculated by dividing the total sales by the number of guests. Multiplying the number of guests by the average guest check reveals the forecasted sales.

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The year is divided into twelve 28-day and one 29-day accounting periods. Weekly forecasted sales are combined to form one accounting period. The 13 accounting periods, when totaled, become the annual total.

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Beyond using forecasts for estimating sales, managers also use them to predict staffing levels and labor cost percentages.

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Once sales figures are determined, all expenditures, fixed and variable, must be deducted from sales. The money remaining becomes the operation’s profit.

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Servers are not merely order takers. They are salespeople of the restaurant and must learn to gauge the guests’ satisfaction levels and to be sensitive to guests’ needs.

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Restaurants in the United States, Canada, and many other parts of the world use American service, in which food is prepared and appealingly placed on plates in the kitchen, carried into the dining room, and served to guests.

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Service Today, the quality of service has become very important to American diners. The quality of the service can often set a restaurant apart. The industry’s response to this desire is evident by its increase in service training. A new American service has emerged. A less formal yet professional approach is preferred by today’s restaurant guest.

Suggestive Selling Suggestive selling can be an exceptional tool to increase food and beverage sales. Servers report that most guests are not offended or uncomfortable with suggestive selling techniques. Through training and practice, servers become sellers. Guests will more likely be receptive to suggestions from competent servers.

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Sustainable Restaurant Operations Sustainability is not just a philosophy about food, it’s about people, attitudes, communities, and lifestyles. See the list of suggestions starting on page 171 for a start in restaurant sustainability.

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Front-of-the-House Restaurant Systems

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Points-of-sales or POS systems are very common in restaurants and other foodservice settings, such as stadiums, theme parks, airports, and cruise ships. They are used to track food and beverage charges and other retail charges that may occur at a hotel or restaurant.

The POS system is made up of a number of POS terminals that interface with a remote central processing unit. A POS terminal may be used as an electronic cash register, too.

Restaurant 3700 by MICROS is a popular POS software package. The 3700 POS has a touchscreen system and supports a network of kitchen printers. It also supports use of a wireless PDA as an order-taking device.

Kitchen Display Systems

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Video monitors replace kitchen printers to present orders to the kitchen staff and monitor how long the orders take.

Kitchen monitors are widely used in Quick-Service Restaurants (QSR) and increasingly used in Table-Service Restaurants (TSR).

Guest Services Solutions Guest services solutions help a restaurant develop a dining relationship with their guests. Their applications include frequent diner programs, delivery management with caller ID interface, guest accounts receivable, and gift certificate management.

Applications are accessed through the POS system and give restaurateurs the opportunity to offer their guests convenience, while allowing the restaurateurs to track who their best customers are.

Back-of-the-House Operations Back office applications, also called Product Management systems, and include inventory control and food costing, labor management, and financial reporting features.

Wireless POS Systems The Pocket POS system by PixelPoint allows servers to use a handheld PDA, which operates on the Windows CE platform, to send orders to the kitchen. Given that wireless POS systems speed up orders, their use is likely to increase.

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Labor Management Front-of-the-house (FOH) systems track employee working time. A back-of-the-house (BOH) management package adds the ability to manage payroll and human resource information.

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Labor management includes a human resources module to track hiring, personal information, vacations, tax status, availability, and so forth.

Scheduling capability lets managers create schedules based on forecasted business. These are enforced as employees check in and out, allowing management control of labor costs.

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The labor management package also tracks actual working time and pay rates, feeding data into a payroll processor to generate paychecks and file tax data.

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FOH and BOH systems post data into a relational database on the CPU. Restaurant managers use this data for reporting and decision-making.

The data must be reported in useful forms.

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It is important to get reports in real time so that losses can be limited.

Some reporting packages provide a continuous graphical representation of financial data.

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Personal digital assistants (PDAs) allow improved time management and speedier service. They allow servers to post data on the spot and not at a computer terminal. Orders don’t have to be written down.

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PDAs also can be used in hotels, especially in housekeeping where they can give housekeepers and the front desk real time information about room status.

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Financial Reporting

Personal Digital Assistants

Back of the House The back of the house refers to all areas that guests do not typically come in contact with; it is generally run by the kitchen manager. The back-of-thehouse includes purchasing, receiving, storing/issuing, food production, stewarding, budgeting, accounting, and control.

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Food Production The kitchen manager, cook, or chef begins the production process by determining the expected volume of business for the next few days. Much of the prep work is done in the early morning and afternoon.

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The kitchen manager checks the head line cook’s order, which will bring the prep area up to the par stock of prepared items.

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The kitchen layout is set up according to the business projected as well as the menu design. Most full-service restaurants have similar layouts and designs for their kitchens.

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The cooking line is the most important part of the kitchen layout. The size of the kitchen and its equipment are all designed according to the sales forecasted for the restaurant.

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Practicing proper staffing is crucial in running a successful kitchen.

Overstaffing, rather than understaffing, is often the best idea, for it is much easier to send someone home than to call someone in. Extra employees allow for cross training and development.

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Problems can also be eliminated if a staffing plan is created.

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The kitchen will also be set up according to what the customers prefer and order most.

Teamwork is especially important in the kitchen; for example, helping each other with the prepping and the cooking.

A number of chefs are joining the green hospitality movement by encouraging the purchase of sustainable farming produce. More than 20,000 American Federation members are emphasizing organic and locally grown produce, whole-grain breads, and grass-fed meat products.

Kitchen/Food Production Staffing and Scheduling

Also crucial to a smoothly run kitchen is a competent staff.

Training and Development Implementing a comprehensive training program is vital in the kitchen due to a high turnover rate.

Often, the most competent chefs are used to train new hires.

Developing the skills of all employees is critical to the growth and success of the kitchen and, ultimately, the restaurant. A development program may consist of delegating duties or projects to the staff, allowing them to expand their horizons within the kitchen and the restaurant business. Such duties include projections of sales, inventory, ordering, schedule writing, and training.

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Production Procedures When determining production, par levels should be changed weekly according to sales trends to help control and minimize waste levels.

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The use of production control sheets is critical in controlling how the cooks use the products since production plays a key role in food cost.

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Purchasing for restaurants involves procuring products and services that the restaurant needs in order to serve its guests.

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Operators need to determine standards to set up an effective purchasing system. The following must be established—standards for each food item, systems to minimize theft/pilferage, par stocks, who will do the buying, who will do the receiving, storage, and issuing of items.

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An efficient and effective system establishes a stock level that must be on hand at all times. This is called par stock.

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The person who is responsible for ordering and the person who is responsible for receiving should not be the same person. Keeping these responsibilities separate is important to guard against theft.

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Pre-purchasing functions include—planning menus, determining the quality and quantity needed to produce the menus, determining the inventory of stock levels, identifying items to purchase and the amount to be purchased, and writing specifications and market orders for purchase. Purchase orders come as the result of the product specifications.

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Management Involvement and Follow-Up Management should know firsthand what is going on in the back of the house. As management spends more time in the kitchen, more knowledge is gained, more confidence is acquired, and more respect is earned.

Continual management follow-up is necessary to ensure that policies and standards are being upheld Employee Recognition Recognizing employees for their efforts creates a positive environment that motivates the staff to excel and to ultimately produce consistently better quality food for the guests. This is an important aspect of back-of-the-house management.

Purchasing

Product specifications establish standards for each product.

Computerized or manual systems can be used to minimize theft and pilferage. But it can’t prevent it.

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Receiving When placing an order, the restaurant operator specifies the time and day the delivery is to be made. Receiving is a point of control in the restaurant.

The purpose is to ensure that quality, quantity, and price are exactly as ordered.

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Perishable items may go directly to the kitchen. Nonperishable items go into storage.

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Control of the stores is often a problem. Records must be kept of all items going into and being removed from stores. The more people that have access to the storage areas, the more difficult it is to maintain strict controls.

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Items should only be released when an authorized requisition has been completed. First in–first out (FIFO) ensures stock rotation by placing the most recent purchases, in rotation, behind previous purchases.

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A balance sheet reflects how the assets and liabilities relate to the owner’s equity at a particular moment in time. It is used by owners and investors to verify the financial health of a business.

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Restaurants are one of the few, fortunate types of businesses to operate on a cash basis for income receivables. There are no outstanding accounts receivables because all sales are in cash.

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Storing/Issuing

Budgeting Budgeting costs fall into two categories: fixed costs are constant regardless of the volume of business and variable costs fluctuate with the volume of business.

Restaurant Accounting One of the most important goals of any business in a fair return on investment, otherwise known as profit. Accounting for income and expenditures is a necessary part of any business enterprise.

Balance Sheet

Operating or Income Statement The income statement, which is for a month or a year, begins with food and beverage sales. From this total the cost of food and beverage is subtracted; the remaining total is gross profit.

Other expenses and sources of income are identified by category to eventually realize net income.

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Food cost percent equals; cost/sales × 100 and is a comparison of cost of goods sold to sales.

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Food cost percentage has long been used as a yardstick for measuring the skill of the chef, cooks, and management to achieve predetermined food cost percentage—usually 28-32 percent for a full service restaurant and a little higher for a high-volume, fast-food restaurant.

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Managing the money to the bottom line requires careful scrutiny of all key results, beginning with the big-ticket controllable items such as labor costs, food costs, and beverages, on down to related controllable items.

Additionally, management may want to compare several income statements representing operations over a number of different periods.

Operating Ratios Operating ratios are industry norms that are applicable to each segment of the industry. Several ratios are good barometers of a restaurant’s degree of success. Some ratios are, food cost percent, beverage cost percent, labor cost percent, contribution margin and prime cost.

Food Cost Percentage

Contribution Margin The contribution margin is the amount that a menu item contributes to the gross profit or the difference between the cost of the item and its sales price. Some items contribute more than others on the menu therefore restaurant operators focus more attention on the items that contribute more dollars.

Labor Cost Percentage Labor costs are the highest single cost factor in staffing a restaurant.

Labor costs include salaries, wages, benefits and training costs.

Labor costs are generally compared to sales as a percent of sales either as a whole or by labor category.

Labor costs are calculated by taking the cost of labor and dividing it by sales for the same period.

Prime Cost Combined food and labor costs are known as prime cost. Prime costs should not go above 60-65 percent of sales.

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Beverage Cost Percentage The beverage cost percent is calculated like food cost percent and is used to compare the cost of goods sold to sales.

Lease and Controllable Expenses Lease Costs Lease costs (rentals) should not exceed 5-8 percent of sales. The best lease is long term with options for renewal. Leases costs are figured in different ways; by square foot, flat monthly rate, monthly rate plus a percentage of sales, etc.

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Most leases are triple net, which means that the lessee must pay for all alterations, insurance, utilities, and commercial fees.

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Some restaurants pay a combination of a flat amount based on square footage and a percentage of sales. This helps protect the restaurant operator in slower months and rewards the landlord in good months.

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Controllable Expenses Controllable expenses are all the expenses over which management has control. They include labor, direct operating expenses, food costs, marketing, etc.

Restaurant Manager Job Analysis The NRA has formulated an analysis of the foodservice manager’s job by function areas and tasks, which follows a natural sequence of functional areas from human resources to sanitation and safety.

Human Resource Management Key elements that must be addressed by foodservice managers include: Recruitment and Training, Orientation and Training, Scheduling for Shifts, Supervision, and Employee Development.

Financial Management Key elements that must be addressed by foodservice managers include: Accounting and Cost Control.

Administrative Management Key elements that must be addressed by foodservice managers include Scheduling and Coordination, Planning, Communication, and Marketing Management.

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Operations Management

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Key elements that must be addressed by foodservice managers include Facility Maintenance, Food and Beverage Operations Management, Service, and Sanitation and Safety.

Recycling At the end of the night in most restaurants, leftover food, paper, bottles, and cardboard are typically put in a dumpster. Separating garbage is dirty; it requires people and time. But, many operators say making minor changes reduces trash and helps the budget.

Current Issues in Restaurant Operations Ethical operations and a positive work environment—upholding the highest ethical standards and a positive work environment with no harassment.

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Competition and change—new technologies and take out plus home delivery.

Grocery and other stores have food for sale.

Food rucks.

Concerns over public health—healthier meals with natural ingredients.

Many guests have health issues such as diabetes and allergies. Maintaining a clean kitchen is a must.

A few trends include more restaurant food truck and mobile vendor operators, simplifying menus, increased use of technology, delivery, fast fresh casual, credit card guarantees and overbooking, and more large retail restaurants.

III. Teaching Techniques/Classroom Exercises Note: The content of some of these exercises is such that they may also be used as essay questions.

Exercise One: Have the students explore the differences between the types of service outlined in the chapter. Through role-play or demonstration, expose students to the procedures for French, Russian, American, etc., types of service. Use as many props as possible—gueridon, rechaud, food (real or plastic), service trays, etc.

Give each student an order pad and demonstrate how to set up the pad to accurately take orders. Distribute menus to each group of students and have them practice taking orders.

Demonstrate the difference between “order taking” and “salesmanship.” Have students practice this skill.

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Exercise Two: Have students consider their own budget. What are their sources of income (sales) and their expenses—tuition, rent, etc. Develop a class list of accounts. Ask them to identify which are controllable costs and which are fixed costs. Using an electronic spreadsheet system, have them develop a personal budget. This exercise can further be developed by forming the students into groups and having each student assume the role of a “department” and asking the group to develop an overall budget for their “company.” Compare group final budgets. Ask them to defend the differences that appear in their budget vs. others in the class. This is an excellent way to introduce Industry Statistics and their meaning for managers.

Apply your Knowledge 1. 25% of $15,000 = $3,750 2. 18% of 3,500 = $630 3. 30% of $18,500= $5,550 4. $9930 are the total costs so $18.500 – $9,930 = $8,570 5. Yes because prime cost is 50.2 percent

IV. Answers to Chapter 7 Review Questions 1. Describe the importance of restaurant forecasting and the components that are needed for an accurate forecast.

Restaurant forecasting is used to calculate sales projections, predict staffing levels, and estimate labor cost percentages.

The components that are needed for an accurate forecast are the guest counts (or covers) and the average guest check amount.

2. Give examples of the different types of restaurant systems used in the back of the house.

There are a range of restaurant systems used in the back of the house. A wireless POS system allows servers to use handheld devices to enter guest orders that are then printed in the kitchen for production.

Labor management systems are used for scheduling, tracking work time and pay rates, submitting pay information to a payroll processor, and can ensure tips are properly tracked and recorded.

Labor management systems can also calculate employer and employee taxes on additional tips to keep the restaurant compliant with wage and hour laws.

Financial reporting systems are used in both the front and back of the house and can be used to generate reports such as inventory, profit and loss statements, end of day reports, and a range of other reports needed to make financial decisions for the restaurant.

3. Explain the importance of the following ratios in the successful operation of a restaurant: food cost percentage, labor cost percentage, contribution margin, and prime cost.

Food cost percentage is often used as a yardstick to measure the skill of the culinary team and the success of management. Food cost is one of the largest costs incurred by a restaurant and can vary dramatically if not carefully managed.

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Labor cost percentage and labor costs are the highest single cost factor experienced by a restaurant and must be closely monitored. Labor costs include salaries, wages, employee benefits, and training.

Contribution Margin is the amount that a menu item contributes to the gross profit of the restaurant. The contribution margin goes beyond the food cost percentage and can be used in determining menu mix.

Prime Cost is the combined food and labor costs and should not go above 60–65 percent of the restaurants sales. If the prime cost is higher than 65 percent, the restaurant may be in financial trouble if the prime cost is too low, the restaurant may also lose business due to poor service or low food quality.

V. Mini-Case Discussion Question Answer Case: Investigating the Food Cost Question: After completing the calculations, your next step is to present your findings to the food and beverage director. Did your calculations support your theory that menu prices needed to be raised? Why or why not?

Feedback: Answers will vary. In responses in support of raising prices, students may cite rising costs, competition pricing, low sales, and that the item brings in other orders.

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Chapter Eight Managed Services I. Chapter Objectives After reading and studying this chapter, the student should be able to do the following: 1. Summarize managed services and differentiate managed services operations from commercial ones.

2. Describe managed services in the airlines and airports segment.

3. Describe managed services in the military segment.

4. Describe managed services in the school segment.

5. Describe managed services in the health care segment.

6. Describe managed services in the business and industry segment.

7. Describe managed services in the leisure and recreation segment.

II. Key Teaching Elements/Chapter Outline/Lecture Suggestions Page

Object.

Managed services consist of all foodservice operations as follows: airlines, military, elementary and secondary schools, colleges and universities, healthcare facilities, and business and industry, leisure and recreation, conference centers, airports, and travel plazas.

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Companies and organizations such as educational or health care organizations must decide if they want to operate their foodservice themselves or to contract it out to a managed food service company. There may cost savings, but if they lack the expertise, they may want to invite contractors to submit proposals.

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Managed services are different from commercial operations in several ways:

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Overview

1. Managed service operators must meet the needs of both the guest and the client. In a restaurant, the challenge is to please the guest.

2. Often, they have “captive” audiences.

3. Many managed service operations are housed in “host” organizations that do not have foodservice as their primary business.

4. Most managed service operations prepare food in large quantities to be served during specific hours. This is called batch cooking.

5. The volume of business is more consistent and easier to forecast.

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Airlines and Airports In-Flight and Airport Foodservice

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Food has become a major competitive factor among airlines. Airlines may provide meals from their own in-flight business or have the food provided by a contractor.

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In-flight foodservice is a complex process. All airlines have a limited menu. The food must be able to withstand transportation conditions and extended holding times (hot or cold). The meal must also be appealing and able to fit in the limited passenger eating space.

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Gate Gourmet International is the largest in-flight foodservice provider in terms of sales. LSG Sky Chefs is another company in the field.

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In-flight foodservice management operators plan the menus, develop the product specifications, and arrange the purchasing contracts. Many airlines place a high priority on controlling meal costs. Some limit the menu choices, while others offer snacks rather than meals on many flights.

International flights tend to have better food and beverage service.

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As airlines have decreased their in-flight foodservice, airport restaurants such as popular chain restaurants, along with quick-service restaurants have picked up the business.

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Military foodservice is a large and important component of managed foodservice. Even with military downsizing, military foodservice sales are estimated at over $6 billion.

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Services and concepts are being redesigned to better serve the needs of personnel. Efforts are being made to address problems with service delays, inferior products, and inventory controls.

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In many cases, officers’ clubs have been contracted out to foodservice management companies. The clubs have moved emphasis from fine dining to a more casual or theme atmosphere. Menu management strategies have also been implemented.

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Another trend is the testing of prepared foods that can be reheated and served without much labor. MREs (meals ready-to-eat) are standard for

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Military

troops in the field. Today, a mobile kitchen can be run by only two people.

One problem of privatization of military foodservice operations may arise in the need to provide foodservice in combat situations. In such cases, the military must be able to provide its own foodservice.

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Elementary and Secondary Schools In 1946, the U.S. Government enacted the National School Lunch Act in response to concerns about student meals. The rationale was that if students received good meals, the military would have healthier recruits.

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Today millions of children are fed breakfast, lunch, or both each day, to approximately 101,000 schools and 31 million children, by the National School Lunch Program.

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A major challenge for the program is to balance nutrition with foods the students like. Many are concerned about the food that young students are eating.

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Some schools have on-site kitchens, where the food is prepared, and dining rooms, where the food is served. Large food districts may prepare foods in a central commissary and then distribute them to schools in the area. Alternatively, some schools purchase ready-to-serve meals that are assembled at the meal site.

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The government National School Lunch Program (NSLP) is a huge market for fast food chains. Although entering this market does mean a decrease in revenues, future benefits, such as building brand loyalty, can be extremely valuable.

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There has been much debate over the suitability of allowing chain foodservice operations in the school lunch programs. Many parents feel that fast food is not sound nutrition.

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College and university foodservice operations are complex and diverse.

Residence halls, cafeterias/student unions, faculty clubs, sports concessions, conferences, convenience stores, administrative catering, and outside catering are the major components of this segment.

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On-campus dining can be a challenge because the clientele lives on campus and eats most of its meals at the campus facilities. Students, faculty, and staff may get bored with the menu offerings.

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Budgeting, in such operations, is simplified because the on-campus students have already paid for their meals and, therefore, numbers are easier to forecast.

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Nutrition Education Programs Nutrition education is now required in the nation’s school lunch program.

The food guide called MyPlate was developed by the USDA which illustrates what to eat each day to follow a healthy diet.

Colleges and Universities

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College foodservice operations tend to offer students a variety of meal plans. Rather than the old “board plan,” where students paid one fee for all meals—whether they ate them or not, many schools have adopted a pre-paid credit plan, where students pay a dollar amount up front, and as they eat meals over the course of the term or school year, the dollar amount of each meal is subtracted from the student’s account.

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The driving forces of change on campuses are the advent and growth of branded concepts, privatization, campus cards, and computer use. A college foodservice manager today must have greater skills in retail marketing and merchandizing as students are given more discretion in how they may spend their money for food on campus.

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The college student union offers a variety of managed services that cater to the needs of a diverse student body. Among services offered are cafeteria foodservices, beverage foodservices, branded quick-service restaurants, and take-out foodservices.

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Offering a diverse menu at a good price is very important to the success of campus operations. Like public schools, some college campuses have opted to allow restaurant chains to open on campus. The restaurant pays fees, either to the contract food company directly or to the college.

Offering take-out service is another trend developing in college foodservice.

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The managed services operating ratios vary according to the type of operation, for example, labor costs, which range from the low teens to 50 percent. For residential and retail, labor costs are high and food costs are low, whereas for concessions, labor costs are low and food costs are high.

Overall, a well-run operation makes a net profit of between 5 and 15 percent.

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A foodservice manager’s responsibilities in a small or midsize operation are more extensive than those of managers of larger operations. In addition to foodservice, key areas of responsibility include: Employee Relations, Human Resource Management, Financial/Budgeting, Safety Administration, Safety Budgeting, Food Production/Service, Sanitation/Food Borne Illness Prevention, Purchasing/Recruiting, and Staff Training/Development. (See lists on text p. 187.)

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Managing Managed Services

Sustainable Managed Service Hospital foodservice directors often say that offering healthy choices in their cafeterias is a key department mission. But many operators are quick to add that they still offer the so-called unhealthy options to prevent a drop in participation and revenues.

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Health Care Facilities Healthcare foodservice operations are very complex because they must meet the needs of clientele with special needs. Service is provided by tray, in the cafeteria, dining room, coffee shop, catering, and vending.

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The needs and desires of both the patients and the health care workers must be provided for. Meals must be consumed in a short period of time (30 minutes usually) and must have a varied menu.

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Health care foodservice is very labor intensive. Labor accounts for 55 to 66 percent of operating dollars. For example, the main focus of a hospital foodservice operation is the tray line. In the tray line, meals are assembled through a color-coding system to meet requirements specified by the dietitian. These trays must be double- and triple-checked to be sure each patient gets his/her correct meal.

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Hospital foodservice has evolved to the point where the need for new revenue sources has changed the traditional patient and nonpatient mealservice ratios at many institutions.

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Innovations in preparation, such as sous vide and cook-chill, have allowed for labor savings. Additional savings can be realized through the quantity purchasing, menu management, and the use of operating systems to reduce food and labor costs.

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Quick-service chains have also entered this segment of the industry.

These chains benefit from long-term leases at very attractive rates compared with a restaurant site.

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Important terms to understand in regard to this segment are: Contractors (companies that operate foodservice for the client on a contractual basis), Self- operators (companies that operate their own foodservice operations), and Liaison personnel (responsible for translating corporate philosophy to the contractor and overseeing the contractor).

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Contractors have about 80 percent of the B&I market. The remainder is self-operated. A new trend is for one operator to serve several tenants in a building through a central facility.

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B&I operators have begun to offer more diverse menu options. By offering more healthful meal options, operators are meeting the evolving needs of their clients.

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The resources largely determine the type of service offered by B&I operators: money, time, space, and expertise. Typical manners of service include: full-service cafeterias with straight, line scatter, or mobile systems, or limited service cafeterias offering parts of the full-service cafeteria, fast-food service, cart and mobile service, and executive dining rooms.

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Business and Industry (B&I)

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Managed Services Other Than Food Many companies such as Sodexo have recognized the potential to increase their market opportunities by developing service capabilities beyond food.

Companies on the cutting edge are able to offer clients broader packages of services. These services often come under the area of facilities management and offer the following services:

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Housekeeping/custodial/environment services Maintenance and engineering Grounds and landscaping Procurement and materials management Office and mail services Concierge services Patient transportation services (hospitals)

Managers who work in the managed services segment of the industry have the advantage of learning about several disciplines. In doing so, they increase their career growth potential and can find career paths similar to those available in the lodging segment of the industry.

Leisure and Recreation Leisure and recreation is probably the most fun area of the foodservice industry to work in: stadiums, arenas, national parks, state parks, zoos, aquariums, and other venues where food and beverage are provided for large numbers of people, are leisure and recreation operations.

Stadium Points of Service Points of service include vendors, concession stands, and restaurants. The concession stands offer everything from branded—meaning well-known brands—foods to hot dogs and hamburgers to local cuisine. A major point of service is the food and beverage offered in the premium seating areas known as super boxes, suites, and skyboxes.

It is possible for all of these points of service to go on all at once serving upwards of 60,000 to 70,000 fans. To feed all these people many foodservice companies have contracts with the stadiums and arenas.

Other Facilities The same managed services companies that serve the stadiums and arenas contract most U.S. national parks. These parks have hotels, restaurants, snack bars, gift shops and myriad of other service outlets. Other venues that require food and beverage service are golf and tennis tournaments and may service 25,000 people in one day.

