Acknowledging Job Applicants

The hospitality industry is coming out of the recession times and I am sure many hotels especially seasonal once are going through an enlargement process of their crew. Nevertheless, special care have to be taken when selecting the right memeber(s) to be recruited. Every hotelier wants to recruit the most skilled, the most experienced and most importantly the most cost-effective workforce.

For those misfortunes, those who are not going to be selected; a 'quick and easy' acknowledgment message, and yet strategic choice, to retain those applicants for future job offers, or even better, to consider them as potential future guests of your property.

Here below is a simple Email that could be sent to non-selected applicants - Hoteliers could add a link to their twitter and facebook accounts so that applicants can follow the hotel news and updates - Thank god! Hoteliers are now conscious more than ever of the importance of social media in driving CRM and generating additional profit

 Dear Applicant,

We highly appreciate your interest in starting a career with our hotel.

While we were impressed with your skills and experience we regret that for the time being we are unable to consider your application as your profile does not match what we looking for.

May we once again thank you for your interest in our company and inform you that we will keep your application for  future offers.

With kind regards

Hotel
Address
Phone
Website

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Categories: Human Resource Management, Marketing Planning

Bad reviews, good reviews...It's the customer's satisfaction that matters at last!

There is so much going on lately between Tripadvisor and hotels over bad reviews, their relationship is a bit of controversial, at a first glance, it looks like hoteliers are the bad guys. From a customer point of view however, TA is a great tool to share online, and sharing nowadays is the trend, whether you like it or not nothing is going to stop the information from instantly traveling from one continent to another.

On September 13 this year a company named KwikChex, a UK-based company specializing in online reputation management said that more than 300 hotels from the UK and United States have expressed interest in pursuing legal action against TripAdvisor over bad reviews and accused TA of defamation.

Some of the complaints against TA are:

"TripAdvisor claims that they are not responsible for user-generated content - but claims ownership of all posts."

"TripAdvisor has singled out businesses and directly advised consumers not to trust them - even when the majority of their own posters recommend these businesses."

"TripAdvisor overstates the level of trust that can be placed in an individual review on their site. They are thus directly seeking to influence consumer opinion." "TripAdvisor has failed to take appropriate action when offered evidence of falsehoods - thus removing their blanket disclaimer defense."

Independent Hotels do not like the way the site is being managed for the simple reason that, it is misused by some customers, well first of all, users of TA write reviews anonymously, and when you're anonymous you can say whatever you want. Second, when you read some negative reviews you feel like it's not a review anymore but some kinda revenge from the hotel, some even don't hesitate to say 'do not go there' 'it's hell' and stuff like that, which can not only damage the hotel's brand but could bring the whole business to dust.

The hotel business is about service and hoteliers who have been in it for decades certainly are aware of that and they work so hard to offer an experience that goes beyond the customer's expectations, however, unfortunately, it happens that you get few unhappy guests with your hotel's product, and before posting a bad review I invite everyone to talk to the hotel's management first , your issue could be solved internally, and during your stay you could get an upgrade out of it!

TA or whatever website, Travel online reviews are a part of our lives today, the fact that online customer generated content influences 10 billion dollars per annum of the travel business can't be ignored anymore, reputation online management has become a part of hotel management, independent hoteliers have to invest more time and money in this branch if they want their business to thrive. 

Categories: Hotel Online Marketing, Marketing Planning

How to prove to your boss that keeping the hotel open during low season is profitable (Practical Case)

Working in a seasonal hotel maybe extremely stressful, front line staff feels like they are nothing but a casuality; squeezed during the high season and then thrown away – Now...from another perspective, each year right before the re-opening the human resource department will be faced with the unpleasant reality that no skilled workforce available; the staff that the hotel spent months training has turned to the competiton, and that has a direct impact on the quality of the hotel's product offering. 

Statistics shows that seasonal hotels have a high Labour turnover. Furthermore, guests and travel operators would not take your business seriously, knowing that during the first and last months of your operations, management will do whatever he can to cut on costs to face the low ocuppancy level