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Advantages and Disadvantages Advantages of a foodservice career in this segment include the unique opportunity to see professional and amateur sporting events as much as you please, to be in rural, scenic areas and enjoy the great outdoors, to provide a diverse set of services for the guests or fans, and to have a set work schedule. With recent growth in this segment, many new career openings are now being offered.

Disadvantages include large amounts of people to serve in short periods of time; a work schedule of weekends, holidays, nights; impersonal service, less creativity with food, seasonal employees, and an on/off season work schedule.

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Trends in Managed Services College and university foodservice managers face increasing challenges.

There is an ever-present problem of trying to balance rising costs with decreased revenues.

Employing students has helped to reduce labor costs. The use of grab-andgo menus, campus cards, 24-hour service, business in health care and nursing homes, and carts at vantage points has increased (see full list of trends on text page 344).

III. Teaching Techniques/Classroom Exercises Note: The content of some of these exercises is such that they may also be used as essay questions.

Exercise One: What types of foodservice operations exist on campus? Lead students in a discussion of their impression of the operations on campus and their awareness of the types of services offered.

How many of the dimensions discussed in the text are reflected on campus…on the campuses of friends at other institutions?

Have students complete a “secret shopper” evaluation of the foodservice outlets on campus. Establish the criteria prior to the evaluation period. Ask the students to determine which outlets they like best and why, and which they like least and why.

Invite the Director of Foodservice to class to speak about his/her operations. Require students to prepare questions in advance. Have students take notes during the speech and questions and answer period. Ask students to “write-up” (word process) the in-class presentation as a newspaper or TV news report.

Exercise Two: As America ages, it is projected that health care hospitality will become a major segment of the industry. Hospitals are diversifying their offerings to meet the needs of patients, their families, and hospital staff. Foodservice in the healthcare setting is changing.

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Assign students to groups and ask them to research the foodservice operations at area hospitals. Who runs the kitchen? What services do they offer beyond tray service? Do they do outside catering? Is space leased to outside restaurant chains? Have students develop an inventory of items to investigate at each hospital location and have them meet (in groups) with a member of the management team at the hospital. Students should prepare a written report on their findings (based on the inventory of items to check) and write a thank you note to the facility and manager for their time. A copy of the note should accompany the final report.

Exercise Three: Divide the class into two groups—Group One: Pro-Privatization of School Lunch Program (or military) and Group Two: Against Privatization of School Lunch Program (or military foodservice). Give the students a few days to prepare their “argument” (interviews, library research, letters, text books, videotapes, etc.). Lead a debate in class on the issue.

Establish ground rules prior to the debate—i.e., time limits, all students must participate, impartial observer to determine the “winner.”

IV. Answers to Chapter 8 Review Questions 1. Compare managed foodservice operations to commercial foodservice operations.

The following characteristics make managed foodservice operations different from commercial foodservice operations:

Commercial Foodservice

Managed Services

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The challenge is to please the guest •

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Guests have multiple dining options

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Guests may have no other dining options

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The operation is housed in an organization focused primarily on foodservice

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The operation is often housed in host organizations that do not have foodservice as their primary business

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Food is most often produced to order rather than in large batch quantities and is served during broader time periods

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Many operations produce food in large batch quantities for service and consumption during fixed time periods

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The volume of business may fluctuate greatly

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The volume of business is generally more consistent

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The needs of both the guest (diner) and client (company contracting the service) must be met

2. Explain the benefits and potential risks associated with contracting a third-party to provide in-flight food service.

The benefits of contracting a third-party to provide in-flight foodservice include potential lower costs, not having to deal with the logistics of preparation and packaging, and food items are delivered according to a pre-determined standard.

The risks of contracting a third-party to provide in-flight foodservice include potential for higher costs, food not properly prepared, packaged, and delivered, and food items not meeting predetermined standards.

3. Describe the ways in which the military foodservice providers are meeting the current demands for providing food both in the field and on base.

Military foodservice providers are meeting current demands in the following ways: contracting out foodservice to fast food restaurants, experimenting with foods that can be reheated and served with minimal preparation, contracting out foodservice operations for officers’ clubs to management companies, and offering healthier dining options.

4. Identify the issues and challenges that must be met in school food service at the K-12 level and at the collegiate level.

Challenges in K-12 foodservice include:

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Providing nutritious low-cost meals Meeting the standards set by the National School Lunch Program Meeting dietary guidelines Meeting guidelines for fat and saturated fat that can be in each meal Balancing the need for funding with the incorporation of fast food restaurant options in schools Educating students and families on healthy eating habits

Challenges in Collegiate foodservice include:

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Providing variety for students who eat most meals on campus seven days a week Offering a variety of food types and options such as vegan, ethnic, traditional burgers, etc.

Marketing the on-campus food service options Competition from on-campus fast food restaurants Offering other dining options including take-out

5. Summarize the complexities for health care foodservice and the complex challenges faced in the health care environment.

Health care foodservice must be able to meet the diverse needs of delicate clientele and meet the needs of guests, visitors, and employees. The greatest challenge is providing many special meals to patients with specific dietary requirements. Additional challenges include providing variety for employees, and competing with other dining options such as fast food restaurants and successfully managing increased costs with decreased operating budgets.

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6. Explain at least five tasks performed by a food service manager in the B&I segment and why these are important.

The tasks performed by a manager in the B&I segment are similar to the tasks performed by managers in all managed services segments. Some of those tasks include:

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Employee relations—development of the team, recognition, coaching Human resources management—recruiting, training, and evaluating Financial/budgets—creating budgets, controlling costs Safety administration—creating a safe work environment Sanitation/Foodborne illness prevention—following proper food handling procedures, health department compliance Purchasing—ordering, receiving, inventory

7. Discuss the advantages and disadvantages of a career in leisure and recreation foodservice.

Advantages

Disadvantages

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Unique opportunities to see professional and amateur sporting events

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Working to serve very large crowds in short periods of time

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To work in rural or scenic areas and experience the great outdoors

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Working nights, weekends, and holidays

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To provide a diverse set of services to guests or fans

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More difficult to provide personal service

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To have a set work schedule

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Fewer opportunities to be creative with food

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Seasonal employment

V. Mini Case Discussion Question Answer Case: Chaos in the Kitchen 1. Jane realizes that she will have to run the cash register and she makes arrangements to move the incoming workers around in order to get the dishes cleaned.

2. Because of safety concerns and the policies that accompany them, all perishables were disposed of. Jane then called the refrigeration company to come and fix the walk-in. She then reordered the necessary perishables.

3. If necessary, Jane will have to purchase ice from a local store. The refrigeration company will also have a look at the ice machines.

4. Jane decides to purchase the desserts for the President’s function from another supplier.

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5. If the desserts were not going to be available at the time of the function, Jane would have to simply call the President’s office and apologize for the inconvenience. She should also try to find or do something in order to substitute the desserts.

6. Jane should make sure that contracts are signed and quickly sent to each other, via email or fax, for instance. Also, she, or the suppliers, should give a confirmation call in order to make sure the right order is being placed.

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Chapter Nine Tourism I. Chapter Objectives After reading and studying this chapter, the student should be able to do the following: 1. Explain the development of transportation and compare the different methods of tourist travel.

2. Describe tourism in the twenty-first century.

3. Describe the economic impact of tourism.

4. Compare the major promoters of tourism and describe how they promote tourism.

5. Describe the sociocultural and environmental impact of tourism and changing concepts in the industry.

II. Key Teaching Elements/Chapter Outline/Lecture Suggestions Page

Object.

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Highlights of Tourism It is difficult to determine when tourism began because, centuries ago, very few people traveled for pleasure or business as they do today. We can trace some travel destinations since ancient times as follows: In the fourth century B.C.E. (before Christ), work started on the Great Wall of China.

In 776 B.C.E., athletic games were held on the plain of Olympia in Greece.

The Romans liked to visit the Bay of Naples, so they built a road there from Rome in 312 A.D. (anno Domini, after Christ). The road was 100 miles long and took four days by litter to get there.

Religious pilgrimages to Rome and the Holy Land (now Israel) began in the 1200s, so inns sprang up to feed and accommodate the pilgrims.

Marco Polo became the first noted European business traveler as he pioneered trade routes from Europe to China from 1275 to 1292, staying at primitive inns called khans along the way.

In the 1600s, during the age of horse-drawn coach travel in England, posthouses were set up to feed and shelter travelers and change the teams of horses every few miles.

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In 1841, Thomas Cook organized a group tour for 570 people to a religious meeting in England.

Cruising began in the 1840s with the Cunard Line crossing the Atlantic between England and North America.

In the 1840s, the Peninsular and Oriental Steam Navigation Company (P&O) cruised the Mediterranean.

In the 1850s, Monaco (a principality in the south of France) decided to cure its economic woes by becoming a winter haven for the rich as a health resort and a casino.

During the age of the grand tour, from 1880 through the 1930s, wealthy Europeans toured Europe as a part of their education.

Rail travel began in the 1800s.

Auto and air travel began in the 1900s.

American Airlines introduced its first transcontinental flight between New York and Los Angeles in 1959.

In 1970, the Boeing 747 began flying 450 passengers at a time across the Atlantic and Pacific Oceans.

In the 1970s, ecotourism and sustainable tourism became important topics.

In the 1980s, cruising became popular.

In 1986, the United States established the Visa Waiver Program to eliminate unnecessary barriers to travel to the United States. Currently, 38 countries are part of the program.

In the 2000s, international tourism temporarily declined as a result of the September 11 attacks, severe acute respiratory syndrome (SARS), bird flu, and war. However, tourism is projected to grow at a rate of between 3.0 and 3.5 percent a year, according to the World Travel & Tourism Council.

In 2008, there were over 922 million international tourist arrivals, but as a result of the 2007–2010 recession, tourism was down by four percent in 2009. However, it was expected to and did rise since then.

International tourism arrivals grew by almost five percent in the first half of 2011, consolidating the nearly seven-percent growth rate from 2010.

China’s expenditure on travel abroad reached US $102 billion in 2012, making it the first tourism source market in the world.

In 2012, international tourism produced $1.3 trillion in export earnings for the United States, while international tourist arrivals increased by four percent. This number is expected to increase an additional 4.3 percent in 2014.

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The Impact of Transportation on Tourism Pre-Industrial Revolution (prior to 1840)

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As early as 5,000 years ago travelers were sailing or trekking from country to country in the name of peace and tourism. Records of ancient travels have been etched on walls in temples and pedestals across Europe, Asia, and Africa.

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Travel in the Middle Ages was mostly for religious or trade reasons. People made pilgrimages to various shrines: Muslims to Mecca and Christians to Jerusalem and Rome.

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Rail travel influenced the building of towns, and cities, caused hotels to be built near rail depots, and opened up the West.

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Auto travel produced the motel and a network of highways, while the commercial jet created destination resorts in formerly remote and exotic locations, and made the rental car business a necessity.

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Although long-distance travel has always been fairly comfortable for the wealthy, it was not until the development of the railroad in the 1830s that travel became comfortable and cheap enough to be within reach of the masses.

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One of the main factors that led to the development of railroads in the United States was the need to move goods and people from one region of the country to another.

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The train made mass travel possible for everyone. Long distance travel became both cheaper and faster, making the horse and ship seem like ‘overpriced snails’.

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…the decline of rail travel started as early as the 1920s…For two main reasons, the bus and the car.

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The railway age The automobile age The jet aircraft age The cruise ship age Pre-Industrial Revolution

Traveling by Train

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Taking the train makes good sense in densely populated areas such as those in Western Europe and parts of Asia, and high speed networks are already well developed.

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France’s TGV trains (Trains a Grande Vitesse) are perhaps the most famous of them all, serving more than 150 cities in France and beyond, and traveling at about 201 mph.

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Several European nations have banded together to offer visitors unlimited first-class rail service for a reduced lump sum. However, if you want to use Eurail, be sure to purchase it before you leave home as the pass is only sold outside of Europe.

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Travel and tourism can bring an economic and social development, yet it can also damage local cultures and environments.

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The internal combustion-engine automobile was invented in Germany, but quickly became America’s obsession.

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The automobile remains the most convenient and rapid form of transportation for short and medium distances. In fact, it is not uncommon for an American to drive 20,000 miles a year.

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Travel by car is by far the largest of all segments in the ground transportation sector of the travel and tourism industry.

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The advantages of car travel are that the car brings you to places that are otherwise inaccessible.

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Although World War II brought a new surge in passenger numbers, people were seldom traveling for pleasure, and at the close of the war, the decline continued. Automobiles were again available, and people had the money to buy them. By 1960, airplanes had taken over much of the long-distance travel market, further reducing the importance of the train.

Rail Travel Abroad

Traveling by Automobile

Rental Cars Some 5,000-rental car companies operate in the United States.

The larger companies do 50 percent or more of their business with large corporate accounts.

The pleasure traveler, however …constitutes about 30 percent of the rental car market. This group constitutes about 30 percent of the market.

The five big rent-a-car company agencies in the United States are Hertz, Avis, Enterprise, National, and Budget. The agencies maintain some 97 ..

625,000-rental cars that are usually new and are sold after six months to reduce maintenance costs and help avoid breakdowns.

Traveling by Bus …buses still play an important role in the travel and tourism industry, especially with regards to their charter and tour services. Some of these companies even offer services such as destination management, incentive programs, and planning of meetings, events, and conferences.

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The major reasons for selecting the bus over other modes of travel are convenience and economy.

In addition to routes between towns and cities, bus travel includes local route service, charter, tour, and special services, commuter service, airport service, and urban and rapid transit service.

Founded in 1910, Gray Line is a franchise operation based in Colorado.

The company assembles package tours, customized stores, arranges rail and air transfers, and even meeting and convention services. Its major service, however, is sightseeing trips by bus.

The Gray Line 150-member organization carries about 28 million passengers a year at more than 200 destinations.

Travel by Air Air travel has made it possible to build great resorts on remote islands, it has fostered multinational enterprises, and it has broadened the horizons of hundreds of millions of people. Without the airplane, most resort destinations would have been virtually impossible to build. The number of international travelers would be far fewer because of the time, money, and difficulty involved in travel.

Hotels, car rental agencies, and even cruise lines depend heavily on airplanes for profits. For instance, lower airfares result in more passengers, and hence a higher occupancy at hotels. Whole towns and cities can and do benefit from this concept by receiving more taxes from tourists, which leads to better public facilities, better schools, and even lower local and property taxes.

In the United States, there are, at any one time, about 5,500 airplanes in the skies. By 2012, total passenger traffic between the United States and the rest of the world is projected to reach 1 billion flights annually.

U.S. airlines have lost billions of dollars in the past few years, in part because of their inability to compete effectively with international carriers.

Several of the major U.S. airlines have been and are in financial trouble, so they are charging an additional fuel surcharge on tickets and charging for checked bags, food, beverages, and selected seats just so that they can stay in the air.

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Many of the world’s major airlines are grouped with either Star Alliance, Sky Team, or One World. Alliances of this nature will allow airlines access to each other’s feeder markets and to resources that will enable them to compete in what will ultimately be a worldwide deregulation.

A feeder market is a market that provides the source—in this case, passengers for the particular destination. Ultimately, any major European airline without a strategic alliance in the United States will only limit its own horizons and lose market share.

To reduce losses brought about by deregulation and high labor, pension plan, and fuel costs, major carriers have eliminated unprofitable routes, often those serving smaller cities. New airlines began operating shuttle services between the smaller cities and the nearest larger or hub city. This created the hub-and-spoke system

The Hub-and-Spoke System The hub-and-spoke system enables passengers to travel from one smaller city to another smaller city via a hub or even two hubs. Similarly, passengers may originate their travel from a small city and use the hub to reach connecting flights to destinations throughout the world. The airlines have worked to decrease losses through the creation of the hub-and-spoke system.

The two main benefits of the hub-and-spoke system are: a. Airlines can serve more cities at lower costs. b. Airlines can maximize passenger loads from small cities.

New Airplanes Boeing’s first new airplane model in several years, the Dreamliner 787, takes advantage of huge advances made in aviation technology in the past decade and is capable of flying long-haul routes using up to 20 percent less fuel than today’s similar-sized airplanes. Up to 50 percent of the primary structure of the plane, including the fuselage and wing, is made of components such as carbon fiber, reducing overall weight.

Able to fly up to 9,400 miles without refueling, the Boeing 787 Dreamliner could easily manage a flight between New York and Moscow, Manila, or Sao Paulo or between Boston and Athens.

From and industry executive, “…If you don’t have a 787-class aircraft and your competitor does, he can under price you and out-profit you.”

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Components of Airline Profit and Loss Airlines have both fixed and variables costs. Examples of fixed costs are the lease of airplanes; the maintenance of airline owned or leased terminals, interest on borrowed money, insurance, and pensions.

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Variable costs include wages and salaries, advertising and promotion, fuel costs, passenger food and drink, and landing fees.

The biggest single cost for airline operations is labor, which is typically 30 to 45 percent of total operating costs. Others are landing and takeoff charges, passenger servicing costs such as reservations, ticketing, food, baggage handling, and an amount for additional security and fuel.

Capacity control is one yield-management technique for maximizing sales income by lowering the price of seats according to expected demand.

The Load Factor A key statistic in analyzing an airline’s profitability is the load factor which means the percentage of seats filled on all flights, including planes being flown empty to be in position for the next day’s schedule. The load factor, like the occupancy rate of a hotel, is an indicator of efficient or inefficient use.

Travel by Cruise Ship A cruise ship is often referred to as a floating resort. Various types of entertainment from exercise classes to cabarets to charm classes to shuffle board tournaments and all night dancing are available; thus, there is plenty for travelers to do. Cruise ship accommodations range from luxurious suites to cabins smaller than most hotel rooms.

The cruise market has increased dramatically in recent years. About 20.0 million people cruise each year. Rates vary from a starting point of about $95 per person per day on Carnival Cruise Lines to $850 on the Seabourn Yachts. Some 215 ships provide mostly ocean-going cruising.

In 2014 almost 25 million passengers vacationed on a ship, but millions more intended to cruise in the next few years The nationality of the ship’s crew contributes to its ambiance. Reasons that most cruise ships sail under foreign flags include: a. U.S. labor costs are too high to compete in world market. b. U.S. ships are prohibited from operating casino-type gambling. c. Many foreign shipyards are subsidized by their governments.

In addition, cruise ships sail under foreign flags (called flags of convenience) because registering these ships in countries such as Panama, the Bahamas, and Liberia means fewer and more lax regulations and little or no taxation.

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Employment positions for Americans are mainly confined to shore-based activities such as sales and marketing. On board, Americans sometimes serve as cruise directors and pursers.

Cruise Market

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Mass Market: Income: $35,000–$75,000.

Cost of Cruise: $99–$195 per day Middle Market: Income: $75,000–$89,000.

Cost of Cruise: $175–$350 per day (750–1000 passengers) Luxury Market: Income: higher than $100,000.

Cost of Cruise: average more than $300 per day (700 passengers) Tourism in the Twenty-First Century Tourism is a dynamic, evolving, consumer-driven force which is the world’s largest industry if all its interrelated components are placed under one umbrella; travel; lodging; conventions, expositions, meetings, events; restaurants, managed services; and recreation.

The United Nations World Tourism Organization (UNWTO), is vested by the United Nations with a central and decisive role in promoting the development of responsible, sustainable (environmentally responsible), and universally accessible tourism.

UNWTO plays a role in promoting technology transfers and international cooperation, stimulating and developing public–private sector partnerships, and encouraging the implementation of the Global Code of Ethics for Tourism.

Through tourism, UNWTO aims at stimulating economic growth and job creation, providing incentives for protecting the environment and cultural heritage, and promoting peace, prosperity, and respect for human rights.

The United Nations World Tourism Organization’s definition of tourism is “Tourism comprises the activities of persons traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business, and other purposes.”

For many developing nations, tourism represents a large percentage of gross national product and a way of gaining a positive balance of trade with other nations.

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Benefits and Prospects of Tourism International tourism is the world’s largest export earner and an important factor in the balance of payments of most nations.

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Tourism has become one of the world’s most important sources of employment. It stimulates enormous investment in infrastructure, most of which helps to improve the living conditions of local people as well as tourists. It provides governments with substantial tax revenues.

United Nations World Tourism Organization (UNWTO) helps countries throughout the world to maximize the positive impacts of tourism, while minimizing its possible negative consequences on the environment and societies.

Tourism, the world’s largest industry, offers the greatest global employment prospects, such as: 1. The opening of borders 2. An increase in disposable income and vacations 3. Reasonably priced airfares 4. An increase in the number of people with more time and money 5. More people with the urge to travel Long-Term Prospects: Towards Tourism 2030 Tourism: 2030 Vision is the UNWTO’s long-term forecast and assessment of the development of tourism for the first twenty years of the new millennium. International arrivals are expected to reach over 1.8 billion by 2030.

This rapid growth presents opportunities and challenges. Tourism is a mature industry but a young profession. There is interdependency between the various segments of tourism, travel, lodging, foodservice, and recreation. Hotel guests need to travel to reach the hotel. They eat in nearby restaurants and visit attractions. Each segment is, to an extent, dependent on another for business.

The Economic Impact of Tourism The World Travel and Tourism Council, a London-based organization, suggests that the revenue from travel and tourism was 7 trillion (approximately three percent) of GDP in 2013 and will rise by 4.2 percent annually through 2023. The total contribution of travel and tourism to GDP, including its wider economic impacts, is forecast to be $10.4 trillion

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by 2023.i Total contribution of travel and tourism to employment, including jobs indirectly supported by the industry, was 266 million in 2013 and is forecasted to rise to 323,826,000 jobs (9.7 percent) by 2021.

Tourism accounts for 7.72 million jobs in the United States. The United States is second to France in the number of tourists (59.7 million) but first in tourism revenues.

The Multiplier Effect Tourism produces effects beyond travel, hotels, restaurants, and souvenirs.

The money earned by transportation companies, hotels, and shops is used to purchase more goods, pay wages, etc. This chain reaction continues until the money is used to purchase something outside of the area, which is called leakage.

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In most economic impact studies to date, developed economies have a multiplier effect of between 1.5 and 2.0. This means that the original money spent is used again in the community between 1.5 and 2.0 times.

Promoters of Tourism The Pacific Area Travel Association (PATA) unites its 34 member countries toward the goal of excellence in travel and tourism growth.

Concentrated successful efforts have focused on research, development, education, and marketing.

Asia Pacific has become the world’s largest travel market, reaching $351.9 billion in 2013. China, India, and Southeast Asia have continued to be driving forces in international travel and are constantly setting new records.

Many countries have a minister of tourism, which is a cabinet-level position that can advocate tourism development, marketing, and management through the National Tourism Organization (NTO) The Travel Industry of America (TIA) addresses common interests and concerns of all components of the U.S. travel industry. It focuses on unifying the goals of the industry, coordinating private sector efforts, monitoring government policies that affect travel and tourism, and supporting research and analysis. The TIA was founded in 1941.

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World Travel and Tourism Council, Travel & Tourism: Economic Impact 2015 World, http://www.wttc.org. Go to Research and click on Economic Research, click on Regional Reports, click on World, and then click on View Full Report (accessed July 29, 2014).

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State Offices of Tourism State offices of tourism are created by the state legislative offices and are responsible for the growth and development of tourism within their states.

They promote recreation and tourism attractions within their states.

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City-Level Offices of Tourism and Convention and Visitors Centers

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Many cities have established Convention and Visitors Bureaus (CVBs) to attract and retain visitors to the city. The CVB’s are largely funded by transient occupancy tax (TOT), which may range from 8 to 18 percent of hotel room rates. Additional funding comes from membership dues and promotional activities.

National Offices of Tourism National offices of tourism (NOTs) seek to improve the economy of the country they represent by increasing the number of visitors and consequently their spending in the country.

Tour Operators Tour operators promote tours and trips that they plan and organize. A tour is a trip taken by an individual or group of people who travel together with a professional tour manager/escort and follow a preplanned itinerary. Most tours include travel, accommodations, meals, land transportation, and sightseeing.

Tour operators also offer vacation packages to people traveling alone.

Vacation packages include a combination of two or more travel services— hotel, car rental, and air transportation—offered at a package price.

Travel Agencies A travel agent serves as a middle person who provides travel counseling and sells services on behalf of airlines, cruises, hotels, car rentals, etc.

The American Society of Travel Agents (ASTA) is the world’s largest travel trade association, with more than 26,000 members in more than 140 countries. Agents use computer reservation systems (CRSs) to access service availability and make bookings. In the United States, the main vendors of CRSs are Amadeus, Sabre, Travel Sky, Worldspan, and Galileo.

In addition to selling tickets, agents arrange transportation, prepare itineraries, book accommodations, meals, tours and special events, and handle and advise on matters such as foreign exchange.

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The travel business has changed, resulting in a sharp decline in the number of travel agents, because there is less need for the traditional travel agent in the age of the Internet. Internet travel services such as Travelocity and Expedia have changed the way we book travel.

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Business travel is declining as a percentage of all travel due to economic reasons.

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Business travelers, when compared to leisure travelers, tend to be younger, spend more money, travel farther, and travel in smaller groups, but they do not stay as long as leisure travelers do.

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From a social and cultural perspective, tourism can have both positive and negative impacts on communities. Undoubtedly, tourism has made significant contributions to international understanding. World tourism organizations recognize that tourism is a means of enhancing international understanding, peace, prosperity, and universal respect for and observance of human rights and fundamental freedom for all without distinction as to race, sex, language, or religion.

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Tourism can be a very interesting sociocultural phenomenon. Seeing how others live is an interest of many tourists, and the exchange of sociocultural values and activities is rewarding.

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Tour Wholesalers and Consolidators Airlines…wanted to sell as many seats as possible and found that they could sell blocks of seats to wholesalers close to departure dates. These tickets were for specific destinations around which tour wholesalers built a tour. Wholesalers then sold their tours directly through retail agents.

Destination Management Companies Destination management companies (DMCs) are service organizations that offer programs and services to meet the needs of their clients. They concentrate on selling the destination to meeting planners and incentive companies.

Business Travel

Social and Cultural Impact of Tourism

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Ecotourism Ecotourism is focused more on individual values; it is “tourism with a conscience,” sharing many of the same aspirations as sustainable tourism.

The International Ecotourism Society (TIES) defines ecotourism as “responsible travel to natural areas that conserves the environment and improves the well-being of local people.”

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Those who implement and participate in ecotourism activities should respect certain principles such as minimize impact, build environmental and cultural awareness and respect, provide positive experiences, financial benefit, raise sensitivity, and support human rights. (See full list on page 217.)

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Most ecotourism destinations can be found in developing countries with natural surroundings and plentiful flora and fauna. The focus of ecotourism is to provide tourists with new knowledge about a certain natural area and the culture that is found in it, along with a little bit of adventure. As for the local inhabitants, ecotourism aims to help improve the local economy and conservation efforts. All parties are to gain a new appreciation for nature and people.

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Generally, most of the more popular ecotourism destinations are located in underdeveloped and developing countries. Thus far, ecotourism projects tend to be developed on a small scale. Another reason ecotourism projects are kept small is to allow more in-depth tours and educational opportunities.

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Sustainable Tourism The concept of sustainable tourism places a broad-based obligation on society… to harmonize tourism and tourism development by improving the quality of its environment and resources—physical and socio-cultural.

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According to the UNWTO definition, sustainable tourism refers to the environmental, economic, and sociocultural aspects of tourism development, with the establishment of a suitable balance between these three dimensions to guarantee its long-term sustainability.

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The United Nations Environment Program (UNEP) says that sustainability principles refer to the environmental, economic, and sociocultural aspects of tourism.

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The two key factors are community-based tourism and quality tourism.

Community-based tourism ensures that a majority of the benefits go to locals and not to outsiders. Quality tourism basically offers tourists “good value for their money.”

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Other Types of Tourism Tourism has developed to the point that there are now several specialinterest areas. Culture and heritage are “our legacies from the past, what we live with today, and what we pass on to future generations.

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The United Nations Educational, Scientific and Cultural Organization (UNESCO) has designated a number of world heritage sites worthy of protection and preservation because of the outstanding value to humanity of their natural and cultural heritage.

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What makes the concept of world heritage exceptional is its universal application. World heritage sites belong to all the peoples of the world, no matter where they call home.

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Cultural tourism. These trips are motivated by interest in cultural events such as feasts or festivals or activities such as theater, history, arts and sciences, museums, architecture, and religion.

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Heritage tourism. This type of tourism is motivated by historic preservation—a combination of the natural, cultural, and architectural environment.

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Nature tourism. These trips are motivated by nature, such as a visit to a national park.

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Culinary tourism. Gastronomic tours of Europe and Asia in places like Florence, Italy, and Bangkok, Thailand, have an appeal to the “foodies” among us.

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Volunteer tourism. Volunteer tourism provides travelers with an alternative to standard commercial vacation options. A major attraction for those who volunteer for overseas aid projects is the opportunity to travel safely and cheaply. There is a belief that volunteer tourism will rival the popularity of ecotourism this decade.

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Current Issues in Travel and Tourism

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Matures or Millennials—which market segment is more important? Both segments are huge Millennials like international travel and use smart phone to capture photos. Matures like to travel to explore new places.

Travel Experiences—to enrich knowledge or other cultures, such as, Volunteerism, language tourism, culinary tourism. Some others may look for a unique vacation experience.

Alternative lodging sites—accommodation can be booked at Airbnb, Living Social, hostels, apartments, Bed and Breakfast, and homestay to avoid higher priced hotels that may not have a family room with four beds.

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Continued growth in tourism is anticipated with increased interest in ecotourism, sustainable tourism, and heritage tourism. Internet bookings will continue to increase with the advancement of technology, heightened government awareness of tourism as an economic and, also as a social/cultural force.

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III. Teaching Techniques/Classroom Exercises Note: The content of these exercises is such that they may also be used as essay questions.

Exercise One: Show portions of the movie A Room with a View or another movie depicting the custom of the Grand Tour of Europe to finish the education of a young lady or gentleman. Have students discuss how the style of travel and the conduct and motivation of tourists have changed or have not changed over the years.

An alternative method for this exercise would be to have students watch various movies (by choice or assigned) revolving around travel and tourism. Ask them to report what they have observed with regard to style of travel and how the conduct and motivation of tourists have changed or have not changed over the years.

Exercise Two: Introduce students to on-line reservations systems via an in-class demonstration.

Especially effective is the use of a consumer on-line system such as America On-Line’s gateway to the American Airlines SABRE system. Demonstrate how arrangements for travel and accommodations can be made and ask students to consider the implications of the “information superhighway” for the local travel agency.

Exercise Three: Form student groups and ask students to generate a list of all trips they have taken in the past two years. This would include holidays, vacations, sports team travel, work related, local, national, and international travel. Have students classify the trips under one of the headings provided: (1) to experience new and different surroundings, (2) to experience different cultures, (3) to rest and relax, (4) to visit friends and family, and/or (5) to participate in sporting/recreation activities. Students may classify each trip under more than one heading.

Have students share results with the class, perhaps by creating a composite class list on the board. Facilitate the class discussion on the destinations that are identified under each heading: Why were they classified under that heading? Which destinations are most frequently listed under multiple headings? Why? What implications would this information have for travel agencies, conventions and visitors’ bureaus, and/or destination management companies?

Check Your Knowledge, p. 359 1. Question: In what locations does rail travel make the most sense?

Answer: Densely populated areas 2. Question: What is the future of rail travel?

Answer: Will be used more as roads become more congested, travel becomes more time consuming, and parking more difficult.

3. Question: Who are the major users of buses?

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Check Your Knowledge, p. 367 1. Question: What measures have the major U.S. airlines taken in recent years to combat the tough economic conditions?

Answer: Some carriers use only one type of plane to reduce maintenance costs. Others have eliminated unprofitable routes, discontinued services, created the hub and spoke system, and added many extra charges for services that were once free.

2. Question: Why do most cruise ships fly under foreign flags?

Answer: Most cruise ships sail under foreign flags because they were built abroad for the following reasons: ii a. U.S. labor costs for ships, officers, and crew, in addition to maritime unions, are too high to compete in the world market. b. U.S. ships are not permitted to operate casino-type gambling. c. Many foreign shipyards are government subsidized to keep workers employed, thereby lowering construction costs.

3. Question: Summarize the cruise market.

Answer: The cruise market has increased dramatically in the last few years. A number of cruise lines have built ships that will capture much of the international market and meet the economic needs of most people.

4. Question: Summarize the historical impact of transportation on tourism.

Answer: Travel was once taken only for religious and trade purposes. Over the many centuries, people began to travel more for leisure and as faster and cheaper means of transportation were invented, it opened up the world to people that wanted to see more.

Check Your Knowledge, p. 369 1. Question: What role does the UNWTO play in the tourism industry?

Answer: UNWTO plays a role in promoting technology transfers and international cooperation, stimulating and developing public–private sector partnerships, and encouraging the implementation of the Global Code of Ethics for Tourism 2. Question: Define tourism.

Answer: The United Nations World Tourism Organization’s definition of tourism is “Tourism comprises the activities of persons traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business, and other purposes.”

3. Question: How is tourism categorized?

Answer: Tourism is a dynamic, evolving, consumer-driven force which is the world’s largest industry if all its interrelated components are placed under one umbrella; travel; lodging; conventions, expositions, meetings, events; restaurants, managed services; and recreation.

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“Maritime Industry Background,” Cruise Lines International Association, www.cruising.org. Click on enter under regulatory, click on Industry Resources, and then click on Maritime Industry Background to view this page (accessed May 28, 2015).

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Check Your Knowledge, p. 380 1. Question: Describe at least three ways in which tourism has a significant economic impact upon society.

Answer: Tourism has become one of the most important sources of employment worldwide. It stimulates investment in infrastructure and provides governments with substantial tax revenues. It also fosters intercultural awareness and promotes peace.

2. Question: Is it better to have a higher or lower multiplier effect and why?

Answer: The higher the effect, the better the economy. It is better for the businesses to spend the money locally as it continues to benefit local businesses for a longer period.

3. Question: Identify the promoters of tourism.

Answer: The Pacific Area Travel Association represents countries in the Pacific and Asia market.

State offices of Tourism work to promote state-wide travel. CVB’s also promote the city to drive additional tourism traffic into a city. National Offices of Tourism act on behalf of countries around the world. On a more local or regional level, there are tour operators and travel agents that work with individuals and businesses to assist in their travel plans.

IV. Answers to Chapter 9 Review Questions 1. The hub-and-spoke system allows U.S. airlines to be efficient and cost effective. This system allows passengers to travel from one smaller city to another city via a hub or two hubs. This system allows airlines to serve more cities at a lower cost and passenger loads can be maximized saving fuel. P.204 2. According to the UNWTO’s long term forecast, tourism should continue to grow throughout the decade and into 2030 with expected international tourism arrivals reaching nearly 1.8 billion. The forecast on an annual basis shows international arrivals increasing by approximately 43 million per year with lots of opportunities for growth in the field. P.209210 3. The multiplier effect is a chain reaction that occurs when tourism brings new money into the local economy. The money spent by the tourist is then used by local businesses to purchase more goods, thus generating additional use of the money. Additionally, employees of businesses that serve tourists tend to spend more of their money locally further compounding the effect.

4. State Offices of Tourism – charged by their legislative bodies to grow and develop tourism within the state.

Convention and visitors Bureaus (CVB’s) and City Tourism Offices. – Main function is attract and retain visitors to the city. Staffed by representatives of area attractions. Conduct promotional activities to highlight the city.

National Offices of Tourism – Goal is to improve the economy of the country represented.

Oversee and ensure hotels, transportation systems, tour operators, and tour guides meet standards.

Publicize the country.

Assist travelers.

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Tour Operators – Promote tours and trips they plan and organize.

Frequently offer vacation packages.

Travel Agencies – Act as travel counselors.

Serve as middle person between traveler and the trip.

Assist in finding the best rates, building itineries and more.

Tour Wholesalers and Consolidators – Provide package components for tour operators.

Work closely with airlines to purchase discounted seats.

Destination Management Companies – Service organization that works to meet a wide range of client needs from travel to onsite activities and more. P. 212-214.

5. Ecotourism and sustainable tourism share many of the same aspirations. The difference is that ecotourism focuses more on individual values, sometimes referred to as “tourism with a conscience” while sustainable tourism puts more of the burden on society at large to plan, develop policies, and harmonize tourism development by improving the place’s environment and resources. P 217-219.

V. Mini-Case Discussion Question Answer Case: Maria’s Effect on Dominica and Dominica’s Tourism Before: Before the hurricane arrives, ensure that all gutters and drains are clear to avoid flooding of guest areas.

Move guests to secure areas.

Stock up with ample food and beverages, particularly bottled water.

Stock up with other essential supplies like washing detergent and cleaning supplies.

Ensure all guests are safe and know what to do.

Help guests get on flights off the island.

Prepare for power-outs.

Secure all items that could become projectiles.

During: Hunker down making sure all guests are as safe as possible and offer any food and drinks as may be possible to serve.

Offer any entertainment such as books, magazines, games, and an honors bar.

Prepare to handle any flooding or other damage.

Be ready for power-outs.

After: Assist all guests as possible.

Offer services possible.

Clear up.

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Chapter Ten Recreation, Attractions, and Clubs I. Chapter Objectives After reading and studying this chapter, the student should be able to do the following: 1. Explain the concepts of recreation and leisure and how attractions are managed.

2. Discuss the development of theme parks and some of the industry’s key players.

3. Describe various tourist attractions popular to those seeking recreation.

4. Describe the private club industry.

5. Explain the origins and operations of government-sponsored recreation.

6. Describe noncommercial recreation.

II. Key Teaching Elements/Chapter Outline/Lecture Suggestions Page

Object.

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Recreation, Leisure, and Wellness The need to develop the wholeness of the person has become increasingly important. Compared to a generation ago, the stress levels of business executives are much higher. The term burnout—and indeed the word stress—has become a part of our everyday vocabulary only in recent years.

Recreation is all about creating a balance, a harmony in life that will maintain wellness and wholeness.

Recreation allows people to have fun together and to form lasting relationships built on the experiences they have enjoyed together. This recreational process is called bonding.

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The word recreation implies the use of time in a manner designed for therapeutic refreshment of one’s body or mind. Recreation is synonymous with lifestyle and the development of a positive attitude.

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Leisure is best described as time free from work, or discretionary time.

Some recreation professionals use the words leisure and recreation interchangeably, while others define leisure as the productive, creative, or contemplative use of free time.

Government-Sponsored Recreation Various levels of government that constitute government sponsored recreation are intertwined, yet distinct, in the parks, recreation, and leisure services. The founding fathers of America said it best when they affirmed the right to life, liberty, and the pursuit of happiness in the Declaration of Independence.

Government raises revenue from income taxes, sales taxes, and property taxes. Additionally, government raises special revenue from recreation112 ..

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related activities such as automobile and recreational vehicles, boats, motor fuels, transient occupancy taxes (TOTs) on hotel accommodations, state lotteries, and others.

Recreation and leisure activities are extremely varied, ranging from cultural pursuits such as museums, arts and crafts, music, theater, and dance to sports (individual and team), outdoor recreation, amusement parks, theme parks, community centers, playgrounds, libraries, and gardens.

Recreation professionals face a number of political and legal concepts.

Comprehensive planning, land classification systems, land-use planning, funding, and differences in purpose are among the factors to be considered (see text page 249 for a full list).

National Parks in the United States

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The United States has designated 407 national park units throughout the country, including a rich diversity of places and settings. The National Parks Service was founded in 1916 by Congress to conserve park resources and to provide for their use by the public in a way that leaves them unimpaired for the enjoyment of future generations.

The ever-expanding mandate of the Parks Service also calls for understanding and preserving the environment. It monitors the ecosystem from the Arctic tundra to coral atolls, researches the air and water quality around the nation, and participates in global studies on acid rain, climate change, and biological diversity.

The system’s current roster of 407 areas covers more than 80 million acres of land. Annual visitation to the National Park system approaches 300 million visitors. Today, emphasis is placed on preserving the vitality of each park’s ecosystem and on the protection of unique or endangered plant and animal species.

National Park Management The National Park Service is in the Department of the Interior and is overseen by a director who reports to the Secretary of the Interior. There are 407 National Parks divided into seven regions. The Director of the National Park Service establishes and approves service-wide natural resource policies and standards.

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The National Park Service budget for 2014-15 is $3 billion, and it employs a staff of 22,000. Beyond these appropriated funds, the National Park Service is also authorized to collect and retain revenue from specified sources: Recreation fees: approximately $172.9 million per year; Park concessions franchise fees: approximately $60 million per year; Filming and photography special use fees: approximately $1.2 million per year; Additional funding comes from individual donations.

Public Recreation and Park Agencies By the early 1900s, fourteen cities had made provisions for supervised play facilities, and the playground movement gained momentum

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About the same time, municipal parks were created in a number of cities.

Boston established the first metropolitan park system in 1892. In 1898, the New England Association of Park Superintendents (predecessor of the American Institute of Park Executives) was established to bring together park superintendents and promote their professional concerns.

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Commercial Recreation—Attractions Recreation management came of age in the 1920s and 1930s when recreation and social programs were offered as a community service.

College degrees began to be offered in recreation management. Both public and private sector recreation management have grown rapidly since 1950.

Commercial recreation, often called eco- or adventure tourism, provides residents and visitors with access to an area’s spectacular wilderness through a variety of guided outdoor activities. Specifically, commercial recreation is defined as outdoor recreational activities provided on a fee-for-service basis, with a focus on experiences associated with the natural environment. Commercial recreation includes theme parks, attractions, and clubs.

Theme Parks Knott’s Berry Farm has truly been a great influence on the American theme park industry. Hundreds of parks, both independent and corporate owned, started to develop following the birth of Knott’s.

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Size and Scope of the Theme Park Industry Theme parks create an atmosphere of different places and times and usually concentrate on a dominant theme. Architecture, landscaping, shows, and merchandise are all focused on the theme. Examples of theme parks are Sea World and Busch Gardens.

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Theme parks and attractions vary according to theme, which might be historical, cultural, geographical, and so on. Some parks and attractions focus on a single theme, such as the marine zoological Sea World parks.

Other parks and attractions focus on multiple themes, such as King’s Island in Ohio, a family entertainment center.

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Walt Disney: A Man with a Vision Walt Disney said that Disneyland really began when he took his two young daughters to the park. He felt there should be some kind of family park where parents and children could have fun together.

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Mickey and Minnie Mouse first appeared in Steamboat Willie, which also incorporated music and sound, on November 18, 1928. Huge audiences were ecstatic about the work of the Disney Brothers, who became overnight successes. During the next few years, Walt and Roy made many Mickey Mouse films, which earned them enough to develop other projects, including full-length motion pictures in Technicolor.

Both Walt Disney World and Disneyland have excellent college intern programs that enable selected students and faculty to work in a variety of hotel, foodservice, and related park positions.

Magic Kingdom The heart of Walt Disney World and its first famous theme park is the Magic Kingdom. It is a giant theatrical stage where guests become part of exciting Disney adventures. It is also the home of Mickey Mouse, Snow White, Peter Pan, Tom Sawyer, Davy Crockett, and the Swiss Family Robinson.

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More than forty major shows and ride-through attractions, not to mention shops and unique dining facilities, fill its seven lands of imagination.

Epcot Epcot is a unique, permanent, and ever-changing world’s fair with two major themes: Future World and World Showcase. Future World shows amazing technology for the near future. Around the World Showcase Lagoons are pavilions where guests can see world-famous landmarks and enjoy native foods, entertainments, and culture.

Disney’s Hollywood Studios With fifty major shows, shops, restaurants, ride-through adventures, and backstage tours, Disney’s Hollywood Studios (formerly Disney–MGM Studios) combines real working motion picture, animation, and television studios with exciting movie attractions.

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Walt Disney World the most popular destination resort in the world. Since its opening in 1971, millions of guests, including kings and celebrities from around the world and all eight U.S. presidents in office since the opening (excluding President Obama), have visited the parks.

Universal Studios Universal Studios Hollywood has been giving guided tours on its famous movie sets for almost forty years, and tens of thousands of people visit Universal every day. Since its founding, Universal Studios has become the most formidable competitor facing the Walt Disney Company.

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In addition to its Hollywood and Orlando parks, Universal has since expanded into Singapore and Japan. Future locations are planned for Dubai, United Arab Emirates and Seoul, South Korea. One reason for Universal’s success is its adaptation of movies into thrill rides; another is its commitment to guest participation.

SeaWorld Parks and Entertainment SeaWorld Parks and Entertainment includes Busch Gardens and is a division of Blackstone Group. The animal parks not only offer guests from around the world the opportunity to see and experience the wonders of many marine and land animals, but they also have highly developed educational programs.

The company is dedicated to preserving marine life. It uses innovative programs to research various wildlife dilemmas. It also participates in breeding, animal rescue, rehabilitation, and conservation efforts throughout the year.

Hershey’s It was at the 1893 World’s Columbian Exposition in Chicago that Hershey first became fascinated with the art of chocolate. He opened his new establishment in Lancaster, Pennsylvania, and named it the Hershey Chocolate Company. In the 1900s, the company started to produce mass quantities of milk chocolate, which resulted in immediate success.

In 1907, Milton Hershey opened Hershey Park as a leisure park for employees of Hershey’s company. He wanted to create a place for his employees to relax and have some fun when they were not on the job. The park was small and simple, offering employees a place to picnic, canoe, and walk around the beautifully landscaped grounds. In 1908, the park started its soon-to-be huge expansion with the addition of a merry-goround.

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In 1971, the park underwent redevelopment to turn the small regional park into a large theme park. In addition, the company decided to add a onetime admission fee to eliminate the pay-as-you-ride policy and changed its name from Hershey Park to Hersheypark. Today, the park sits on more than 110 acres and is the home of more than sixty rides and attractions Regional Theme Parks The Florida Attractions Association, founded in 1949, is a trade association representing 90-plus family-oriented attractions, including astronaut, historical, cultural, military, and scientific museums; botanical gardens; castles; collections of the unique and different; dinner entertainments; dolphin and marine parks; exhibitions of alligators, lions, monkeys, parrots, butterflies, and manatees; Native American villages; musical entertainment complexes; sightseeing trains, cruises, and boat tours; state parks; theme parks; towers; water parks; and zoological parks.

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The world-famous San Diego Zoo is located in historic Balboa Park in downtown San Diego, California. Founded in 1916 by Dr. Henry Wegeworth, the zoo’s original collection totaled 50 animals. Today, it is home to over 4,000 animals of more than 800 different species. The zoo also features a prominent botanical collection with more than 700,000 exotic plants.

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The National Zoo

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Dollywood, owned by Dolly Parton and located in the Great Smoky Mountains in Tennessee.

LEGOLAND, Owned by Lego Group with four locations in England, Germany, California and Denmark.

Gatorland, a 110 acre theme park and wildlife preserve located in Florida.

Wet’n Wild, a chain of water parks in Florida and North Carolina.

Attractions Zoos Approximately 181 million people visit a U.S. zoo every year. The first zoo in the United States was the Philadelphia Zoo, built in 1859. Even today, zoos are extremely popular in the United States and Canada, and almost every major city has one

San Diego Zoo, California

The National Zoological Park in Washington, D.C., is part of the respected Smithsonian Institution. More than 2,000 animals from nearly 400 species make their home in this zoo.

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This well-known institution now holds almost 140 million artifacts, works of art, and specimens and is visited by more than 30 million people a year.

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The Field Museum

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Aquariums Aquariums are attractions that provide thrilling educational experiences to millions of tourists each year. They are also multi-million-dollar showpieces, displaying creatures vastly different from us who dwell on land.

Historic Places and Sites The first sites visited in recorded history were the Seven Wonders of the ancient world, which included the Great Pyramid of Giza (Egypt), the Hanging Gardens of Babylon (modern-day Iraq), the Statue of Zeus at Olympia (Greece), the Temple of Artemis at Ephesus (modern-day Turkey), the Mausoleum at Halicarnassus (modern-day Turkey), the Colossus of Rhodes (Greece), and the Lighthouse of Alexandria (Egypt).

Historic places, sites, and museums are a part of what is now called heritage tourism. Heritage tourism has gained prominence in recent years, particularly with baby boomers and older adults.

The National Register of Historic Places is the United States’ official list of districts, sites, buildings, structures, and objects worthy of preservation.

The more than 85,000 listings represent significant icons of American culture, history, engineering, and architecture.

Consider the following for a look at a few of the most important U.S. historical attractions: Monticello, the Alamo, the French Quarter in New Orleans, The Martin Luther King Jr. National Historic Site in Atlanta, The Grand Ole Opry in Nashville, The Freedom Trail in Boston, and the Liberty Bell in Philadelphia.

Museums Some experts have speculated that people visit museums because of some innate fascination with the past and with diverse cultures. Nobody knows for sure, but it is a fact that the number of museums in the United States has more than quadrupled since 1950. There are many types of museums, including general, art, science and technology, natural history, history, and military.

The Smithsonian Museum

The Field Museum, founded in 1893 in Chicago, is a “unique institution of public learning that utilizes its collections, researchers, exhibits, and educational programs to increase public knowledge . . . of the world.”

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London was once the center of an empire that included approximately one quarter of the globe. The name suggests history, pageantry, royalty, theater, shopping, museums, music, fashion, and now even food. London has several interesting areas such as Chelsea and the River Thames and Hampstead on the hill with its quaint pubs and row houses.

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Paris

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They say, “All roads lead to Rome.” Rome, the Eternal City, also called the “Cradle of Civilization,” is built on seven hills beside the Tiber River, with centuries of history that seem to exude from every building.

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Managing Attractions

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Performance Arts Theaters once were immensely important. In a time before people had access to modern inventions like radio or television, books and theater were the only entertainment available. Theater is no longer attractive only to the upper classes; affordable prices make it reasonable entertainment for almost anyone.

Destinations Some destinations are major attractions in themselves.

Athens Athens, the capital city of Greece, is one of the world’s oldest cities—the cradle of Western civilization and the birthplace of democracy. Classical Athens was a powerful city-state, a center for the arts, learning, and philosophy, and home of Plato’s Academy and Aristotle’s Lyceum.

London

Paris is a city of beautiful buildings, boulevards, parks, markets, and restaurants and cafés. Paris began as a small island called Île de la Cité, in the middle of the River Seine. In time, Paris grew onto the Left Bank (Rive Gauche), where the University of the Sorbonne was founded. The university provided instruction in Latin, so it became known as the Quartier Latin, or Latin Quarter.

Rome

Theme park managers use the same main management functions (planning, including forecasting; organizing; decision making; and controlling).

Planning involves all types of planning that fall under two headings: strategic (long term) and tactical (short term).

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Decision making can be quick and easy for the many programmed decisions—decisions that occur on a regular basis.

Controlling is constantly checking to make sure that the results were what they should be.

Attractions management is all about keeping the quality of product and guest service at the highest levels. It boils down to revenue minus expenses equal net profit.

Clubs Private clubs are places where members gather for social, recreational, professional, or fraternal reasons. Members enjoy bringing friends, family, and business guests to their club. Their club is like a second home, but with diverse facilities and staff to accommodate the occasion

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There are a few thousand private clubs in North America, including both country and city clubs. When the total resources of all the clubs are considered, such as land, buildings, and equipment, along with thousands of employees and so forth, clubs have billions of dollars of economic impact.

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Club Management

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Many business deals are negotiated on the golf course. A few years ago, country clubs were often considered to be bastions of the social elite.

Historically, the ambiance of these clubs attracted the affluent.

New clubs are born when a developer purchases a tract of land and builds a golf course with a clubhouse surrounded by homes or condominiums.

The homes are sold and include a membership to the club. After all the homes are sold, the developer announces that the golf course and clubhouse will be sold to an investor who wishes to open it to the public.

Size and Scope of the Club Industry

Club management is similar in many ways to hotel management, both of which have evolved in recent years. The general managers of clubs now assume the role of chief operating officer, and in some cases chief executive officer of the corporation.

The main difference between managing a club and managing a hotel is that with clubs the guests feel as if they are the owners (in many cases they are) and frequently behave as if they are the owners. Another difference is that most clubs do not offer sleeping accommodations.

Club members pay an initiation fee to belong to the club and annual membership dues thereafter. Some clubs also charge a set utilization fee, usually related to food and beverages, which is charged regardless of whether those services are used.

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Club Management Structure The internal management structure of a club is governed by a constitution and bylaws. The members elect the officers and directors of the club. The officers establish policies by which the club will operate. Committees also play an important part in the club’s activities.

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The president presides at all official meetings and is a leader in policymaking. Committees play an important part in the club’s activities.

The basic level of competency required of a general manager or COO is management of club’s operations, which includes private club management, food and beverage, accounting and financial management, human and professional resources, building and facilities management, external and governmental influences, management, marketing, and sports and recreation (see Figure 10–1; page 243).

The second tier of the model is mastering the skills of asset management.

Today’s general manager or COO must be able to manage the physical property, the financial well-being, and the human resources of the club.

The third and final tier of the new model is preserving and fostering the culture of the club, which can be defined as the club’s traditions, history, governance, and vision.

Types of Clubs

Country Clubs Nearly all country clubs have one or more lounges and restaurants, and most have banquet facilities. Members and their guests enjoy these services and can be billed monthly. The banquet facilities are used for formal and informal parties, dinners, dances, weddings, and so on, by members and their personal guests Country clubs have two types of memberships—full and social. Full members are able to use all of the facilities at all times. Social members are able to attend only social facilities.

City Clubs City clubs are predominantly business oriented, although some have rules prohibiting the discussion of business and the reviewing of businessrelated documents in dining rooms. They vary in size, location, type of facility, and services offered. Some of the older, established clubs own their own buildings; others lease space. Clubs exist to cater to the wants and needs of members. Clubs fall in the following categories; professional, social, athletic, dining, university, military, yachting, fraternal, and proprietary.

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Professional clubs are for people in the same profession. Social clubs concentrate on serving the social needs of members who are from similar socioeconomic backgrounds. Athletic clubs provide an outlet for working out, dining, and meeting. Some have sleeping quarters.

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Dining clubs are usually located in large office buildings. University clubs are reserved for alumni. Military clubs cater to both noncommissioned officers (NCOs) and enlisted officers. Fraternal clubs include many special organizations such as the Veterans of Foreign Wars, Elks, and the Shriners.

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Proprietary clubs are operated on a for-profit basis. They are operated by corporations or individuals. People wanting to become members purchase a membership, not a share in the club.

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Sustainable Golf Course Management The golf course industry recognizes sustainability as it is referenced by the Environmental Protection Agency (EPA) and the United Nations, which indicates that it is “meeting the needs of the present without compromising the ability of future generations to meet their own needs.”

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Sustainable practices include the following; reducing energy during peak times, holding departments accountable for energy consumption, and recycling.

Golf course facilities are prime candidates for reducing or reusing waste: As landfill disposal costs rise, recycling becomes even more important.

Golf courses can improve their sustainability by improving grass and plant selection and by using well water and organic fertilization.

Noncommercial Recreation Noncommercial recreation includes voluntary organizations, campus, armed forces, and employee recreation, as well as recreation for special populations.

Voluntary Organizations Voluntary organizations are nongovernmental, nonprofit agencies, serving the public-at-large or selected elements with multiservice programs that often include a substantial element of recreational opportunities.

Examples include: Boys Scouts, Girl Scouts, YMCA, and YWCA. A multipurpose club has more exclusive recreation programs than a health club. Some clubs offer automatic bank tellers, laundry and dry cleaning services, and other services.

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Revenues come from membership fees, food and beverage sales, facility rentals, etc. Human resources account for 66 percent of expenses at most clubs.

Campus, Armed Forces, and Employee Recreation

Campus Recreation North America’s colleges and universities provide a major setting for organized leisure and recreational programs with services involving millions of participants each year. The programs include involvement by campus recreation offices, intramural departments, student unions, residence staffs, or other sponsors.

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The various recreational activities help in maintaining good morale on campus. Some use recreational activities such as sports or orchestras or theater companies as a means of gaining alumni support.

Armed Forces Recreation The Department of Defense has an official policy regarding the obligation of maintaining well-rounded morale, welfare, and recreational programs for the physical, social, and mental well-being of its personnel.

These services are provided under the auspices of the Morale, Welfare and Recreation Program (MWR). Recreation is seen as an important part of the employee benefit package for military personnel, along with the G.I. bill, medical service, commissaries, and exchanges.

Employee Recreation Businesses and industry have realized the importance of promoting employees’ efficiency. Experts have found that workers who spend time in constructive recreational activities have reduced absenteeism. Many leading corporations have recreation and wellness programs.

Recreation for People Who Have Special Needs Recreation for special populations involves professionals and organizations that have a responsibility for serving groups such as the mentally ill, mentally retarded, or the physically disabled.

The Special Olympics is an international program of physical fitness, sports training, and athletic competition for children and adults with mental disabilities. The program accommodates competitors at all ability levels.

The National Recreation and Parks Services, as well as state and local agencies, work closely with Special Olympics.

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Current Issues in Recreation, Wellness, and Leisure Changing nature of country clubs—the number of golfers is declining. Clubs need to find a way to attract new members. Some clubs are becoming more family friendly by adding pools, tennis and a fitness center.

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Technology meets attractions—people are excited to see how new technologies are being used in parks such as Virtual Reality and Augmented Reality.

National Parks—more than 300 million people visit the parks each year.

Park funding has declined so they are generating money from concessions and events and activities.

Trends include the following: Advancements in Rides and attractions, more fitness centers, reinvestment leading to increased competition, blurring the lines in product development for theme parks, custom VIP experiences, shopping entertainment parks, and national and state parks investing in infrastructure to become a destination for events.

III. Teaching Techniques/Classroom Exercises Note: The content of some of these exercises is such that they may also be used as essay questions.

Exercise One: Have students identify recreational facilities/locations in the area. Which are federal, state, and locally managed? What are the fees charged for public use at each? What services are provided?

Have students compare and contrast various facets, including funding, staffing, and seasons of operation.

Exercise Two: Send students on a “Club Scavenger Hunt.” Ask them to gather information from interviews with local businesspeople, club operators, and/or the library.

Exercise Three: Facilitate opportunities for students to complete a recreation-oriented community service project at a local service agency—for example, a craft activity at a nursing home or after-school program, coaching a local softball team, and/or volunteering at a Special Olympics event.

IV. Answers to Chapter 10 Review Questions: 1. Discuss the relationship between recreation, leisure, and wellness and the role they play in society today.

Recreation implies the use of time in a manner designed for the refreshment of the mind or body and allows people to have fun together.

Leisure is time free from work or time to do what you desire.

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Recreation and leisure play a major role in society today as more people focus on achieving balance in their life. This can take a variety of approaches from more flexible work schedules, spa days, or scheduled recreational activities in the workplace.

2. Identify three theme parks, how they began, and what they are known for, and be sure to include regional and national attractions.

Theme Park

Beginnings

Known For

Disney World/Disneyland

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Four major theme National parks and International o Magic Kingdom o Epcot o Disney’s Animal Kingdom o Disney’s Hollywood Studios

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Vision of Walt Disney Began with films in the 1920s Dreamed of a place to take his girls during the war years of the 1940s Disneyland opened in the 1950s

Regional or National

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Disney World opened after Walt Disney died in 1966

Universal Studios

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Provided guided tours of movie sets for over 40 years

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Theme parks around the world o Universal Orlando o Universal Hollywood o Universal Japan o Universal Singapore

National and International

SeaWorld Parks and Entertainment

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Dedicated to preserving marine life

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Dedication to preserving marine life and conservation efforts Active in research and rescue Theme parks o SeaWorld o Busch Gardens o Adventure Island

National

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o Water Country USA o Aquatica o Sesame Place o Discovery Cove Hershey’s

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Dollywood

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Founded in 1907 by • Milton Hershey as a leisure park for • employees 1908 added a merry • go round 1971 underwent major renovation to become a major theme park Originally the Rebel Railroad in 1961 with a Civil War theme 1970s name changed to Goldrush Junction and theme changed to Wild West 1986 Dolly Parton became co-owner of the theme park

• • •

Known for its chocolate connection Offers one-time admission fee More than 60 rides and attractions

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Location in the Great Regional Smokey Mountains Features rides and entertainment Known for highlighting the culture of the area with crafts such as blacksmiths, glassblowing, and wood carving.

Legoland

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1st Legoland opened in Denmark in 1968

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Lego themed rides and attractions

Regional and International

Gatorland

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Started shortly after • WWII by Owen Godwin • Attraction opened in 1949 as the Florida Wildlife • Institute 1954 Name changed to Gatorland

Close up views of alligators Offers reptilian shows, petting zoo, swamp walk Privately owned

Regional

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3. Describe why a tourist may choose to visit an attraction such as a performance, museum, or animal attraction.

A tourist may decide to visit an attraction such as a zoo, aquarium, museum because they are interested in the animals or museum pieces on display. A tourist may visit a performance because of their interest in the nature of the performance or a particular artist.

4. Compare the management structure of a private club to a hotel, highlighting the similarities and differences between each.

Type

Similarities

Differences

Private Club

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GM must work with all leadership roles GM ultimately responsible for the success of the organization GM oversees all departments

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Hotel

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Governed by articles of incorporation Officers elected to positions GM works with President of the Board President of the Board is the leader in policymaking Committee’s do much of the work GM responsible to shareholders or owner GM takes lead in making decisions Leadership roles not elected Department heads and teams do the work

5. Describe the importance of national parks and the role played by the national park management professionals in maintaining these locations.

National Parks are important both in providing recreation and leisure opportunities for the masses but also for their role in understanding and preserving the environment. The National Park Service oversees millions of acres of lands and serves over 300 million visitors annually, ensuring that the ecosystem is protected.

National Park Management professionals maintain these locations through a variety of positions and associated duties. Park Rangers act as law enforcement for the parks and operate campgrounds, perform search and rescue, and provide emergency medical services. Resource Educators provide a range of programs for all ages. Resource Management is responsible for the ongoing health of the natural and cultural resources. Facility Management is responsible for the infrastructure. All of these positions work together to provide an exceptional experience for park visitors.

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6. Describe the characteristics of voluntary recreational organizations and the populations they serve.

Voluntary recreational organizations serve the general public and are designed to provide a range of recreational activities for all ages. Some of the best known of these organizations are the Boy Scouts, Girl Scouts, YMCA, and YWCA. They serve populations ranging from school age children to adults.

V. Mini-Case Discussion Question Answer Case: The Country Club Restaurant Mistry: Question: If you were the food and beverage director at a large country club, what are two practices you would implement that would help control labor costs while still providing members with the quality of service they expect?

Feedback: Answers will vary. However, practices that could be implemented to control labor costs while still providing quality service include: 1. Using select items as a base for multiple dishes in various restaurants to minimize prep time.

2. Staggering scheduling with fewer employees on the schedule during non-peak hours.

3. Developing a rotating menu.

4. Creating menus that highlight seasonal items that can be prepped and used in multiple locations.

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Chapter Eleven Gaming Entertainment I. Chapter Objectives After reading and studying this chapter, the student should be able to do the following: 1. Describe the development of the gaming entertainment industry.

2. Explain unique aspects of the casino resort business.

3. Summarize the different positions within the gaming industry.

II. Key Teaching Elements/Chapter Outline/Lecture Suggestions Page Object.

Gaming Entertainment While the gaming entertainment industry is a global industry, there are five types of legal gambling in the Unites States. This includes charitable gaming, commercial casinos, lotteries, Native American gaming, and parimutuel gaming. Some form of legal gaming exists in 48 of the 50 states, with commercial casinos representing the largest part of the domestic gaming market. While gaming revenues vary by the state, the industry contributes billions of dollars in tax revenue to these local governments on an annual basis. The gaming entertainment industry has seen development not only in the United States, but also internationally, particularly in the Asian destinations of Macau and Singapore. The size and scope of the global gaming industry are expected to reach $130 billion dollars in 2019.

Gambling is playing a game of risk for the thrill of the action and the chance of making money. The gaming industry has exploded from just two jurisdictions in 1976 to some form of legal gambling in 48 states.

The competitive nature of casino business has forced the creation of a bigger, better product to meet the needs of its guests. As Steve Wynn, Chairman of the Board and Chief Executive Officer (CEO) of Wynn Resorts, Limited explains, the casino floor is “a thing which people pass on their way to visit the things that really matter to them.” This product, gaming entertainment, has evolved over the past decade.

Gaming entertainment serves a customer base of social gamblers, customers who play a game of risk as a form of entertainment and social activity, thus combining gambling with other activities during their visits.

Social gamblers, by this definition, are interested in many gaming entertainment amenities and take part in many diverse activities during a stay. Gaming entertainment refers to the casino gaming business and all its aspects, including hotel operations, entertainment offerings, retail shopping, recreational activities, and other types of operations, in addition to wagering on the gaming floor.

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Gaming entertainment is the business of hospitality and entertainment with its core strength in casino gaming. According to this definition, a gaming entertainment business always has a casino floor area that offers various games of risk that serve as the focal point for marketing to and attracting guests. Next in importance to the guests are high-quality food and beverage operations.

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Gaming entertainment offers a place where guests can gamble (the casino floor), eat and drink, sleep and relax, and maybe do some business. But there is much more: the entertainment ranges from live performances by the most famous entertainers to production shows that use high-tech wizardry. Gaming entertainment includes theme parks and thrill rides, museums, and cultural centers. The most popular gaming entertainment destinations are designed around a central theme that includes the hotel and the casino operations.

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Nongaming revenue comes from sources that are not related to wagering on the casino floor. As the gaming entertainment concept continues to emphasize activities other than gambling, nongaming revenue is increasing in importance. This is what gaming entertainment is truly about: hospitality entertainment based on the attraction of casino.

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Casinos are also operated by Native American tribes on their reservations and tribal lands. These are land-based casinos and are often as complex as any operations in Las Vegas. Gaming entertainment is also popular on cruise ships.

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There is a strong support for gaming in the marketplace as an entertainment activity. Patrons are required to be 21 years of age to gamble in the United States, and research shows that more than a third of Americans have visited a casino in the last 12 months, and 32 percent of them have actually gambled in those 12 months. According to the market research, more than 85 percent of U.S. adults say casino entertainment is acceptable for themselves or others. Eighty-six percent of Americans report having gambled at least once.

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Commercial casinos account for 36 percent of gaming revenue. Indian casinos and state lotteries tie for second place at 26 percent. The demographic makeup of the typical gaming entertainment guest has remained consistent during the past several years. In comparison to the average American, casino players tend to have higher levels of income and education and are more likely to hold white collar jobs.

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Historical Review of Gaming Entertainment

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The precise origin of gambling is still unknown today. However, according to Chinese records, the first official account of the practice dates back to as far as 2300 B.C.E. The Romans were also gamblers. They placed bets on chariot races, cockfights, and on dice throwing.

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won and lost every night. Las Vegas is all of that and much more. This city represents the American dream. Since the state of Nevada legalized gambling in 1931, Las Vegas has been transformed into one of the most elaborate cities in the world and one of the hottest vacation spots.

The gaming entertainment business in the United States has its roots in Las Vegas. From the early 1940s until 1976, Nevada, and predominantly Las Vegas, had a monopoly on the gaming entertainment business. Casinos had no hotel rooms, entertainment, or other amenities. The hotels that existed were just places to sleep when guests were not on the casino floor.

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Las Vegas is rich with tales of Benjamin Hymen Siegelbaum, better known as Bugsy Siegel. After developing criminal associations his entire life, Siegel moved on to build the well-known Flamingo Hotel and Casino in Las Vegas.

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During the 1970s, Atlantic City was in an impoverished state, with high rates of crime and poverty. In an effort to revitalize the city, New Jersey voters, in 1976, approved casino gambling in Atlantic City.iii Later casino gambling was legalized in the state of New Jersey by the Casino Control Act. The Casino Control Act initiated a number of fees and taxes specific to the casino hotel business that would provide revenues to support regulatory costs, fund social services for the disabled and the elderly through the state, and provide investment funds for the redevelopment of Atlantic City.

Native American Gaming In California v. Cabazon Band of Mission Indians, et al. (1987), the Supreme Court decided 6 to 3 that once a state has legalized any form of gambling, the Native Americans in that state have the right to offer and self-regulate the same games without government restrictions. Congress, which some observers say was alarmed by the prospect of losing control over tribal gaming, responded to these court decisions by passing the Indian Gaming Regulatory Act of 1988 (IGRA). The IGRA provides a framework by which games are conducted in a way that protects both tribes and the general public.

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There are over 400 gaming facilities on reservation lands in 28 states, and Native American gaming has been one of the fastest growing sectors of gaming in the United States. Foxwoods Resort Casino in Ledyard, Connecticut, operated by the Mashantucket Pequot Indian Reservation, is one of the largest casinos in the United States with more than 6,300 slot machines and 380 table games.

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Wikipedia, Atlantic City, New Jersey, http://en.wikipedia.org. Search for “Atlantic City” (accessed on May 1, 2015).

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The Casino Resort: A Hospitality Buffet Fifteen of the 25 largest hotels in the world are casino resorts on the Las Vegas Strip. The size and scope of the global gaming industry is expected to reach $157 billion dollars in 2016.

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Today, many casino resort presidents and key executives have come up through the lodging or food and beverage side of operations; a solid understanding of what’s happening in the casino—and how casino guests are different from other hospitality patrons—makes advancing through the ranks that much easier.

What Is Gambling?

In its broadest definition, gambling is the act of placing stakes on an unknown outcome with the possibility of securing a gain if the bettor guesses correctly. To be considered gambling, an act must have three elements: something wagered (the bet), a randomizing event (e.g., the spin of slot reels or the flip of a card), and a payoff.

Some of the best-known games are: poker, blackjack, and baccarat are played with cards, and craps with dice. Slot machines, which were originally mechanical (but now are electronic) devices, award prizes based on the random stopping of reels, are also popular, and are typically the most-played games in most casinos today.

There are two basic categories of gambling: social gambling and mercantile (or commercial) gambling. Social gambling is conducted among individuals who bet against each other; mathematically, each player has the same chance of winning.

In mercantile or commercial gambling, players bet against “the house,” a professional gambler or an organization that accepts wagers from the general public. Mercantile games have a mathematical advantage for the casino, or a house edge that lets professionals profit from them while still offering fair games.

The house edge is what makes casinos possible; without it, the only way to offer games of chance to the public that can generate an income would be to cheat. The house edge allows casinos to offer their customers honest games, fairly dealt, and still remain in business.

The handle is the total amount of money bet at a game. The win is the handle minus the money paid out on winning bets—essentially, what the casino keeps. The hold percentage is the percentage of the total handle that is retained as win.

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As a manager of a casino resort, it is important that you have an appreciation of the nature of volatility. Just because the casino department is reporting a net loss for a shift does not necessarily mean that the department is inefficient or incompetent; it may just be an expression of volatility. Over time, gaming wins will tend toward their historical average.

Comps: A Usual Part of an Unusual Business Comps are complimentary goods and services offered to casino patrons in order to attract their business. The value of comps varies; generally speaking, higher-producing players are given higher-value comps.

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Casinos, with thousands of guests on any given day, rely on customer loyalty programs to track patron play. Patrons who wish to receive comps and other offers join the casino’s player loyalty club.

Casinos use the information they gain about a player’s gambling patterns to offer him or her comps, based both on theoretical wins by the player and his or her expected levels of play.

Loyalty programs are an essential part of casino marketing; many guests base the money they spend gaming around where they receive the best comps, so good casino managers know they must send out good offers to qualified players. Recently, some casinos have begun tracking and rewarding nongaming spending as well, a reflection of the broadening of the casino resort revenue stream.

Types of Casino Operations At one end of the spectrum is the Nevada-style gaming tavern, which is a typical bar and restaurant that has less than sixteen electronic gaming devices. At the other is a fully-developed casino resort, with (on average) a 100,000-square-foot casino featuring thousands of slot machines and dozens of table games, approximately 3,000 hotel rooms, at least a dozen bars and restaurants, meeting and convention facilities, entertainment venues, retail shopping, and pool and spa facilities.

Stand-alone casinos are not very common in the United States or elsewhere in the world. Where they are found, they usually consist of only slot machines; this type operation might be called a slot parlor.

In the United States, casinos on Indian reservation can take many forms, from bingo parlors in prefabricated buildings to fully functional casino resorts with lodging, dining, and entertainment that are indistinguishable from resorts on the Las Vegas Strip.

Some states allow gambling only on riverboats, other states allow slot machines at racetracks (called “racinos”), finally, many cruise lines have casinos as part of the amenities for guests on their ships.

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Components of Casino Resorts The best example of the modern casino resort can be found on the Las Vegas Strip. These destination resorts are centered on casinos that have several types of games available; slot machines, table games, race and sports book, poker rooms and live keno games.

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In most parts of the United States, slot machines produce the bulk of the revenue; on the Las Vegas Strip, it is closer to a 50/50 split (see Figure 11–1). Among table games, blackjack is most popular nationally, while on the Strip baccarat has recently become a favorite. In Macau casinos, nearly all revenue comes from high-stakes baccarat; slot machines are negligible.

Casino resorts also include the following components: lodging, F&B, entertainment venues, retail shopping, convention facilities, nightclubs, pools and spas.

Evolution of Gambling and Casinos Gambling is among the oldest of human behaviors; archaeological evidence of gambling stretches back into prehistory, and purpose-built dice have been discovered at sites dating back to 7,000 years before the present. Gambling developed in nearly every ancient civilization of consequence and has been part of Western life since the days of Ancient Greece.

Casino resorts, as they are currently operated, are much younger, dating back only to 1941, though the casino industry has its antecedents in several earlier developments, both legal and illegal.

Legal public gambling in casinos dates back to 1638, when the Grand Council of Venice awarded a franchise or a single legal casino in that city.

By 1872, however, casino-style gambling had been banned in all European countries save the tiny Mediterranean enclave of Monaco, whose Monte Carlo would grow wealthy on a decades-long monopoly.

In the United States, public gambling at cards and dice was legal intermittently during the nineteenth century in several states, including Louisiana, California, and Nevada, but by 1910 this kind of gambling— and playing at slot machines—had been outlawed everywhere in the United States.

Yet the tide soon turned toward legalization, at least in Nevada. When legislators authorized “wide open” commercial gambling there in 1931, the state was in the throes of the Great Depression. By allowing taverns and hotels to conduct games of chance, they hoped to increase tourism slightly.

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The real creation of the modern casino came in 1941, with the opening of the El Rancho Vegas, the first casino resort on what would become the Las Vegas Strip.

These casinos were superior to gambling halls because, with rooms and a full range of amenities, they offered a diverse set of options for travelers—gamblers and non-gamblers alike.

By the mid-1950s, the casino resorts of the Las Vegas Strip had changed Nevada. Now numbering more than a dozen, they became an integral part of the state’s economy.

The industry grew, and with the entrance of publicly traded corporations in the 1970s, it became more integrated into the national economic mainstream.

As a result, by 2000, Las Vegas Strip casinos accounted for well over half of all state gambling revenues.

In 1976, New Jersey voters legalized casino gambling in Atlantic City by referendum, and two years later the first legal casino on the East Coast opened.

Riverboat gaming, which permitted games of chance on boats, debuted in Iowa and Illinois in 1991, and soon spread throughout the Midwest and South, with a robust presence in Mississippi.

In the 1987 Cabazon decision, the Supreme Court affirmed that if a state allowed betting on bingo or card games, Indian tribes could offer these games without limits imposed by state regulators. The following year, the Indian Gaming Regulatory Act codified the rules under which Indian tribes could open “Las Vegas-style” casinos with slot machines and bank games: To do so, the tribes needed to sign a compact, or treaty, with the state in whose land the reservation sat.

Over 200 tribes in more than thirty states have some form of gambling operation, with combined annual revenues of more than $25 billion.

Working in a Casino Resort Hotel Operations The career opportunities in gaming entertainment hotel operations are much like the career opportunities in the full-service hotel industry, with the exception that food and beverage can be a division of its own and not part of hotel operations.

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Food and Beverage Operations Gaming entertainment has a foundation of high-quality food and beverage service in a wide variety of styles and concepts. Some of the best foodservice operations in the hospitality industry are found in gaming entertainment operations.

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Casino Operations

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Casino operations jobs fall into five functional areas; gaming operations, casino service, marketing, human resources, and finance and administration.

Retail Operations The increased emphasis on nongaming sources of revenues in gaming entertainment demands an expertise in all phases of retail operations, from store design and layout to product selection, merchandising, and sales control.

Entertainment Operations Because of the increased competition, gaming entertainment companies are creating bigger and better production shows to turn their properties into destination attractions. Some production shows have climbed in the millions of dollars range and require professional entertainment staffs to produce and manage them.

Casino management is hierarchical. At the top of the management structure, a property president or general manager is in charge of day-today operations. Internal audit and surveillance departments report directly to the President. Below the casino president are the vice presidents (sometimes called directors) of different divisions of the casino. Within the casino, the vice president of gaming operations oversees a casino manager.

The Mirage Effect Since the 1990s rooms have become a major revenue center.

The rooms aren’t the only part of the Strip that’s become a money generator. In 1992, Wolfgang Puck opened Spago in the Forum Shops at Caesars Palace … leading to an explosion of both gourmet-dining opportunities for patrons and an increase in restaurant revenues for casinos.

Headliner concerts and installed shows (Cirque du Soleil alone has five) raised their production values and their prices. And with the growth of fullfledged shopping malls inside casinos, ranging from the Canal Shops at the Venetian to the Miracle Mile at Planet Hollywood, retail spending has climbed … as well as the ascendancy of nightclubs, ultra-lounges, and day clubs.

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Sustainability in Gaming Entertainment Gaming entertainment companies continue adapting their operations and practices to fit “green” standards. Many well-known companies in gaming entertainment are leading the way to establish sustainable initiatives as the standard practice in the industry.

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Caesar’s Entertainment Corporation has undertaken a sustainable initiative in several areas of operation, including energy, waste and water conservation, as well as climate control.

Hospitality Green LLC, an environmental consulting firm has taken on the task of creating a model for “green” standards that will set precedent for which existing and future initiatives will be measured.

Career Information The growth of the gaming industry has resulted in a variety of new job openings. People choose to work in the industry because it is known to place people first, whether they are employees or customers.

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Most careers include impressive benefits packages and offer many career advancement opportunities.

Although it may appear as if many gaming jobs have very specific qualifications, it is important not to focus too narrowly on one sector.

Knowledge of all areas of the industry is essential for advancement.

To get a job in the gaming industry, one must have very thorough knowledge of the legal, regulatory, and compliance issues related to daily operations in the casino.

Current Issues in the Gaming Entertainment Industry Sports betting—States outside of Nevada will likely add sports betting to their states gaming industry.

Innovation for growth—Casinos are using technology to improve the guest experience. Casinos are constantly trying to get new gamblers and retain the ones they have.

Safety and security—After the Las Vegas tragedy, safety and security of gaming guests is of paramount importance.

Gaming entertainment is depending less on casino revenue and more on rooms, F&B, retail, and entertainment. Other trends include; an emphasis on loyalty player smartcards, universal gaming machines, a new generation of gamblers (including Millennials and Generation X), Candid Sky Camera technology, and more emerging markets around the world.

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III. Teaching Techniques/Classroom Exercises Note: The content of some of these exercises is such that they may also be used as essay questions.

Exercise One: Have students write to various casinos for information. Have students study the packages they receive and determine which markets are primarily being targeted. Have students compare the quality, information, and aesthetics of each brochure they receive.

Exercise Two: Ask students to consider the ethical aspects of the gaming entertainment industry. Have students prepare arguments both pro and con regarding the development of gaming entertainment.

Students should strengthen their positions through articles and Internet research.

Exercise Three: Investigate the impact of gaming entertainment within the community. Students can research the local impact or investigate the impact on another community. Consider how such development may change the nature of the community, affect the environment, contribute to the economy, and/or impact tourism. Have students examine all factors and write their own case study and solution.

Exercise Four: Invite a guest speaker from a local gaming entertainment operation to your class to discuss the unique aspects of this segment of the industry. If there is not a gaming entertainment close enough to make this exercise feasible, consider utilizing graduates from your program who currently work within such operations as a resource.

IV. Answers to Chapter 11 Review Questions 1. In the United States, public gambling at cards and dice was legal intermittently during the nineteenth century in several states, including Louisiana, California, and Nevada, but by 1910 this kind of gambling—and playing at slot machines—had been outlawed everywhere in the United States. When legislators authorized “wide open” commercial gambling there in 1931, the state was in the throes of the Great Depression. By allowing taverns and hotels to conduct games of chance, they hoped to increase tourism slightly.

The real creation of the modern casino came in 1941, with the opening of the El Rancho Vegas, the first casino resort on what would become the Las Vegas Strip. As a spa-like, selfcontained destination with fine dining, entertainment, and gambling, the El Rancho Vegas appealed to casual tourists in a way that the smoky downtown gambling halls did not. Within a decade, a half-dozen other resorts joined the El Rancho Vegas, and the Las Vegas Strip was becoming a force. Others soon became interested in the potential of casino resorts for economic revitalization. In 1976, New Jersey voters legalized casino gambling in Atlantic City by referendum, and two years later the first legal casino on the East Coast opened.

In the 1987 Cabazon decision, the Supreme Court affirmed that if a state allowed betting on bingo or card games, Indian tribes could offer these games without limits imposed by state regulators. The following year, the Indian Gaming Regulatory Act codified the rules under which Indian tribes could open “Las Vegas-style” casinos with slot machines and bank 138 ..

games. As of 2010, over 200 tribes in more than thirty states have some form of gambling operation, with combined annual revenues of more than $25 billion.

2. The IGRA of 1988 provides a framework by which games are conducted in a way that protects both tribes and the general public. The objectives of the act are to promote tribal economic development, self-sufficiency and strong tribal governments. Also, to shield them from organized crime. And to establish a regulatory authority.

3. A casino resort obviously differs from others in that they have gaming entertainment. Many other resorts are located in areas of beaches or natural beauty. We think of the Las Vegas strip where there are several huge resorts but no beaches. However, the casino resort has some unique challenges in the sheer number of guests on property plus the gaming aspect, and security.

4. Hotel operations in a gaming entertainment business are different from hotel operations in a non-gaming environment in that the size and scope of gaming entertainment is much greater.

Gaming entertainment operations are relatively labor intensive; thus, they create more direct jobs than those in other industries. Also, casino entertainment is one of the most tightly regulated industries in the United States. Due to large competition, gaming entertainment companies are creating bigger and better production shows and casinos to turn their properties into destination attractions. Unlike the non-gaming hotel operations, major sources of revenue are derived from entertainment rather than room revenue.

Hotel operations in a nongaming hotel focus on the guest accommodation, food and beverage preparation and service and related services such as conference and banqueting. A casino hotel focuses on these topics plus the gaming entertainment and how to attract and retain guests. Gaming entertainment refers to the casino gaming business and all its aspects, including hotel operations, entertainment offerings, retail shopping, recreational activities, and other types of operations in addition to wagering on the gaming floor. The millions of neon lights, round-the-clock entertainment, elaborate shows, outrageous performers, bustling casinos, and the chance to win millions attract people from all over the world.

V. Mini-Case Discussion Question Answer Case: VIP Service marketing and differentiation of customer base are two critical aspects of hotel operations in gaming entertainment. In a non-gaming hotel, the revenue generating potential of any guest is limited to hotel related revenue, e.g., rooms and food and beverage. Most guests spend within a relatively narrow range for these services. However, in the gaming environment, any particular guest may represent a significant amount of gaming revenue, sometimes in the thousands or hundreds of thousands of dollars. Systems must be in place to identify premium players at any point in their encounter with the property. Some common systems to ensure that premium players receive a high level of attention and service include the following: 1. Assigning to the player a specific casino marketing host who is on call to the player at any time. There is no need to contact anyone else on the property to make arrangements for the stay. The host can handle all arrangements for the player, from room reservations, to dining room reservations, to show tickets, to any other special amenities the player may require.

2. The design of a separate hotel check-in area for premium players, either a separate section of the hotel’s registration desk, or a separate room with its own registration desk. Staff is trained specifically to handle the demands of the premium player and to familiarize themselves with the names and requirements of this market.

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3. The creation of a guest history record includes the “theoretical win” per trip of the player.

This is the newest and most sophisticated of gaming entertainment tracking systems. The casino operations staff has always followed the wagering habits of specific guests and “rate” the guests’ relative contribution to gaming revenue. In recent years, this information has been computerized and typically results in a figure termed “theoretical win,” or the number of dollars in gaming revenue that can be expected to be generated by the guest’s wagering in the casino. However, this information was shared by casino staff only and was not available to hotel operations staff, such as the front desk clerks. Newer systems make this information available to reservation staff, front desk staff, and even food and beverage staff in order to ensure that highly rated players are given the best quality service that the property can offer.

Harrah’s “Total Gold” program is an example of a corporate-wide customer database that can be used to differentiate guests based on their casino play, in addition to hotel and food and beverage.

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Chapter Twelve Meetings, Conventions, and Expositions I. Chapter Objectives: After reading and studying this chapter, the students should be able to do the following: 1. Describe the meetings, conventions, and expositions industry including key players.

2. Summarize the different types of meetings, conventions, and expositions.

3. Describe the process of planning a meeting.

4. List the various venues for meetings, conventions, and expositions.

II. Key Teaching Elements/Chapter Outline/Lecture Suggestions The Meetings, Conventions, and Expositions Industry

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People have gathered to attend meetings, conventions, and expositions since the ancient times, mainly for social, sporting, political, or religious purposes.

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Associations go back many centuries to the Middle-Ages and before. The guilds in Europe were created during the Middle-Ages to secure proper wages and maintain work standards. Associations began in the United States at the beginning of the eighteenth century, when Rhode Island candle makers organized themselves.

The Meetings, Incentive Travel, Conventions, and Exhibitions (MICE) segment of the industry statistics point to the fact that the average MICE tourist spends about twice the amount of money that other tourists spend.

Size and Scope of the Industry According to the American Society of Association Executives (ASAE), there are about 90,908 trade and professional associations. The association business is big business. Associations spend billions holding thousands of meetings and conventions that attract millions of attendees.

The hospitality and tourism industry itself consists of a number of associations, including the following: • • • • • • • •

The American Hotel and Lodging Association The National Restaurant Association The American Culinary Federation Destination Marketing Association International Hotel Sales and Marketing Association International Association of Meeting Professionals Club Managers Association of America Professional Convention Management Association 141 ..

Associations are the main independent political force for industries like hospitality, offering the following benefits: Governmental/political voice • Marketing avenues Education • Member services • • Networking Associations have an elected board of directors and an elected president, vice president, treasurer, and secretary.

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Key Players in the Industry Many major and some smaller cities have convention centers with nearby hotels and restaurants.

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The major players in the convention industry are convention and visitors bureaus (CVBs), corporations, associations, meeting planners and their clients, convention centers, specialized services, and exhibitions.

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The CVB represents local businesses by acting as the sales team for the city with the outcome of increasing revenues for the city’s tourist industry.

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A number of bureaus have offices or representatives in these cities or a sales team who will make follow-up visits to the leads generated at trade shows. The CVB sales manager will invite the meeting, convention, or exposition organizer to make a familiarization (FAM) trip to do a site inspection.

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Business and Association Conventions and Meetings Publicly held corporations are required by law to have an annual shareholders’ meeting. Most also have sales meetings, incentive trips (all-expenses paid trips for groups of employees that meet or exceed goals set for them), product launches, focus groups, executive retreats, seminars and training sessions, and management meetings.

When a corporation decides to hold a gathering, it determines what the budget will be, where the gathering will be held, and who will attend.

In the United States, almost 1.3 million corporate events are held annually, with a total attendance of 84 million. The total direct spending on these events is over $30 billion per year, with the average corporate event generating almost $550,000.

Associations represent the interests of their members and gather at the state, regional, national, and international levels for professional industry–related reasons; for annual congresses, conventions, and conferences; and for scientific, educational, and training meetings.

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Conventions charge attendees a registration fee and charge vendors for booth space. Association conventions and meetings attract crowds ranging from hundreds to over 100,000.

The larger associations book their dates several years ahead, some in the same place at the same time of year; others move around the country.

Destination Management Companies A Destination Management Company (DMC) is a service organization within the visitor industry that offers a host of programs and services to meet clients’ needs. Initially, a destination management sales manager concentrates on selling the destination to meeting planners and performance improvement companies (incentive houses).

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DMCs work closely with hotels; sometimes DMCs book rooms, and other times hotels request the DMCs know-how on organizing theme parties.

A DMC does everything, including airport greetings, transportation to the hotel, VIP check-in, theme parties, sponsoring programs, organizing competitive sports events, and so on, depending on budget.

Meeting Planners Meeting planners may be independent contractors who contract out their services to both associations and corporations as the need arises or they may be full time employees of corporations or associations. About 212,000 full and part-time meeting planners work in the United States.

The professional meeting planner not only makes hotel and meeting bookings but also plans the meeting down to the last minute.

The meeting planner’s role varies from meeting to meeting but may include some or all of the following: Premeeting activities • • • • • • • • • • • • •

Estimate attendance Plan meeting agenda Establish meeting objectives Set meeting budget Select city location and hotel/convention site Negotiate contracts Plan exhibition Prepare exhibitor correspondence and packet Create marketing plan Plan travel to and from site Arrange ground transportation Organize shipping Organize audiovisual needs

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On-Site activities Conduct pre-event briefings • Prepare VIP plan • Facilitate people movement • • Approve expenditures Post-Meeting Activities Debrief • Evaluate • Give recognition and appreciation • Plan for next year •

Service Contractors Service contractors, exposition service contractors, general contractors, and decorators are all terms that have at one time or another referred to the individual responsible for providing all of the services needed to run the facilities for a trade show.

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Meetings are conferences, workshops, seminars, or other events designed to bring people together for the purpose of exchanging information.

Meetings can take any one of the following forms: clinics, forums, seminars, symposiums, or workshops.

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The reason for having a meeting can range from the presentation of a new sales plan to a total quality management workshop. The purpose of meetings is to affect behavior.

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Just as a meeting planner is able to multitask and satisfy all the demands in meeting planning, a general exposition contractor must be multitalented and equipped to serve all exhibit requirements and creative ideas.

The service contractor is hired by the exposition show manager or association meeting planner. The service contractor is a part of the facilities management team, and, to use the facility, the sponsor must use its service contractor.

Types of Meetings, Conventions, and Expositions Meetings

Meetings are set up according to the wishes of the client. The three main types of meeting setups are theater style, classroom style, and boardroom style.

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Association Meetings

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Every year there are thousands of association meetings that spend millions of dollars sponsoring many types of meetings, including regional, special interest, education, and board meetings.

The things that top the list of what an association meeting planner looks for when choosing a meeting destination include the availability of hotels and facilities, ease of transportation, distance from attendees, transportation costs, and food and beverage.

Conventions and Expositions Conventions are generally larger meetings with some form of exposition or trade show included. A number of associations have one or more conventions per year. These conventions raise a large part of the association’s budget.

Conventions are not always held in convention centers; in fact, the majority are held in large hotels over a three- to five-day period.

Function space is allocated for registration, the convention, expositions, meals, and so on.

Expositions are events that bring together sellers of products and services at a location (usually a convention center) where they can show their products and services to a group of attendees at a convention or trade show.

Exhibitors are an essential component of the industry because they pay to exhibit their products to the attendees.

Types of Associations An association is an organized body that exhibits some variety of volunteer leadership structure, which may employ an activity, or purpose that they share in common. The association is generally organized to promote and enhance that common interest, activity, or purpose.

The association industry is significant in many respects—but it’s the big spender when it comes to conventions and meetings.

Historical Associations Today’s associations find their roots in historical times. Ancient Roman and Asian craftsmen formed associations for the betterment of their trade. The Middle Ages found associations in the form of guilds, which were created to ensure proper wages were received and to maintain work standards.

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Types of Historical Associations Trade Association is an industry trade group that is generally a public relations organization founded and funded by corporations that operate in a specific industry.

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Professional Association is a professional body or organization, usually non-profit that exists to further a particular profession, to protect both the public interest and the interests of professionals.

Medical and Scientific Associations are professional organization for medical and scientific professionals. They are often based on their specific specialties and are usually national.

Religious Organizations include those groups of individuals that are part of churches, mosques, synagogues, and other spiritual or religious congregations.

Government Organizations can range from federal, state, and local.

Other Types of Meetings Some of the types of meetings are annual meetings that are held by private or public companies, board and committee meetings, fund-raisers, and professional and technical meetings.

Annual meetings are meetings that are generally held every year by corporations or associations to inform their members of previous and future activities.

Board Meetings, Committee Meetings, Seminars and Workshops, Professional and Technical Meetings—board meetings for corporations must be held annually, and most corporations hold meetings monthly or four times a year. Committee meetings are generally held at the place of business and only occasionally are held in hotels. Seminars are frequently held in hotels, as are workshops and technical meetings.

Corporate Meetings, Conventions, and Expositions—borporations in various industries hold lots of meetings mostly for reasons of educating, training, decision making, research, sales, team building, the introduction of a new product, organization or reorganization, problem solving, and strategic planning.

SMERF—many participants in meetings are organized by either an association, a corporation, or social, military, educational, religious, and fraternal groups (SMERF). Often, these groups are price conscious, because of the fact that the majority of the functions sponsored by these organizations are paid for by the individual.

Incentive Meetings—the incentive market of MICE continues to experience rapid growth as meeting planners and travel agents organize incentive travel programs for corporate employees to reward them for

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reaching specific targets. Incentive trips generally vary from three to six days in length and can range from a moderate trip to an extremely lavish vacation for the employee and his or her partner.

Meeting Planning Meeting planning includes not only the planning but also the successful holding of the meeting and the post-meeting evaluations. As the following sections discuss, there are a number of topics and lots of details to consider.

Before a meeting planner can start planning a meeting, a needs analysis is done to determine the purpose and desired outcome of a meeting. The key to a productive meeting is a meeting agenda which provides the framework for making meeting objectives. The meeting’s objectives provide the framework from which the meeting planner will set the budget, select the site and facility, and plan the overall meeting or convention.

Setting the budget for the meeting is more successful if the meeting planner is involved in the budget planning throughout and before making a finalized decision on how much to spend in each area. Income for a meeting, convention, or exposition comes from grants or contributions, event sponsor contributions, registration fees, exhibitor fees, company or organization sponsoring, advertising, and the sale of educational materials. Expenses for a meeting are extensive.

No matter how large or small a meeting, it is essential that clear meeting specifications are developed in the form of a written request for proposal/quote (RFQ), rather than contacting hotels by telephone to get a quote. Many larger hotels and convention centers now have online submission forms available.

Several factors are evaluated when selecting a meeting site, including location and level of service, accessibility, hotel room availability, conference room availability, price, city, restaurant service and quality, personal safety, and local attractions.

During the site inspection, the meeting planner is shown all facets of the hotel, including the meeting rooms, guest sleeping rooms, the food and beverage outlets, and any special facility that may interest the planner or the client.

The meeting planner has several critical interactions with hotels, including Negotiation with the Convention Center or Hotel for room blocks and rates.

The most important interaction is typically with the catering/banquet/conference department associates, especially the services manager, maître d’ and captains.

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signed by the planner, the organization, and the hotel or convention center. The contract is a legal document that binds two or more parties.

The components include: An offer, consideration (payment), and acceptance.

Contracts should include clauses on “attrition and performance,” meaning that the contract has a clause to protect the hotel or convention facility in the event that the organizer’s numbers drop below an acceptable level.

The performance part of the clause means that a certain amount of food and beverage revenue will be charged for regardless of whether it is consumed.

Organizing and Preconference Meetings—The average lead time required for organizing a small meeting is about three to six months; larger meetings and conferences take much longer and are booked years in advance Conference Event Order—A conference event order has all the information necessary for all department employees to be able to refer to for details of the setup (times and layout) and the conference itself (arrival, meal times and what food and beverages are to be served, and the cost of items so that the billing can be done).

A Post-event Meeting is held to evaluate the event—what went well and what should be improved for next time.

Venues for Meetings, Conventions, and Expositions Most of the time, meetings and functions are held in hotels, convention centers, city centers, conference centers, universities, corporate offices, or resorts, but more and more, meetings are housed in unique venues such as cruise ships and historical sites.

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City Centers

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City centers are good venues for some conferences because they are convenient to reach by air and ground transportation. There is plenty of action in a major city center; attractions range from cultural to scenic beauty.

Convention Centers Convention centers throughout the world compete to host the largest exhibitions, which can be responsible for adding several million dollars in revenue to the local economy.

Usually, convention centers are corporations owned by county, city, or state governments and are operated by a board of appointed representatives.

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Convention centers have a variety of expositions and meeting rooms to accommodate both large and small events. The centers generate revenue from the rental of space, which frequently is divided into booths (one booth is about 100 square feet). Large exhibits may take several booths’ space. Additional revenue is generated by the sale of food and beverages, concession stand rentals, and vending machines.

In addition to the mega-convention centers, a number of prominent centers also contribute to the local, state, and national economies.

Conference Centers A conference center is a specially designed learning environment dedicated to hosting and supporting small- to medium-sized meetings, typically between twenty and fifty people. The nature of a conference meeting is to promote a distraction-free learning environment.

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Hotels and Resorts Hotels and resorts offer a variety of locations from city center to destination resorts. Many hotels have ballrooms and other meeting rooms designed to accommodate groups of various sizes.

Cruise Ships Meeting in a nontraditional facility can provide a unique and memorable experience for the meeting attendee.

A cruise ship meeting is a uniquely different meeting setting and offers a number of advantages to the attendees such as discounts, complimentary meals, less outside distraction while at sea, entertainment, and visiting more than one destination while unpacking only once!

Colleges and Universities More and more, alternative venues for meeting places include facilities such as colleges, universities, and their campuses. Most of the time, the relative cost of campus-based meetings is less expensive than a mediumpriced hotel.

Sustainable Meetings, Conventions, and Expositions The meetings industry is becoming more responsible in its environmental stewardship ... companies that choose to do so are reporting higher gross margins, higher return on sales, higher return on assets, and a stronger cash flow within its own organization.

Simply switching from bottled water to pitchers of water for attendees and reusing name-badge holders can provide substantial savings. In addition to monetary savings to these groups, the amount of waste deposited into a landfill was dramatically reduced, just by making these small changes.

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Convention centers are going green by reducing the heat, light, and power consumption.

Career Information Meetings, incentive travel, conventions, and expositions (the MICE segment) offer a broad range of career paths. Successful meeting planners are detail-oriented, organized people who not only plan and arrange meetings, but also negotiate hotel rooms and meeting space in hotels and convention centers.

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Other career opportunities include incentive travel, conventions and expositions, and off-premise catering.

For all career paths, it is critical to gain experience in the areas of your interest. Ask people you respect to be your mentor. Ask questions! When you show enthusiasm, people will respond with more help and advice.

Current Issues in Meetings, Conventions, and Expositions • • • • • • •

New technologies assisting meeting planners with the ability to identify and manage key markets Increased use of smartphones Connectivity and lighting speed or the need for faster networks Demand for unique, out-of-the-ordinary meeting experiences Making meetings personal with social media Keeping it healthy Going greener

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III. Teaching Techniques/Classroom Exercises Note: The content of some of these exercises is such that they may be used as essay questions.

Exercise One: Students may request Banquet and Catering packages from several Convention Centers or hotels.

Students can analyze the packets to determine what demographic the venue is aiming for. By scrutinizing the prices the student may find information on the quality of the facility and the food and beverage department.

Exercise Two: Invite a Catering Manager to talk to the class. Have the students prepare questions relevant to the concepts in this chapter.

Exercise Three: Divide class in groups and have them research the job descriptions of a Catering Manager, Meeting Planner, Convention Event Planner, and several other M.I.C.E. careers. Discuss the merits of each career path and where each position may lead.

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Exercise Four: What conventions or expositions are taking place in your city? Investigate the local CVB to find information on the type of convention and the number of attendees it brings to the area. Are there enough hotel rooms in your city to accommodate the number of visitors?

Exercise Five: Using the web, locate a convention center in a nearby city. What assistance is available to the professional Meeting Planner? What services can you find to make their job easier in locating accommodations, dining choices, recreation, and shopping in the vicinity of the CVB?

IV. Answers to Chapter 12 Review Questions 1. Among the major players in the meeting and exposition industry are the Convention and Visitors Bureau (CVB) who ae the marketing arm of a destination. They advertise and represent the city at trade shows and conventions for meeting planners. CVBs also host meeting planners who visit a city to ascertain if the city would be the best one to hold a meeting, convention or exposition.

Destination management companies (DMCs)—offer full or partial services to clients holding events in the places they operate in. These range from meet and greet at airports, welcome receptions, planned meetings, conventions, sales meetings, and so on. They work closely with hotels and convention centers to offer clients the best service.

Meeting planners—offer their services to clients planning a meeting, often they are corporate clients who need every detail planned and organized. The meeting planner makes more money if they handle the hotel bookings.

2. The characteristics of an association meeting are that people pay to attend, travel to the location are greeted with a reception followed by dinner with a key-note speaker, after which it is networking time at the bar. The next morning, there is breakfast often with a noted speaker (to get people there) followed by breakout sessions on specific topics of interest to members. A luncheon is offered, again there may be a speaker. Afternoons are devoted to more presentations on specific member-interest topics. The evening may have an entertaining dinner event off property as at a museum or zoo or some other place of interest. The meeting culminates with an awards dinner during which some members receive an award.

Conventions can follow a similar pattern whereas an exposition (which we strongly recommend you attend) has booths of exhibits showing goods for sale that attendees can view as they visit for a day or two. Some expositions like the National Restaurant Expo, held in May in Chicago; or the Hotel and Lodging Exposition in New York every November. These expositions attract thousands of industry personnel to view hundreds of booths of industry related goodies.

3. Please see page 279 and surrounding pages.

4. 1. City centers—easy to reach, lots to see and do.

2. Convention Centers—purpose built, easy to access, lots of services available.

3. Conference Centers—good for medium sized meetings.

4. Hotels and Resorts—convenient for guests staying at the hotel. Hotels have several meeting rooms plus a ballroom for use.

5. Cruise Ships—an interesting venue, guests are captured on board so attending meetings is easier. All food and beverages are easy to obtain.

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6. Colleges and Universities—Due to declining State and Federal funding, colleges and universities like to let out their facilities for meetings and conferences. They are well suited to groups that have limited budgets.

V. Mini-Case Discussion Question Answers Case: Double-Booked Discussion Questions 1. Ultimately, who is responsible for decision making with regard to this situation?

Possible discussion topics: a. The president or CEO of the bureau is generally responsible for all space allocations for the convention center. His office will have a record of all bookings and coordinate timing. b. The vice president or director of sales is also responsible for appropriate bookings and disseminating correct information to the convention center. c. The “seasoned convention sales manager” is responsible for tracking his bookings and ensuring that there are no overlaps.

2. What steps should be taken to remedy this situation?

Possible discussion topics: a. If this convention center is large enough to handle both conventions simultaneously, then rebooking the room, space, and banquet facilities should take place immediately with the cooperation of the booked parties. b. Although it appears clear that the preferred customer may have primary rights, this isn’t always the case. c. The secondary and later bookings should be moved to local centers of hotels as quickly as possible. This would be accomplished with generous cost adjustments and assistance by the convention bureau.

3. Are there fair and ethical procedures to follow to provide space for the preferred customer?

If so, what are they?

Possible discussion questions: a. It may be “fair” to provide the “preferred customer” their space before the other bookings. b. Perhaps refer to the contract dates.

4. What measures, if any, should be taken in handling the seasoned sales manager?

Possible discussion questions: a. The sales manager should have been scheduling meetings far in advance of ten days. A 3,000 person exposition is scheduled with dozens of support groups which require much more lead time than ten days. b. Not recognizing this oversight until ten days prior to the exposition can be considered negligence. c. The changes in personnel should have been a signal to the sales manager to confirm all of his bookings at the center.

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5. What leverage does the meeting planner have to secure this and future business with the bureau?

Possible discussion questions: a. The meeting planner should have good leverage to secure ideal conditions and terms in the future depending on the changes that will take place in the next ten days.

6. What might the preferred customer do if they are denied space and usage of the convention center?

Possible discussion questions: a. The preferred customer must secure space locally in order to accommodate the exposition. This will require the assistance of the convention bureau, the city, and local hotels large enough. b. With the expense of importing personnel and equipment to this site, legal action would seem appropriate to recover costs.

7. How can this situation be avoided in the future?

Possible discussion questions: a. Bookings are placed in queue with information about contracts and confirmations. This file should be distributed to all sales personnel, directors, and the office of the president periodically. b. Software sufficient to prevent double-bookings must be in place throughout the organization. An alert should be distributed if a double-booking is attempted. c. Meetings should be taking place within the sales department with bookings discussed at least two to three years in advance.

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Chapter Thirteen Special Events I. Learning Outcomes: After reading and studying this chapter, the students should be able to do the following: 1. Explain the special events industry and describe what event planners do.

2. Classify special events.

3. Describe the traits and skills of a successful event manager.

4. Identify the main professional organizations and associations involved with the special events industry.

II. Key Teaching Objectives/Chapter Outline/Lecture Suggestions Page “A special event recognizes a unique moment in time with ceremony and ritual to satisfy specific needs.” Special events include countless functions, such as corporate seminars and workshops, conventions and trade shows, charity balls and fundraisers, fairs and festivals, and social functions such as weddings and holiday parties.

Object.

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What Event Planners Do Event planning is a general term that refers to a career path in the growing field of special events. Its forecast includes a growing demand for current and future employment opportunities.

The title event planner was first introduced at hotels and convention centers. Event planners are responsible for planning an event, from start to finish. This includes setting the date and location, advertising the event, and providing refreshments or arranging catering services, speakers, or entertainment.

Highlighted skills and characteristics of a future professional in this field include the following: Computer skills Willingness to travel Willingness to work a flexible schedule Experience in delegating Willingness to work long hours Negotiating skills Verbal and written communication skills Enthusiasm

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Project management skills Follow-through skills Ability to work with high-level executives Budgeting skills Ability to initiate and close sales Lots of patience Ability to handle multiple tasks simultaneously Ability to be a self-starter Ability to interact with other departments Event Management Event management can be as small as planning an office outing, to something larger like organizing a music festival and as large as planning the Super Bowl or even the Olympics.

Things do not just happen by themselves; it takes a great deal of preparation to stage a successful event. To hold a successful event, the organizer should have a vision and leader/manager skills in the following key result areas: marketing, financial, operational, and legal.

Sponsors provide money or in-kind contributions and receive recognition as sponsors of the event, including use or display of their logos in the event’s promotion. Sponsors expect to get something in return for their sponsorship, so give them something tangible that will help their corporation or organization.

Event management requires special skills in marketing and sales, Planning, organization, financial, human resources and motivation, lots of patience, and attention to detail and endless checking on them.

To gain business, event managers prepare a proposal for the client’s approval and contract signature. Some of the issues in preparing a proposal are: find out as much as possible about the event, what went wrong or right at the last event, writing a proposal, and formalizing the numbers … a pro-forma invoice.

Event management also takes place at convention centers and hotels, where event managers handle all the arrangements after the sales manager has completed the contract.

Both the convention and visitors bureau and the convention center marketing and sales teams work closely with each other.

The booking manager is critical to the success of the event by booking the correct space and working with the organizers to help them save money by allocating only the space needed.

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Planning, the third stage in the event-planning process, is often led by the budget determined for the event. The planning process includes contracting out services and arranging all other activities that will become part of the event.

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Coordination

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Evaluation should take place during each of the stages of the eventplanning process and is a final step that can measure the success of the event in meeting the goals and objectives. If you take a look at the event-planning process diagram in Figure 13–1, you will notice that it is a continuous process. Outcomes are compared to expectations and variances investigated and corrected.

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Challenges and Tools

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The first stage of event planning is to answer the following simple questions: 1. Why should a special event be held?

2. Who should hold it?

3. Where should it be held?

4. What should be the focus of the event 5. What outcomes are expected?

Design This stage allows freedom in creativity and the implementation of new ideas that support the objectives of the special event.

Planning

The event manager engages in the process of coordinating the event as it unfolds. This may be a stressful time because of unforeseen problems that occur, or it may be a truly rewarding time with a flawless execution. Regardless, coordination of the event may involve decision-making skills and abilities as the event progresses.

Coordination also relates to the human resource aspect of the special event. Event managers are leaders who, through example, motivate others.

Evaluation

There are four primary challenges professional event managers face: time, finance, technology, and human resources.

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same way that you would your finances.

Financial management becomes important for an event planner when it becomes necessary for you to evaluate financial data, management fees, vendor fees, and so forth.

Utilizing technology as a tool such as software programs for word processing, financial management, and database management and other technology products include laptop computers, cell phones, handheld devices, event management software, and the Internet.

Empowering your employees is the key to success. As a manager and leader, you must train your employees and/or volunteers and give them the necessary information to perform their jobs.

Empowering your team is the greatest tool you can use to become an effective leader and improve the performance of your staff.

Classifications of Special Events The special events industry has been divided up into the following classifications:

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The act of carrying out a successful event takes more than just an idea—it takes leadership, communication, project management, effective negotiating and delegating skills, the ability to work within a budget, the ability to multitask, enthusiasm, social skills, and even the ability to make contacts.

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Leadership

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• • • • • • •

Corporate events (seminars, workshops, meetings, conferences) Association events (conventions, trade shows, meetings) Charity balls and fund-raising events Social functions (weddings, engagement parties, holiday functions) Fairs and festivals Concerts and sporting events Mega Sporting Events (Olympics, Super Bowl, World Cup, etc.)

Traits and Skills of a Successful Event Management

Leadership ability is the number-one skill for successful event managers. The goal of an event manager is to become a leader who can direct a team of employees and/or volunteers who will respect, admire, and follow your direction to accomplish the established goals.

Following are suggestions given by Dr. Joe Jeff Goldblatt, Certified Special Events Professional (CSEP), for event leadership: •

Event leadership enables your team members to find the motivation to continue achieving the event goals and objectives.

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• •

•

•

You cannot motivate others; they must motivate themselves by identifying clear personal goals and objectives.

Volunteers are the lifeblood of most events. Recruiting, training, coordinating, and rewarding are critical to the success of this activity.

The three styles of event leadership are democratic, autocratic, and laissez-faire. Each style may be used during the course of the event.

Policies, procedures, and practices serve as the blueprint for event decision making.

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Project management is the act of completing the project(s) on time and within budget.

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Negotiation

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Communication Communication can take different forms: oral, written, and electronic. Written communications are an essential tool for record keeping and providing information to be mass distributed. Another way to communicate with other departments is through a meeting.

Delegation For successful delegation, a climate of trust and a positive working environment are needed. Also required is a committed associate who will complete the delegated task and who will communicate effectively throughout the process.

Project Management

Negotiation is the process by which a meeting planner and supplier reach an agreement on the terms and conditions that will govern their relationship before, during, and after an event.

The planning and execution of a special event may involve the negotiation of several contracts. The most important is generally the one with the facility or event site. Contracts with other services may include: destination management, entertainment, catering, temporary employees, security, and audiovisual equipment to name a few.

Coordinating and Delegating Skills The management of staff and volunteers involves coordinating their duties and job performance to enable you to accomplish the goals of the event.

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Budgeting Skills Budgeting is an activity that allows managers to plan the use of their financial resources. In the event industry, the event planner may be working with a fixed budget determined by an association, a SMERF group, or an individual (a wedding or an engagement).

Ability to Multitask During the planning and staging of the event, your ability to administrate, coordinate, market, and “manage” will be put to the test. Your job is ultimately to conduct and take control of whatever needs to be done to carry out your goals and objectives.

Enthusiasm Enthusiasm and passion. Drive and determination. These are all qualities that will contribute to the success of an event manager/planner.

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Social Skills Social skills are critical in making those you do business with feel comfortable, handling situations appropriately, and eliminating barriers that get in the way of accomplishing your goals.

Professionals in the hospitality industry, including the special events field, must be proficient in proper social etiquette.

Ability to Form Contacts An event planner prepares a specification of what is required and requests potential suppliers to submit their prices. Over time, event planners quickly find out who is the best provider and therefore the one with whom they prefer to work.

Special Event Organizations Professional associations are a key contributor to the professional development of the special event field. Professional associations provide training and prestigious certification to their members, and membership provides an opportunity to network with other professionals in the field. Furthermore, associations can help members connect with vendors that provide products and services relating to special events.

Professional associations also provide their members with help in creating a business plan and other forms of consultation. Job banks and referral services are even provided by some associations

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International Festivals and Events Association

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The International Festivals and Events Association (IFEA) has provided fund-raising and modern developmental ideas to the special events industry for 60 years to enhance the level of festival management training and performance with a Certified Festival and Event Executive (CFEE).

The benefits of joining this association and meeting the CFEE requirements include being able to negotiate a better income or financial package, recognition by other industry professionals, and the “inside” knowledge that it provides for the festival industry.

Meeting Professionals International Meeting Professionals International (MPI) is a Dallas-based association with nearly 18,500 members. MPI believes that “as the global authority and resource for the $102.3 billion meeting and event industry, MPI empowers meeting professionals to increase their strategic value through education, clearly defined career pathways, and business growth opportunities.”

Hospitality Sales and Marketing Association International Hospitality Sales and Marketing Association International (HSMAI) is the largest and most active travel industry sales and marketing membership organization in the world, with over 7,000 members in 35 countries, representing hotels and resorts, airlines, cruise lines, car rental agencies, theme parks and attractions, convention and visitors bureaus, destination management companies, reservations sales organizations, restaurants, golf and recreation sites, and much more.

HSMAI’s mission is to be the leading source for sales and marketing information, knowledge, business development, and networking for professionals in tourism, travel, and hospitality.

Local Convention and Visitors Bureaus A convention and visitor bureau (CVB) is a not-for-profit organization that is located in almost every city in the United States and Canada. The CVB is an organization with the purpose of promoting tourism, meetings, and related business for their city.

The CVB does not engage in the actual planning or organizing of meetings, conventions, and other events. However, the CVB assist meeting planners and managers in several ways.

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Sustainability in Special Events Britain has recently developed a system of standards for event management, which highlights policies and procedures necessary to implement sustainability. Event managers can use these standards as a benchmark for how to train employees on proper sustainable practices before, during, and after events.

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Currently in the United States, ASTM International has created a guide for sustainable event management called the Standard Specification for Evaluation and Selection of Destinations for Environmentally Sustainable Meetings, Events, Trade Shows, and Conferences, which credits much of its content to the British system of standards.

Sustainable event tourism refers to the implementation of practices and procedures which help conserve both the natural environment and the special event space.

Sustainable event tourism not only provides environmental advantages, but financial returns as well. The organizations who are dedicated to incorporating sustainable programs into their business plans can expect to see the greatest return on investment as a result of cost reduction, revenue increase, etc.

Carrier Information As with any career, an “experience ladder” must be climbed.

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A recommended ladder will include: food and beverage experience (culinary and banquets), front desk agent (guest service skills), banquet manager or convention service coordinator, a sales position or meeting manager, catering sales where you learn to negotiate with vendors, convention services manager and then into either sales consultant, production company manager or destination management company (DMC).

Current Issues in the Special Events Management Sustainable events—in compliance with ISO20121. And Green lifestyle. Faster Internet connections and Go To Meetings, guest registration and programs can have a mobile interface.

Security—There should be “screening of people” attending events just as at an airport. Both attendees and booth operators are very concerned about security.

Some of the trends in the special events industry are; providing multiscreen event experiences, creating personalized special events for clientele, embracing integrated special event technologies, incorporating green events, and the role of the event coordinator is changing into a multi-media presenter.

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III. Teaching Techniques/Classroom Exercises Note: The content of some of these exercises is such that they may be used as essay questions.

Exercise One: Consider an “event” in your lifetime that you were present at such as a wedding, a birthday party, a school rally, a club meeting, or a fair or festival you attended. Do you think it was organized well? Describe a few tactics you would have used to make it better.

Exercise Two: What technology do you use today that will help you in coordinating your time, financial data, and human resource needs for your special event needs?

Exercise Three: Visit the International Special Events Society (ISES) and investigate why it would be an advantage to become a CSEP. This designation is considered the benchmark of the industry. How would it help you perform your job?

IV. Answers to Chapter 13 Review Questions 1. Describe the role of the event planner and the five steps an event planner uses in planning a meeting.

Event planners are responsible for planning an event from start to finish. The responsibilities include: • Setting the date and location • Advertising the event Providing refreshments or arranging catering services, speakers and/or entertainment • The event planning process is comprised of these five steps: • Research—answer questions regarding, why, who, and what Design—brainstorm ideas for the event • • Planning—multiple elements are including the planning phase beginning with the budget, selecting the event site, selecting accommodations, negotiating contracts, arranging for catering, speakers, and/or entertainment, etc.

• Coordination—applies to the human resource component of coordinating staff and/or volunteers Evaluation—assessing what worked and what could be improved • 2. Explain the different types of special events and provide an example of each.

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Type of Event

Example (s)

Corporate

Annual meeting, sales meeting, product launch, training meeting/workshop, press meeting, management meeting, incentive meeting, awards ceremonies

Association

Annual convention, monthly luncheon, workshop/training

Charity Balls and Fundraising

Fundraising dinner, gala for named charity

Social Events

Weddings, birthday parties, retirement parties, funeral luncheons, anniversary parties, holiday parties, graduation parties, military events

Fairs and Festivals

Oktoberfest, Mardi Gras, Heritage Festivals, Dance Festivals, Music Festivals, Craft fairs, state fairs

Concerts and Sporting Events

Symphony, rock, country music, soccer tournaments, football games, baseball games, hockey games

Mega Sporting Events

Super Bowl, Olympic Games, World Cup, Master’s Golf, Stanley Cup, Grand Slam Tennis

3. Identify the traits and skills of a special events manager and explain how each of these traits would be exhibited by a manager planning a wedding.

Trait

How Exhibited

Leadership

• •

•

Communication

• • • • • •

Assure bride that everything is under control and her goals will be achieved Ensure the team is well-trained, knows the expectations of the client (bride), and an agenda is provided and followed Provide support for team by answering questions, remaining calm, and leading by example Provide clear and easy to understand direction Document requirements in writing and share with team and client Delegate tasks to appropriate team members and follow up to be sure tasks are completed Negotiate with vendors regarding all elements of the wedding—venue, flowers, cake, catering, etc.

Demonstrate situation appropriate social skills including basic etiquette Keep the client informed of any possible problems and proposed solutions 163 ..

Project Management

• • •

Enthusiasm

• • •

Book all needed items in correct time frame Finalize all paperwork Create a working document detailing the event requirements Smile Be positive Provide outstanding service

4. What are the three special event organizations that provide educational and networking activities for industry professionals?

The three special event organizations that provide educational and networking activities for industry professionals are: International Festivals and Events Association • Meeting Professionals International • • Hospitality Sales and Marketing Association International

V. Mini-Case Discussion Question Answer Case: Not Enough Space 1. What can Jessica do to get this exhibition to use the convention center without inconveniencing either convention too much?

Possible discussion topics: a. Negotiate a partial move for the other exhibition. b. Find a common ground for both exhibitions to overlap part of their show that will benefit both sets of attendees. c. Is there another time frame for either show to make a move by one or two days? d. Is the new exhibition able to use off-site space for part of their exhibition? e. Is it possible to use framed tent structures for partial outdoors space usage? f. Look and see if there is other exhibit space, perhaps in an unused meeting room. g. If not all exhibitors have booked yet, ask if they can decrease the number of exhibitors.

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Chapter Fourteen Leadership and Management I. Chapter Objectives After reading and studying this chapter, the student should be able to do the following: 1. Define leadership and identify the characteristics and practices of leaders.

2. Define management and identify the characteristics of management.

3. Discuss ethics in hospitality.

II. Key Teaching Elements/Chapter Outline/Lecture Suggestions Page

Object.

Leadership Leaders can and do makes a difference when measuring a company’s success.

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In terms of hospitality leadership, the following definition is appropriate: Leading is the process by which a person with vision is able to influence the activities and outcomes of others in a desired way.

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Leaders know what they want and why they want it—and they are able to communicate those desires to others to gain their cooperation and support. Leadership may be identified as transactional or transformational.

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Characteristics and Practices of Leaders In addition to these leadership traits, the following identifiable practices are common to leaders: 1. Challenge the process––Be active, not passive; search for opportunities; experiment and take risks.

2. Inspire a shared vision––Create a vision; envision the future; enlist others.

3. Enable others to act––Do not act alone; foster collaboration; strengthen others.

4. Model the way––Plan; set examples; strive for small wins.

5. Encourage the heart––Share the passion; recognize individual contributions; celebrate accomplishments.

Definitions of Leadership

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Transactional Leadership Transactional leadership is viewed as a process by which a leader is able to bring about desired actions from others by using certain behaviors, rewards, or incentives. In essence, an exchange or transaction takes place between leader and follower.

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An example of a transactional leader is a hotel general manager who pressures the food and beverage director to achieve certain goals in exchange for a bonus.

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Transformational leadership describes the process of eliciting performance above and beyond normal expectations.

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A transformational leader is one who inspires others to do more than they originally thought possible, by raising their commitment to a shared vision of the future.

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Transformational leaders have a hands-on philosophy in terms of encouraging their followers individually, not in performing day-to-day tasks.

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Transformational leadership entails three important factors: charisma, individual consideration, and intellectual stimulation.

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It is possible to be a charismatic transformational leader as well as a transactional leader. It takes substantial effort but guarantees success.

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Dr. Martin Luther King, Jr., was one of the most charismatic transformational leaders in history, dedicating his life to achieving rights for all citizens by nonviolent methods and winning the Nobel Peace Prize in 1964.

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Herb Kelleher, former president and CEO and current board member of Southwest Airlines inspired his followers to pursue his corporate vision, setting Southwest apart from its competitors. He valued individuals for themselves and was frequently seen interacting with passengers on Southwest flights.

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Other demands on a leader in the hospitality industry include the owners, the corporate office, guests, employees, regulatory agencies, and competitors.

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The leader must balance two additional forces: how much energy to expend on getting results and how much to expend on relationships.

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Transformational Leadership

Examples of Excellence in Leadership

Demands Placed on Leaders

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Common traits of leaders include: high ego strength, the ability to think strategically, an orientation toward the future, a belief in certain fundamental principles of human behavior, strong connections they don’t hesitate to display, political astuteness, and ability to use power for efficiency and the larger good of the organization.

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Peter Drucker identifies four common traits of leaders: they have followers, their followers do the right things regardless of the leader’s popularity, they are visible and set examples, and they are concerned with responsibility, not rank or money.

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According to Drucker, leaders ask what needs to be done and what they can do to make a difference, taking into account their strengths.

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Effective leadership skills include: being decisive, following through, selecting the best, empowering employees, and enhancing career development.

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Management is defined as the process of “coordinating and overseeing the activities of others so that their activities are completed efficiently and effectively” with and through other people.

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Efficiency is getting the most done with the least amount of inputs; managers work with scarce resources: money, people, time, and equipment.

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Management is also about being effective; effectiveness is “doing the right thing,” as in cooking food correctly and having it ready on time.

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A manager is someone who works with and manages others’ activities to accomplish organizational goals in an efficient and effective way.

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There are three levels of managers. Frontline Managers manage the work of “line” employees; they may also be called supervisors.

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Hospitality Management Managers forecast, plan, organize, make decisions, communicate, motivate, and control the efforts of a group to accomplish predetermined goals. Managers establish the direction the organization will take.

Managers obtain the necessary resources for the tasks to be accomplished and supervise progress toward goal accomplishment. Top management focuses on strategic planning and the organization mission; middle and supervisory management are responsible for day-to-day operations.

The Function of Management?

Who Are Managers?

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Middle Managers, such as department heads, are responsible for short- to medium-range plans; they manage frontline managers.

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Top Managers are responsible for medium- to long-range plans.

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The key management functions are planning, organizing, decisionmaking, communicating, motivating, and controlling. They are interdependent and frequently happen simultaneously or at least overlap.

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Planning involves setting the company’s goals and developing plans to meet or exceed these goals. Organizing decides what needs to be done.

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Decision-making includes determining the vision, mission, goals, and objectives of the company. It also includes scheduling employees and responding to guest needs.

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Communicating and motivating get the job done. Motivating includes maintaining morale, molding corporate culture, and managing conflict.

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Controlling involves setting standards, monitoring, comparing, and correcting results.

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Managerial duties also encompass various roles including figurehead, leader, liaison, spokesperson, and negotiator. The figurehead role involves performing ceremonial duties. The liaison role includes contact with people in other departments. As negotiator, a head of a company may negotiate with a union.

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The two most important changes right now are technological advances and internationalization.

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The manager’s role is not only internal but also external. For instance, a manager must be responsive to market needs and income generation.

Managers must continually strive to be innovative by realizing efficiencies in their respective areas of responsibility through process improvement.

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Managerial Skills

Additional Skills Major skill areas: conceptual, human, and technical. Conceptual skills enable top managers to view the corporation as a complete entity split into different departments. Interpersonal skills involve dealing with people; technical skills involve using techniques, methods, and equipment. As a manager rises, conceptual skills increase and the need for technical skills decreases.

The Manager’s Changing Role

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Sustainable Leadership Many business leaders, including hospitality ones, are becoming increasingly more concerned about sustainability. Not only are they concerned about the environment but also social responsibility.

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Leaders and managers need to steer the organization on a path of sustainability for all associates to follow.

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Distinction between Leadership and Management Managing is the formal process by which organizational objectives are achieved through the efforts of subordinates. Leading is the process by which a person with vision is able to influence the behavior of others.

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Ethics Ethics is a set of moral principles and values that people use to answer questions about right and wrong. Ethics is also about our personal value system, and there are people with value systems different from ours.

Ethics and morals have become an integral part of hospitality decisions from employment to truth in menu. Many corporations have developed a code of ethics that all employees use to make decisions.

Trends in Leadership and Management The following are concepts currently trending in the hospitality industry: 

Leadership is walking the talk (setting examples)

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Uncertainty makes leadership harder (we must communicate with employees)

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Developing first-line leaders (develop and recognize leadership traits)

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Leadership skills are vital (strong people-leadership skills)

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More thoughtful training (engage the employee in the training process)

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Choosing a leadership style that works (the key to leadership is learning what technique works for each individual person)

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Understand your organization (all functions of the business must work smoothly in harmony)

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Accepting responsibility (never shift blame)

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Exceptional listening (be open to employee suggestions)

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Don’t hesitate to ask why (question the system)

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Excel at every opportunity (positive attitude and never overlook an opportunity) 169 ..

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III. Teaching Techniques/Classroom Exercises Note: The content of these exercises is such that they may also be used as essay questions.

Exercise One: Invite the general manager from a local hotel property to speak to the students. Ask him/her to address the issues of leadership and management in their own organization. Have the students prepare three questions to ask.

Exercise Two: Ask each student to prepare a short report on a leader they’ve admired (it doesn’t have to be industry-related) and have them identify the qualities that made him/her particularly effective, paying some attention to the distinction between transactional and transformational leadership.

IV. Answers to Chapter 14 Review Questions 1. Define leadership and identify the qualities of a leader.

The definition of a hospitality leader, “Leading is the process by which a person with vision is able to influence the activities and outcomes of others in a desired way.”

The qualities of a leader include: 

Courage

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Decisiveness

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Dependability

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Endurance

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Enthusiasm

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Initiative

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Unselfish

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Integrity

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Judgement

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Justice

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Knowledge

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Loyalty

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Tact

2. Describe the core managerial skills needed to be a successful manager.

The core managerial skills needed to be a successful manager are: 

Planning—Setting goals and creating plans to meet the goals/objectives



Organizing—Deciding what needs to be done, who will do it, how will it be done, when will it be done

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Decision making—Determining how to make the vision/mission come to life which includes scheduling, responding to guest needs, and operational tasks

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Communication—Verbal, written, and non-verbal interaction to get the job done

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Human resources management—Attracting and retaining the best employees for the job



Controlling—Setting standards, comparing actual results to standards, and taken corrective action as needed

3. Explain the role ethics plays in responsible decision making as a hospitality leader.

Ethics is the set of moral principles and value that people use to answer questions about right and wrong. Ethics play an integral role in responsible decision making of a hospitality leader as ethical questions occur and decisions need to be made. Using a standard such as Stephen S. J. Hall’s, “Ethics in Hospitality Management” can help in resolving some of these difficult questions.

V. Mini-Case Discussion Question Answers Case: Performance Standards 1. Based on the information provided, who would you select as front office manager?

Feedback: Based on the information provided, students can make a case for hiring either person.

Factors to consider in hiring Nancy include her college degree and eagerness to learn. Her front office experience is also beneficial, but it is at a budget motel not a luxury property.

Factors to consider in hiring Charles include his extensive hotel experience including working in luxury hotels. He understands the culture of the hotel. Hiring Charles could be a risk due to recent performance issues. These would need to be resolved before offering a managerial role.

1. Relevant experience, knowledge of that particular property, general attitude and demeanor.

2. The rooms division manager needs to find out what has gone wrong and emphasize the need for change, ascertaining what help she/he can provide. Specific recommendations will vary.

3. Answers will vary, but Charles may be the better choice if his problems can be addressed.

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Chapter Fifteen Planning I. Chapter Objectives After reading and studying this chapter, the student should be able to do the following: 1. Describe the importance of planning.

2. Discuss the process of strategic planning and strategic management.

3. Explain the process of operational planning.

II. Teaching Elements/Chapter Outline/Lecture Suggestions What Is Planning?

Page

Object.

Planning involves selecting the various goals that the organization wants to achieve and the actions (objectives) that will ensure the organization accomplishes the goals.

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In organizations, executives determine where the organization is and where it wants to go. Goals are established for each of the key operating areas.

Key operating areas would include, but not be limited to: guest satisfaction, employee satisfaction, and productivity.

All managers do some form of planning, whether informal or formal.

Informal planning is often done at the last minute, and there is little or no sharing of goals and strategies with others in the organization.

Formal planning occurs when specific goals covering a period of up to several years are identified and shared with all associates, and strategies are developed stating how each goal will be reached.

Planning can also help identify potential opportunities and threats.

Planning helps facilitate the other functions of management— organization, decision making, communication, motivation, and especially control—because planning establishes what needs to be done and how it is to be done, and control looks at how well we have done compared to how well we expected to do.

The Purpose of Planning Planning gives direction not only to top management but to all associates as they focus on goal accomplishment. The purpose of planning is to determine the best goals and strategies to achieve organizational goals.

Top executives do most of the strategic planning and first-line managers do most of the operational planning.

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Planning provides the road map of where the organization is going.

Planning also helps coordinate the efforts of associates toward goal accomplishment. Planning assists in risk reduction by forcing managers to look ahead and anticipate change so they can plan scenarios to react to those potential changes.

Strategic Planning and Strategic Management Strategic planning creates the long-range plans that steer an organization toward its goals in the accomplishment of its mission and vision. The strategic planning process involves top management, who, in simple terms, identify where the organization is and where it wants to go. There is a strong link between strategic planning and strategic management. The planners figure out what to do and management implements the plan.

Strategic management develops the mission, goals, and strategies by identifying the business of the corporation today and the business it wants for the future, and then identifying the course of action it will pursue, given its strengths, weaknesses, opportunities, and threats (internal and external environments).

There are three main strategic management tasks: the development of a vision and a mission statement, translating the mission into strategic goals, and crafting a course of action to move the organization to where it wants to be.

A direct link exists between the mission of the organization and strategic management—they complement each other. Strategic planning involves creating a long-term strategy for how the organization will meet its mission. The job of strategic management is to translate the mission into strategic goals.

The difference between strategic planning and strategic management is that strategic planning is a systematic process whereby the top management of an organization charts the future course of the enterprise.

Strategic management is the process of guiding the organizational strategic plan and acquiring the necessary resources and capabilities to ensure successful implementation of the plan in the context of emergent situations caused by the level of environmental turbulence.

There are six steps to strategic planning: 1. Create a vision 2. Find out what your guest wants 3. Do an environmental scan 4. Identify critical issues 5. Formulate strategies for the future 6. Create your action plan and act on it, and then monitor results

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Strategic Planning/Management Process Most of the strategic planning that takes place at the top management level is called corporate-level strategy. It begins with identifying the organization’s mission, goals, and objectives. It then goes on to analyze the environment and the organization’s resources and to identify strengths, weaknesses, opportunities, and threats. The organization then formulates strategies, implements them, and evaluates the results.

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Corporate-Level Strategies There are three corporate strategies: 1. Growth: market penetration, geographic expansion, product development, and horizontal integration 2. Strategic alliances and joint ventures 3. Diversification Corporations choose the number of areas of business in which they want to operate.

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Most companies want to grow, and they must plan a strategy for that growth. There are four growth strategies: Market penetration, Geographic expansion, Product development, and horizontal integration.

2

Strategic alliances or joint ventures are methods for a corporation to fulfill its mission by joining forces with other similar corporations to meet a goal.

2

Diversification is where companies expand into other types of businesses—related or not.

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Strengths, Weaknesses, Opportunities and Threats Analysis SWOT analysis is used to assess the company’s internal and external strengths and weaknesses, seek out opportunities, and be aware of and avoid threats. It is conducted in comparison with a company’s main competitors.

The eleven P’s of hospitality marketing include the traditional four P’s of marketing—place (or location), product, price, promotion—but add three others (people, process, physical evidence) and four new P’s (personalization, participation, peer-to-peer, and predictive modeling).

Strategic plans are implemented through action plans, operating plans, and standing plans.

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Environmental Scanning and Forecasting Environmental scanning is the screening of large amounts of information to anticipate and interpret changes in the environment.

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Environmental scanning creates the basis for forecasts.

Forecasting is the prediction of future outcomes. Information gained through scanning is used to form scenarios. These establish premises for forecasts, which are prediction of future outcomes. The two main types of outcomes that managers seek to forecast are future revenues and new technology breakthroughs.

Operational Planning How Do Managers Plan?

Planning is the first of the management functions, so it establishes the basis for the other functions. Planning involves two main parts: goals and strategies.

Operational plans are generally created for periods of up to one year and fit in with the strategic plan. Most hotel, restaurant, and other hospitality managers plan for periods from hourly, daily, weekly, monthly, and up to 90 days.

Operational plans provide managers with a step-by-step approach to accomplish goals. The overall purpose of planning is to have the entire organization moving harmoniously toward the goals.

There are seven steps in operational planning: 1. Setting goals. Goals should be specific, measurable, and achievable.

2. Analyzing and evaluating the environment. This involves analyzing political, economic, social, and other trends that may affect the operation.

3. Determining alternatives. This involves developing courses of action, sometimes requesting the input from employees.

4. Evaluating alternatives. This calls for making a list of advantages and disadvantages considering resources and effects on the organization.

5. Selecting the best solution. This results from the analysis of various alternatives and sometimes combining two or more alternatives.

6. Implementing the plan. This includes decisions on people, dates, resources, benefits, costs, reporting, and authority to be granted.

7. Controlling and evaluating results. This involves monitoring progress toward goals.

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Operational Goal Setting 330

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Management by objectives (MBO) is a managerial process that determines the goals of the organization and then plans the objectives, that is, the how-tos of reaching the goals. With MBO, associates usually establish the goals and objectives and review them with management.

MBO works because associates have been involved with setting goals and objectives and are likely to be motivated to see them successfully achieved.

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MBO goals need to be specific, measurable, and challenging but attainable. The main purpose of an MBO program is to integrate the goals of the organization and the goals of the associates so that they are in focus.

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Goal setting is the process of determining outcomes for each area and associate. No one can work effectively without specific goals and monthly evaluation reports to gauge whether the effort is moving toward goal accomplishment, or whether adjustments must be made to change course.

Examples of goals and information for a sales department include: 

Group room nights (booked this month and year-to-date by market segment and salesperson, actual consumer room nights, actual average group room rates).



Individual room nights (actual room nights booked, local corporate clients, occupancy compared to same time last year, rev par, and packages sold).

Another example of goals is productivity goals that measure the amount of labor required to do a task. Productivity is measured in labor costs, which are expressed as a percentage of sales, for each department.

Planning expert George Morrisey offers this four-point model for writing goals: 1. to (action/verb)……… “increase guest satisfaction scores” 2. the (single measurement result)…. “from 87 to 95 percent” 3. by (the target date/time span)…. “by December 31, 20xx” 4. at (cost in time and/or energy)… “at a cost of $500 for training”

Operational Objectives Objectives state how a goal will be met. Objectives are operational statements of activities that should be quantifiable and attainable within a stated time.

Management Concepts and Approaches

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Benchmarking identifies the best way of doing something and which companies excel in that area (best practices companies). The best practice is noted and emulated or improved on by other companies. Successful companies sometimes swap information.

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Benchmarking is an operational tool that can be used to guide corporate strategy as well as operations strategies.

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Policies, Procedures, and Rules Policies, procedures, and rules are examples of standing plans.

Policies set broad guidelines for associates to use when making decisions.

Procedures specify what to do in given situations. A rule is a very specific action guide that must be followed.

Budgeting A budget is a plan allocating money to specific activities. There are budgets for revenues (sales) and costs (expenses) for capital equipment— equipment that has an expected life of several years.

Budgets are popular because they force managers to anticipate expected sales and budget expenses accordingly.

Budgets are planning techniques that force managers to be fiscally responsible.

Budgets are created by department heads once a year and revised monthly or as necessary.

Budgets intertwine with (1) scheduling, because scheduling equals labor costs, the largest controllable budget item; (2) purchasing, because that contributes to food, beverage, and other costs; and (3) controlling, because we want to compare budget to actual revenue and expenditure results.

Scheduling Scheduling associates is a planning activity that involves taking the business forecast and allocating an appropriate number of staff to give the necessary level of service.

The hospitality industry, in order to keep costs down and remain competitive, uses a large number of part-time employees.

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Project Management Project management is the task of getting the project completed on time and within budget. Hospitality companies are using project management because the approach fits well with the need for flexibility and rapid response to market opportunities.

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There are five steps: 1. Goals need to be defined.

2. Activities and resources must be identified.

3. Sequence of completion is determined using flowchart-type diagrams such as a Gantt chart or a PERT network.

4. Activities are scheduled.

5. Tasks and budgetary responsibilities are assigned.

On Sustainability Planning for sustainable tourism requires identifying opportunities in a particular area and balancing them with possible limitations placed on tourism development, in order to capitalize on the strengths and diminish the negative effects that can befall on the environment. At the heart of sustainable planning is a focus on protecting the community and their environment from being misused.

Sustainable planning should be initiated with certain intentions in mind, such as using resources responsibly with an environmentally conscious approach, maintaining respect for local heritage and different cultures living in the community, improving the quality of life in the community, and encouraging the preservation of the various ways of life.

Current Issues in Planning Strategic Planning—With greater turbulence in the environment leadermanagers must formulate and amend strategic plans to fit a fast-changing business climate.

Sustainability and Environmental Planning—Society is placing greater emphasis on sustainability and so are hospitality operators. From lighting to energy consumption every dollar saved goes directly to the bottom line. So, encouraging guests to use less water and towels can save thousands.

Social Media Planning—It is important to be proactive in the social media. Having a constant series of photos, images, and write up is a good way to attract additional business.

Some of the current trends are; a focus on international visitor planning, planning social media, social media marketing, a continuous job search culture, diversity planning, strengthening stakeholder confidence, re-

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evaluating existing business models, a strong customer focus, strengthening management talent, planning beyond the traditional event venue, budget spending, and a focus on going viral in the age of the environment.

III. Teaching Techniques/Classroom Exercises Note: The content of some of these exercises is such that they may also be used as essay questions.

Exercise One Have the students recount an incident in which they were involved in actively planning how to meet goals. It can be job-related, a school or community project, home improvement, or anything which fits. Have them discuss the successes and failure of the projects in light of their goals and how changes in managing the project might have improved the outcomes.

Exercise Two Form student groups and ask them to develop a project management plan for a hypothetical sandwich shop near campus. What would the goals be, what factors would be involved in achieving them, and how would they measure success?

Exercise Three Invite as a guest speaker the owner or manager of a local independent restaurant to talk about planning for the business.

IV. Answers to Chapter 15 Review Questions 1. The Planning process involves selecting the various goals the organization wants to achieve and the actions (objectives) that will ensure their accomplishment. Goals are established for each of the key operating areas and objectives or strategies planned to ensure that the goals are met.

2. Goals involve the vision of the organization and how to realize it; objectives are the strategies involved in realizing those goals.

3. Strategic planning is the long-range plans that steer an organization toward accomplishing its mission and vision.

4. SWOT analysis concerns itself with competitors operations; environmental analysis screens information pertaining to the organization’s own environment.

5. Policies provide broad guidelines; procedures specify actions in certain situations; a rule is stricter still and must always be followed. Student answers should use a variation of these points.

V. Mini-Case Discussion Question Answer Case: Shell’s Seafood Restaurant Answers vary, but they should include the fact that a specific schedule and budget was not set, there was no staffing plan, and they did not discuss and prepare for the alternative that the couple’s aunt was making the cake.

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Chapter Sixteen Organizing I. Chapter Objectives After reading and studying this chapter, the student should be able to do the following: 1. Describe the purpose of organization and fundamental aspects of organizational structure.

2. Identify key factors that should be considered in choosing an organizational design structure and summarize contemporary organizational designs, including team-based structures.

3. Explain team-based structures and how companies create productive teams.

II. Key Teaching Elements/Chapter Outline/Lecture Suggestions What Is Organizing?

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An organizational structure is like a skeleton in that it supports the various departments in an organization. It provides the total framework by which job tasks are divided, grouped, and coordinated

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Work Specialization and Division of Labor

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The Purpose of Organizing The purpose of organizing is to get a job done efficiently and effectively by completing these tasks: • • • • • • •

Divide work to be done into specific jobs and departments.

Assign tasks and responsibilities associated with individual jobs.

Coordinate diverse organizational tasks.

Cluster jobs into units.

Establish relationships among individuals, groups, and departments.

Establish formal lines of authority.

Allocate and deploy organizational resources.

Organization refers to the arrangement of activities so that they systematically contribute to goal accomplishment.

Defining Organizational Structure

Work specialization is used to describe the extent to which jobs in an organization are divided into separate tasks. In the hospitality industry, we use work specialization in various departments but not to the extent that a heavy industry does. The reason is that in the hospitality industry we are not producing a commodity.

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Departmentalization Once jobs have been divided up by work specialization, they have to be grouped back together so that the common tasks can be coordinated. This is called departmentalization.

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Departments are created to coordinate the work of several associates in a given area.

The simplest form of departmentalization is by function. A large hotel rooms division has a reservations department, uniformed service department, front desk, communications department, concierge, housekeeping, and so on—each with its own specialized function.

Choice Hotels International departmentalizes its lodging properties by product in the form different hotel brands. Hotels may also departmentalize by guest needs or territory.

Authority and Responsibility Authority is closely associated with chain of command because it gives managers the right to exercise their power in a given situation. Authority should be commensurate with responsibility. There is a two-way obligation regarding authority.

Some companies have empowered their employees to do whatever it takes to please the guest, even to the extent of comping a room if necessary.

When authority is delegated, so should commensurate responsibility.

That means that you are responsible for the performance of your operation and the associates who work with you.

Chain of Command In a chain of command structure, departments are clearly indicated, and titles may be used to show each associate’s position. The chain of command begins at the top of the organization with the board of directors, who are elected by the shareholders. The board of directors selects a president or chief executive officer (CEO), and the president selects the top executives such as the chief financial officer (CFO) and vice president of marketing.

The chain of command should flow from the top to the bottom of the organization and up from bottom to top.

Increasing Span of Control How many associates can a manager supervise? The answer used to be between 8 and 12. Now, however, the answer is likely to be 12 to 18. The reason for this increase in span of control is that organizations needed to become more competitive with not only other U.S. companies but foreign ones, too.

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Although hospitality corporations have increased their span of control, it is also fair to say that they realize that there is a point when the number of people reporting to managers overburdens associates. At that point, managers don’t have the time to give advice, nor do they have time to properly supervise their associates, so standards decline.

Empowerment Empowerment has become an industry norm. As managers delegate more authority and responsibility, associates have become empowered to do whatever it takes to delight the guest. Front-line associates are in a better position to know guests’ wants and needs than management.

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A company with 20 associates will look very different from one with 10,000 associates. But even organizations of comparable size don’t necessarily have similar structures. What works for one organization may not work for another.

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Coordination of Activities

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Centralization and Decentralization Some organizations make most of the decisions at the corporate office and inform unit managers of them. This process is called centralization. Other organizations make most of the decisions at the unit level or with input from associates. This is decentralization. In reality, organizations are never completely centralized or decentralized.

Many companies have become more centralized in an effort to save costs and improve service to associates. Because of rapid changes in the hospitality business, organizations are becoming more flexible and responsive. This means the organizations are becoming more decentralized.

Organizational Design Decisions

Problems can and do occur unless there is good coordination of activities. The hospitality business is fast paced—guests want something now or even sooner! Departments need to communicate quickly and often to keep up with guest requests.

Contingency Planning An organization’s size generally affects its structure. Larger organizations tend to have more specialization, departmentalization, centralization, and rules and regulations than do small organizations.

Every organization has some form of technology that relates to structure.

In the hospitality industry, technology has tended to help the existing structure perform better—sometimes with fewer associates

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Contingency factors deal with what hospitality organizations refer to as the what-ifs. The company plans and organizes for several possible outcomes.

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Contemporary Organizational Designs Team-Based Structures In response to competitive market demands for organizations that are lean, flexible, and innovative, managers are finding creative ways to structure and organize work and to make their organizations more responsive to guest needs.

The first of the contemporary designs is a work team structure; either the complete organization or a part of it is made up of teams that perform the duties necessary.

Teams tend to be more productive. There are two main types of work teams: integrated and self-managed. Integrated work teams are given a number of tasks by the manager, and the team gives specific assignments to members. Self-managed work teams are assigned a goal, and the team plans, organizes, leads, and controls to achieve the goal.

Matrix and Project Structures The matrix structure is an organizational structure that assigns specialists from different departments to work on a project—for example, a new attraction, restaurant, or hotel opening. The specialists come together to pool their knowledge and experience to work on the project.

During this time they may have two bosses: their department head plus the project manager.

Project structures are those in which employees continuously work on projects. Unlike a matrix structure, members of a project do not return to their departments after project completion. They go on to the next project.

Independent Business Units The Independent Business Unit (IBU) becomes its own independent business and makes decisions accordingly, with little or no need to get approval for routine operational decisions. The unit can implement strategies that will improve guest satisfaction or reduce costs by finding a quicker or better way of doing something.

IBUs also enable management to seriously look at departments not making a sufficient profit contribution, with a view toward making changes and improvements or eliminating the department.

Boundaryless Organizations The boundaryless organization is an organization whose design is not defined by, or limited to, the horizontal, vertical, or external boundaries imposed by a predefined structure.

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The boundaryless organization seeks to eliminate the chain of command, to have appropriate spans of control, and to replace departments with empowered teams.

Teams and Employee Involvement Teams are task-oriented work groups; they can either be formally appointed or evolve informally. Both formal and informal teams make important contributions to the company and to associates’ needs and satisfaction.

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Teams are great for doing work that is complex, interrelated, or more than one person can handle.

Group Dynamics Group dynamics and includes variables such as the abilities of the group’s members, the size of the group, the level of conflict, and the internal pressures on members to conform to the group’s norms. Sometimes external influences inhibit the group’s performance.

How Companies Use Teams at Work Team players, which is vital in the fast-paced hospitality industry.

Another way management can use teams is through total quality management (TQM) programs that involve associates working in teams to constantly improve the guest experience.

Self-managed teams make decisions that were once made by managers.

Self-managed teams work successfully in several types of hospitality organizations such as theme parks and convention centers.

How to Build Productive Teams In recent years, the introduction of TQM processes has significantly increased the number of teams in the hospitality industry. At the heart of TQM is process improvement, and associate participation is the heartbeat.

Productive teams are built by giving associates the authority, responsibility, and encouragement to come together to work on guestrelated improvements that will not only enhance the guest experience but also make the associates’ jobs easier.

Team building happens when members interact to learn how each member thinks and works. Through close interaction, team members learn to develop increased trust and openness.

Job Rotation Job rotation is an excellent way to relieve the possible boredom and monotony that can be a disadvantage of work specialization because it gives associates a broader range of experiences. Once associates have 184 ..

mastered the jobs they were hired to do, boredom tends to set in. Job rotation creates interest and helps develop associates to take on additional responsibilities.

Job rotation does create some additional costs, mostly in the area of training and reduced productivity, because as associates move into new positions, they need time to become proficient in their new roles. A major benefit of job rotation is that associates become well rounded in the operation of the corporation, and many associates are promoted as a result of gaining the additional knowledge and experience.

Job Enlargement and Job Enrichment Job enlargement increases the scope of the associates’ work. Today, hospitality management professionals have more work and responsibilities than ever before. Job enrichment adds some planning and evaluating responsibilities to a position. It gives associates greater control over their work by allowing them to assume some tasks typically done by their supervisors.

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Organizing for Sustainability Organizing for sustainability requires structured planning and actions in which individuals are contributing to, operating within, or cooperating in a larger environmentally active system. The necessity of a business or organization to adapt to sustainable practices is contingent on specific markets, their competition, and the degree of social consciousness within the market.

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Sustainable initiatives are established for different purposes, namely, in providing value to those invested in an organization. In a hotel or restaurant company, this could include stakeholders, employees, consumers, and community members who are affected by tourism that is created as a result of the organization’s existence.

Current Issues in Organizational Management • • •

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The inverted organizational chart … The inverted organizational chart; places the customer at the top Responsibility vs. authority; every employee’s responsibility to perform above and beyond.

Employee engagement—it is important to engage employees by allowing them to participate in the decision-making process and to reward them when a goal has been met.

Job rotation may relieve boredom.

Encouragement and recognition for greater employee involvement; discuss areas that need improvement and recognize employees for their role.

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Centralized vs. decentralized decision making; centralized decisions come from the top.

Share your story; the trend in managers developing their own mission statement and values.

Flattened organizational systems; allows more flexibility

III. Teaching Techniques/Classroom Exercises Note: The content of some of these exercises is such that they may also be used as essay questions.

Exercise One Have students separate into groups. The scenario is that your hotel is hosting a business meeting and all the guests will arrive at the same time. Using a work team structure, devise a method to check in the 100 guests quickly and efficiently.

Exercise Two You have been offered an internship at a local resort. Devise your own job rotation to maximize your development in the three month placement.

1. departments but not to the extent that heavy industry does. The reason is that in the hospitality industry we are not producing a commodity, so the line cook is likely to continue to prepare a variety of different dishes. In the hospitality industry, many repetitive tasks may seem boring so it is often preferable to do more than one to avoid boredom.

2. Question: Describe ways managers can departmentalize work activities.

Answer: The simplest form of departmentalization is by function. Others may departmentalize by product in the form different hotel brands. Hotels may also departmentalize by guest needs or territory.

IV. Answers to Chapter 16 Review Questions 1. What would the similarities and differences be in the organizational structure of a 300 roomluxury hotel, quick service restaurant, and a 3,000-room casino hotel?

Type Similarities Differences 300 room luxury hotel · General manager and direct reports · Middle managers · Front Line supervisors · Hourly associates · Department heads for key areas · Some specialization of tasks Quick service restaurant · Less supervisory roles · Fewer management roles · Less specialization of tasks 3,000 room casino hotel · More layers of leadership · Shareholders · Board of Directors · President · Vice-Presidents · Specialization by department · Further specialization within departments · More first level leaders 2. Give examples of when a team-based approach, a matrix approach, and an independent business unit approach work best in the hospitality industry.

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Approach Example Team-based · Solving guest service issues specific to front-line processes · Event planning i.e. sales, catering, culinary, and banquet department working together Matrix · Project specific i.e. implementing new computer system or purchasing new equipment for several locations Independent Business Unit · Increasing revenue in revenue producing departments i.e. Front Desk, restaurant outlets · Decreasing costs in non-revenue generating departments i.e.

Housekeeping, Stewarding 3. When work teams are self-managed, what are the risks that a manager must be aware of that might prevent their success?

A manager needs to be aware of the risks that may prevent a self-managed team from being successful: • • • • •

The team may not have the needed skill set to accomplish the task The team may not have clear goals and deadlines established Team members may not get along with each other Management did not set reporting systems/structure in place Primary job duties may interfere with implementation of team goals

V. Mini-Case Discussion Question Answer Case: The Organization of Outback Steakhouse Answer: 1. Answers will vary. With nearly 1,200 locations worldwide, it may be prudent to suggest that eventually the structure at Outback may change to be centralized for elements such as purchasing and marketing while allowing each restaurant to operate as an independent business unit.

2. Answers will vary. Although described as decentralized, certain decisions must be made at the corporate level. As the organization grows, the president may find it necessary to delegate some of the direct responsibility duties.

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Chapter Seventeen Communication and Decision Making I. Chapter Objectives After reading and studying this chapter, the student should be able to do the following: 1. Define communication and explain an effective interpersonal communication process.

2. Explain organizational communication.

3. Summarize the eight steps in the decision-making process.

4. Explain how managers make decisions in real-world situations.

II. Key Teaching Elements/Chapter Outline/Lecture Suggestions Communication and the Interpersonal Communication Process Communication is the oil that lubricates all the other management functions of forecasting, planning, organizing, motivating, and controlling.

Managers interact with others throughout the day by the following means: Personal face-to-face meetings Telephone • • Mail/fax • Memos, reports, log books, and other internal/external written communication E-mail, web sites • The simplest method of communication involves a sender, a message, and a receiver. Several factors can lead to distortion of the message, such as noise interference, poor listening skills, and inappropriate tuning.

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What Is Communication?

Communication is the exchange of information and meaning. The essence of communication is the exchange of information. Another important aspect of communication is understanding the meaning.

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Successful communication results when a sender communicates a thought or idea and the receiver perceives it exactly as envisioned by the sender. You can disagree with something even though you fully understand it.

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networks, and systems of communication that occur among individuals, groups, or departments within an organization.

The Interpersonal Communication Process Communication between two or more people is described as interpersonal communication The interpersonal communication process is made up of seven elements: the sender, encoding, the message, the channel, the receiver, decoding, and feedback.

Noise is often a part of the interpersonal communication process. Noise can consist of various activities going on in the background. Therefore, noise is considered a somewhat constant disturbance in the communications process and the cause of distortions of the message.

Too much knowledge may cause the message not to be understood at all. Preexisting attitudes and the cultural system of the sender can influence the encoding of the message as well.

The message itself, such as a written document, an oral speech, or gestures and facial expressions, can be influenced by disturbances.

The channel used to convey the message is important to the whole communications process.

Whether the sender chooses to use an office memorandum, a phone call, e-mail, gestures, or pictures to convey the message will play a large role in how accurately the receiver will understand it. Using two channels can sometimes eliminate distortion—for example, oral speech followed by a written summary.

The receiver is limited by the same factors as the sender. If he or she has too little knowledge of the subject, distortions will take place.

Likewise, if he or she has too much knowledge, too much can be read into a simple message.

Examples of communication by managers include face-to-face, telephone, e-mail, fax, group discussions and meetings, memos, formal presentations, bulletin boards, mail, employee publications, and teleconferencing.

Communication experts generally agree that when two people are engaged in a face-to-face conversation, only a small fraction of the total message they share is contained in the words they use. A large portion of the message is contained in vocal elements such as tone of voice, accent, speed, volume, and inflection. The largest part of the message— and arguably the most important—is conveyed by a combination of gestures, postures, facial expressions, and clothing.

Although people may listen closely to what is said, nonverbal behavior may constitute two-thirds or more of total communication.

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Nonverbal communication is communication without words…gestures, actions, and the type of clothes worn communicate messages to us.

Body language consists of facial expressions, gestures, and any other ways of communicating a message with your body.

Verbal intonation is using your voice to emphasize certain parts of a phrase or certain words.

Barriers to Effective Interpersonal Communication Everybody perceives things differently. This is due to different backgrounds, upbringing, personal experiences, and major influences in their lives. No two people are alike, and neither is their perception.

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The actual meaning of words, or semantics, is the cause of many failed communication efforts. The literal meaning of words and the actual meaning can be two different things, but they can be expressed in the same way.

Nonverbal communication—communication through body language—is a typical means of communication. However, it can also be considered a barrier to effective communication.

Misinterpretations of nonverbal communication are especially dominant in cross-cultural communication. Gestures and expressions mean different things in different cultures.

Ambiguity, vagueness, or uncertainty can occur in a message being conveyed.

A message may be ambiguous, meaning the person receiving the message is uncertain about the actual meaning.

When people feel that they are being verbally attacked or criticized, they tend to react defensively. The reaction could be making sarcastic remarks, being overly judgmental, or simply screening out the unpleasant parts of the conversation.

Overcoming Barriers to Effective Interpersonal Communication Right off the bat, offering feedback the last step in the communication process, will eliminate misunderstandings and inaccuracies regarding the message being conveyed. The feedback can be verbal or nonverbal. The best form of verbal feedback is a quick restatement and summary of the message that has been conveyed.

There is a difference between hearing and actually listening. You may hear what your manager is saying, but did you reallylisten? Hearing is passive, and listening is a deliberate act of understanding and responding to the words being heard. The first step to active listening is listening for the total meaning.

Defensiveness is one of the main barriers to effective communication. By avoiding the tendency to criticize, argue, or give advice, senders can avoid triggering defensive behavior.

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Leaders will get the best results with and through their associates if they…have a great attitude toward your associates, treat them fairly and with respect; establish a climate of trust; include your associates in as much decision making as possible, be sensitive to cultural differences and learn more about their cultures, learn the best ways to communicate, make sure that your associates know what is expected of them, actively listen to them, and train them.

Organizational Communication Formal and Informal Communication Formal communication is used by managers to communicate job requirements to their employees. It follows the official chain of command.

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Informal communication does not follow a company’s chain of command or structural hierarchy. The subject matter may be job related but may not be essential to performing job duties.

Communication Flows and Networks Upward communication takes place when managers or superiors rely on their subordinates for receiving information. It flows upward from employees to managers.

Communication flowing down from supervisor to employee is considered downward communication. Downward communication is often used to inform, direct, coordinate, and evaluate employees.

Communication that takes place between the employees of a company who are on the same hierarchical level in the organization is called lateral communication. This type of communication is used by employees to discuss their environment and the organization in general.

Communication that takes place between employees who are on different hierarchical levels and in different departments of the organization is called diagonal communication.

Communication in a chain network flows according to the existing chain of command of an organization. This includes downward as well as upward communication flow. This type of network is highly accurate; no information can be lost, and the path the message travels is precise.

The wheel network is a network in which communication flows between a strong leader and each individual in a group or team; they communicate solely with their leader.

The all-channel communication network is differentiated from others by its freely flowing communication between all members of a group or team. This means that the leader communicates with employees, and employees all communicate with each other.

The grapevine may be the most popular and important communication network in an organization. One survey reported that 75 percent of employees hear about 191 ..

matters first through rumors on the grapevine. The grapevine is an informal organizational communication network and an important source of communication for the managers of an organization.

The Decision-Making Process Step 1: Identification and Definition of Problem Defining this problem is best done by writing a problem statement. Once the problem has been accurately stated, it becomes easier to move to the next step.

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Step 2: Identification of Decision Criteria Once the problem has been identified and defined, we need to determine the criteria relevant to the decision.

Criteria that are not identified are usually treated as unimportant Step 3: Allocation of Weights to Criteria To decision makers, decision criteria all have different levels of importance.

One method used to weigh the criteria is to give the most important criterion a weight of 10 and then score the others according to their relative importance.

Step 4: Development of Alternatives In developing alternatives, decision makers list the viable alternatives that could resolve the problem. No attempt is made to evaluate these alternatives—only to list them.

Step 5: Analysis of Alternatives The alternatives are analyzed using the criteria and weights established in Steps 2 and 3.

Step 6: Selection of Alternative Select the best alternative. Once the weighted scores for each alternative have been totaled, it will become obvious which is the best alternative.

Step 7: Implementation of Alternative Ensure that the alternative is implemented so that the decision is put into action. Sometimes good decisions fail because they are not put into action.

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Step 8: Evaluation of Decision Effectiveness The final step in the decision loop is to evaluate the effectiveness of the decision. As a result of the decision, did we achieve the goals we set? If the decision was not effective, then we must find out why the desired results were not attained.

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How Managers Make Decisions Managers are the main decision makers in any organization. Although all employees face daily decisions, the choices a manager makes impact the future of the organization. Decision making is an integral part of all four primary managerial functions: planning, organizing, leading, and controlling.

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Making Decisions: Rationality, Bounded Rationality, and Intuition The first criterion for making a decision is that it must be rational. Several assumptions are made to define what a rational decision really is. First, the decision itself would have to maximize value and be consistent within natural constraining limits. This means that the choice made must maximize the organization’s profitability.

One assumption of rationality as it relates to the decision maker is that he or she is fully objective and logical.

Bounded rationality means that managers make decisions based on the decision-making process that is bounded, or limited, by an individual’s ability to gain information and make decisions.

When decision makers cannot find all of the necessary information to analyze a problem and all of its possible alternatives, they find themselves satisficing or accepting a solution that is just “good enough” rather than maximizing.

Intuitive decision making is a subconscious process of making decisions on the basis of experience and accumulated judgment. Five different identified aspects of intuition comply with the different types of decisions made. The first is a values- or ethics-based decision. The second is an experience-based decision. Affect-initiated decisions are those that are based on a manager’s emotions and feelings. The fourth type is a cognitive-based decision. Last, the manager may use his or her subconscious mind to retain data and process it.

Intuition and rationality are separate but are often used in combination in most decision making. The two complement each other to offer the manager an ideal solution for the decision-making process.

Types of Problems and Decisions The two major types of decisions are programmed decisions and nonprogrammed decisions. A programmed decision involves situations that recur on a regular basis, allowing the response to be a handled with a “programmed” response. In a programmed decision, the response will occur on a repetitive basis. Programmed decisions generally become a standard operating procedure.

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A non-programmed decision is nonrecurring and made necessary by unusual circumstances. The type of problem that induces a non-programmed decision is a poorly structured problem. These types of problems are usually new or unusual to the decision maker. More often than not, the information on the problem is incomplete or unavailable.

Decision-Making Conditions The ideal situation for making a decision is one of certainty. A decision of certainty includes knowing all of the alternatives and therefore having no risk involved when making a decision, because the outcome is known.

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Making a decision that involves risk is one of the most common situations.

Here the decision maker is not certain of the outcome of the situation.

However, through personal experience, or a simple “gut feeling,” she can estimate the probability of the outcome.

Uncertainty situations are characterized by having to make a decision when the outcome is not certain and when reasonable outcome estimates can’t be made either. These situations often arise when alternatives to the decision are limited because of lack of adequate information.

Decision-Making Styles Decision makers differ in their way of thinking; some are rational and logical, whereas others are intuitive and creative. Rational decision makers look at the information in order. They organize the information and make sure it is logical and consistent.

Intuitive thinkers, on the other hand, can look at information that is not necessarily in order. They can make quick decisions based on their spontaneous creativity and intuition.

The second dimension in which people differ is each individual’s tolerance for ambiguity. Managers who have a high tolerance for ambiguity are lucky in that they save a lot of time while making a decision. These individuals can process many thoughts at the same time.

Four major decision-making styles become evident: 1. The directive style entails having a low tolerance for ambiguity as well as being a rational thinker. Individuals who fall into the category of having a directive decision-making style are usually logical and very efficient.

2. Decision makers who have an analytic style of decision making have a large tolerance for ambiguity. These people require more information before making their decisions and, consequently, they consider more alternatives.

3. Decision makers who have a conceptual style of decision making look at numerous alternatives and are typically very broad in their outlook. Their focus is on the long run of the decision made.

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4. Decision makers who work well with others are said to have a behavioral style of decision making. This entails being receptive to suggestions and ideas from others as well as being concerned about the achievements of their employees.

Decision makers often combine two or more styles to make a decision. Most often a manager will have one dominant decision-making style and use one or more other styles as alternates.

On Sustainability In order to successfully implement sustainable initiatives, it is important to effectively communicate sustainable goals internally to employees and investors, as well as to guests. Sustainable initiatives are driven from within an organization through employee encouragement and involvement. The decision to employ sustainable practices is generally made from the top of an organization; however, it must be supported by everyone in order to prevail.

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Because tourism heavily impacts local communities, it is important to effectively communicate sustainable initiatives by fostering a degree of participation from the local population. Some strategies to involve the local population in tourism development include training, meetings, workshops, special events, projects, and so on. It is beneficial to harbor trust by creating relationships with local communities, and considering their needs and concerns.

Current Issues in Communication Current issues include: • • •

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Communication a positive message—guests like positive messages across all methods of communication, including social media.

Participative decision making—Decisions that involve associates are more likely to be successful.

Data driven decisions—Using the right data to make decisions is important. For example the STAR report can help make better revenue management decisions.

Maintaining a solid business reputation; public comments and observations, both positive and negative, can be captured and shared in real time to a global audience.

Integrated marketing communications; remain consistent in messaging across all communication channels.

Ethics in the hospitality industry Employee satisfaction leads to guest satisfaction New decision making models; ALL staff must be able to make decisions.

Improved hospitality consumer insights; it is imperative that we learn more about some of the choices individuals and groups make.

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Divergent market segmentation; as each generational cohort matures and their lifestyles evolve, their spending and travel habits typically also start to change and the industry must react.

Innovative technology; need to continue to invest in technology to help improve the guest experience, but they must also make smart investments.

III. Teaching Techniques/Classroom Exercises Note: The content of these exercises is such that they may also be used as essay questions.

Exercise One: Ask students to describe various distractions in the classroom. Which of these distractions has more impact on how they pay attention in class? How can these distractions be reduced in order to offer a more distraction free learning environment?

Exercise Two: Ask the class to “Freeze!” Ask various students to identify and discuss their perception of a classmates “body language.”

Exercise Three: Ask students to describe various communication flow examples in their place of employment or at school. Discuss examples of upward and downward communication, lateral and diagonal communication.

Exercise Four: Have students identify the last time they heard something through the “grapevine.” What was the original message versus the actual fact? How closely were they aligned?

IV. Answers to Chapter 17 Review Questions 1. No, it means there is a genuine disagreement between the two.

2. The upward and downward communication at (your university or college) will vary and be specifie to your institution. For example, some communication may be formal such as a new policy announced at a faculty meeting; other communication may be informal, such as did you hear that Fred is leaving for a directors position at XYZ university. Gaps can occur an any step in the process.

3. Answers will vary.

4. Answers will vary.

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V. Mini-Case Discussion Question Answers Case: Where’s My Food?

1. Student answers will vary. Some suggestions may be: a. Stagger the start times for housekeeping to minimize impact on elevators. b. Does room service need to have an elevator blocked at this time of the day? Research and initiate a method to deliver room service orders without dramatically impacting hotel guests. c. Stagger housekeeping breaks to minimize guest impact.

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Chapter Eighteen Control I. Chapter Objectives After reading and studying this chapter, the student should be able to do the following: 1. Explain why control is important and explain the control process.

2. Describe different types of control.

3. Explain contemporary issues in control.

II. Key Teaching Elements/Chapter Outline/Lecture Suggestions What Is Control?

Control provides a way to check actual results against expected results.

Action can then be taken to correct the situation if the results are too far from the expected outcome.

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Control is the management function that provides information on the degree to which goals and objectives are being accomplished.

Management engages in controlling by monitoring activities and taking corrective actions whenever the goals are not being met. An effective control system ensures that activities that lead to the attainment of the organization’s goals are completed.

It is also about providing guidelines and mechanisms to keep things on track.

Why Is Control Important?

Control is important because it’s the final link in the management functions. It’s the only way managers know whether organizational goals are being met and, if not, why not. Controlling is involved with planning, organizing, and leading.

An effective control system is important because managers need to delegate duties and empower employees to make decisions The Control Process The control process is a five-step process of determining goals, setting standards, measuring actual performance, comparing actual performance against those standards, and taking managerial action to correct deviations or inadequate performances.

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Setting Standards Standards are normally set in terms of quantity, quality, finances, or time.

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When developing a method of measurement, one must be absolutely sure that the goals are indeed measurable.

Measuring Personal observation—by monitoring subordinates to make sure things are done right—is the simplest and most common way of comparing actual performance to standards.

How We Measure Four common sources of information frequently used by managers to measure actual performance are personal observation, statistical reports, oral reports, and written reports.

Management by walking around (MBWA) is the best way to make personal observations.

Statistical reports provide information in the form of data that measures results and can be used for comparative purposes. They also use charts, graphs, and other displays that are easy to visualize.

Control information can be acquired through oral reports, conferences, meetings, one-on-one conversations, or telephone calls. The advantage of oral control reports is that they can be quick and allow instant feedback in the form of a two-way conversation.

Written reports generally have more information than oral ones and are usually easy to file and retrieve.

What We Measure We measure results to see how they compare with expectations. What we measure is more critical than how we measure.

The results we measure include guest satisfaction, labor costs, food and beverage costs, employee satisfaction, rooms and room rates, bed sheets, energy costs, insurance, and labor turnover.

In simple terms, we measure labor costs because they are the highest of the variable costs.

Because all managers, by definition, coordinate the work of others, criteria such as employee satisfaction or turnover and absenteeism rates can be measured.

Most managers have budgets set in dollar costs for their areas of responsibility. Keeping costs within budget is, therefore, a fairly common control measure.

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Results-accountability control system must be able to detect deviations from desired results quickly enough to allow for timely corrective management action.

Comparing Results Comparing results with expectations shows the amount of variation between actual performance and the standard or expected results. Some variation is generally seen between the expected and the actual results.

The range of variation is the acceptable difference between the actual and expected results.

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Managers are concerned with the size and direction of the variance.

Taking Managerial Action The final step in the control process is taking managerial action.

Correcting actual performance is used by managers if the source of the performance variation is unsatisfactory. For instance, corrective action may include changing the way the job tasks are done, changing strategy (doing different tasks), changing structure (changing supervisors’/managers’ compensation practices), changing training programs, redesigning jobs, or firing employees.

Another decision: Do you use immediate corrective action, which corrects problems at once to get performance back on track, or basic corrective action, which looks at how and why performance has deviated and then proceeds to correct the source of deviation?

Effective managers analyze deviations and, when the benefits justify it, take the time to pinpoint and correct the causes of variance.

Good communication is critical to associate control. The most important reason is that good communication helps associates understand what is expected of them. Employee performance reviews take on added significance when viewed from the control perspective. Rather than a method of reviewing past performance, they become a control technique.

Types of Control Managers can use controls in advance of an activity (feedforward control), during the activity (concurrent control), and after the activity has been completed (feedback control).

Feedforward control focuses on preventing anticipated problems because it takes place in advance of the work activity.

Feedforward controls are helpful in that they encourage managers to prevent problems rather than react to them.

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Concurrent control is a type of control that takes place while a work activity is in progress. When control is enacted while the work is being performed, management can correct problems before they become too costly.

Feedback control, the most popular type of control, takes place after the activity is done. For example, financial statements are examples of feedback control.

Feedback control has two advantages over feedforward and concurrent control. First, feedback provides managers with meaningful information on how effective their planning efforts were. Second, feedback control can enhance employee motivation.

Other Types of Control Corporate Control Planning and scheduling work more effectively may save thousands of dollars for departments such as Food and Beverage and Banquets.

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Food and Beverage Controls Most operations take inventory and calculate the food and beverage costs expressed as a percentage of sales at least once, sometimes twice, a month.

When you become a manager and assume responsibility for controlling food and beverage items, the first thing to do is to get the locks changed because you have no idea who has access to what. The second thing is to review all control procedures. If you really want to exercise tight control, insist that all orders have your signature or approval—that way, you know what should be received. Next, the stores need to be under the authority and responsibility of one person who is held accountable for all items under his or her control.

Operational Financial Controls At the operational level in the hospitality industry, the financial controls mainly consist of budgets and income statements. Budgets “guesstimate” the sales figure for the month/year and allow for up to a specific dollar amount to be spent on any cost of goods sold or controllable-costs item.

Instead of just allowing departments to budget the same amount year in and year out, zero-based budgeting has managers begin with a budget of zero dollars and justify all the cost of goods sold, controllable costs, and capital expenditures.

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Income statements show the actual sales and expenditures for a month or year. They are used extensively in the hospitality industry as a means of control because they are results driven.

Good managers first control the “big ticket” items that will be most costly if not controlled.

Labor costs in a hospitality operation are the largest of the controllable costs. Labor costs, like any other, need to be controlled in line with sales.

In managerial accounting, food and beverage costs are the next largest to be controlled after labor costs. All food and beverage items need to be costed and priced in advance to yield a certain percentage.

Qualities of an Effective Control System Effective control systems tend to have certain characteristics in common.

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All effective control systems exhibit the following ten characteristics: Accuracy, timeliness, economy, flexibility, understandability, reasonable criteria, strategic placement, emphasis on exceptions, multiple criteria, and corrective action.

Contingency Plans and Controls The most important contingency plan factor that affects the design of an organization’s control system is size of the organization. The control system should vary according to the organization’s size.

As organizations increase in size, direct supervision is likely to be supplemented by an expanding formal control system of reports, regulations, and rules.

Very large organizations typically have highly formalized and impersonal feedforward and feedback controls.

As you move up in the organization’s hierarchy, there is a greater need for several different types of control; this reflects increased operational complexities.

Adjusting Controls for Cultural Differences In a global hospitality corporation, managers of foreign operations tend to be controlled less directly by the home office.

Because distance creates a tendency to formalize controls, the home office of a global company often relies on extensive formal reports for control. Global companies rely on the power of information technology to provide speedy control reports of results.

In less technologically advanced countries, managers tend to rely more on direct supervision and highly centralized decision making for control.

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Contemporary Issues in Control Workplace Privacy Employees are hired to work, not to surf the Web checking stock prices, placing bets at online casinos, or shopping for presents for family or friends.

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Factors contributing to workplace violence include employee stress caused by long working hours, information overload, daily interruptions, unrealistic deadlines, and uncaring managers.

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Personal on-the-job Web surfing costs millions of dollars a year in wasted computer resources and billions of dollars in lost work productivity.

Another reason why managers monitor employee e-mail and computer usage is that they don’t want to risk being sued for creating a hostile workplace environment because of offensive messages or an inappropriate image displayed on a coworker’s computer screen.

Concern about sexual harassment is one of the reasons why companies may want to monitor or keep backup copies of all e-mail.

Employee Theft A high percentage of all organizational theft and fraud is committed by employees, not outsiders.

Industrial loss-prevention professionals suggest that people steal because the opportunity presents itself through lax controls and favorable circumstances.

People steal because they can rationalize whatever they’re doing as being correct and appropriate behavior. Hospitality associates also steal because they often feel underpaid.

Workplace Violence

Hotels and restaurants as well as other businesses and organizations must constantly monitor and manage the different aspects of sustainable practices, such as energy, waste, lighting, water, heating and cooling, temperature and other sources that consume energy.

Energy Management There are a variety of solutions to lighting controls, including occupancy sensors, time switches, energy efficient bulbs.

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Waste Reduction The tourism industry serves many millions of visitors annually. The waste generated by tourists constitutes a large portion of a destination’s commercial waste stream.

Restaurants, lodging establishments, and other businesses are finding that promoting a “green” image provides innumerous benefits, resulting in more long-term cost-savings.

Current Issues in Control Current issues include: •

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Loss prevention—everywhere the author worked there was someone of staff stealing which signifies that loss prevention is a challenge in the hospitality industry. Losses can also occur when guests take property belonging to the hospitality operation.

Government regulations—making sure that all employees are legally entitled to work in the United States. Abiding by all laws in all departments including food and beverage laws.

A focus on variable and fixed cost controls; reducing costs without shrinking quality standards or profitability.

Staffing guides and flexible scheduling; use of staffing guides and detailed, yet flexible, staffing schedules to control labor use and expenses.

Labor costs; more care in planning, attentive scheduling, and improving productivity.

Invest in logistics and equipment; to control costs and drive productivity.

Hire and train to reduce turnover; screening, hiring, and training for the future.

III. Teaching Techniques/Classroom Exercises Note: The content of these exercises is such that they may also be used as essay questions.

Exercise One: Divide students into groups and have each group use the five-step control process to develop a strategy to control their food and beverage department costs in one area; either food or beverage.

Exercise Two: Your banquet department just reported a food cost of 26.4 percent on a budget of 25.5 percent.

Have your students decide whether to use immediate corrective action or basic corrective action to correct the problem.

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Exercise Three: Ask students if they are concerned about workplace violence. How does it affect them in their workplace or at school?

IV. Answers to Chapter 18 Review Questions 1. Describe the elements of the control process and provide an example of how the control process is used in a restaurant during the lunch rush.

The control process involves setting standards, measuring results, comparing the results against the standards, and taking action.

An example of the control process used in a restaurant during the lunch rush: Set Standard: The lunch special is a ¼ pound burger garnished with 1 slice of Muenster cheese, 1 slice of cheddar cheese, a ¼ oz of special sauce, 2 slices of bacon, lettuce and tomato on a toasted bun.

Measure Results: Burgers can be weighed prior to cooking. Kitchen manager or expediter can review each burger to ensure all elements are on the burger.

Compare Results to Standards: Kitchen manager or expeditor can record number of burgers that don’t meet the standard and were not special requests from customers.

Take Action: Cooks can meet with the kitchen manager or expediter to review proper burger construction and action can be taken immediately or post shift depending on the nature of the variance.

2. Explain feedforward control, concurrent control, and feedback control, and provide an example of each as it may occur in the hospitality industry.

Feedforward Control: focuses on preventing problems before they occur.

Example: Taking inventory the night before a big event to ensure all equipment and food are on-hand.

Concurrent Control: focuses on problems that occur during the work activity.

Example: Front desk agent does not properly greet the guest and does not process the credit card properly.

Feedback Control: focuses on problems after they occur.

Example: End of month inventory in the bar shows that the sales of vodka are lower than the actual vodka used.

3. Explain the challenges to control if employee theft is occurring in the business.

If employee theft is occurring in the business there are several challenges to control that may be occurring including the need for stricter security, the need for more clearly defined processes, the need to improve employee morale, lack of training, or employees with financial or other problems outside of work that may need assistance.

V. Mini-Case Discussion Question Answer Case: The Ritz-Carlton Question: How does the Ritz-Carlton foster a high level of employee commitment and ensure a high quality of guest service?

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1. The company uses a participatory leadership style through information gathering, coordinated planning and execution, and a highly trained workforce. They maintain “Gold Standards” that are beyond industry standards. They “certify” employees and reinforce the training with frequent recognition for achievement.

2. Besides recognition for achievement, they perform regular performance appraisals, daily lineups, and annual surveys are taken to measure satisfaction. Workers are further empowered to do whatever it takes to solve guest problems and solve them immediately.

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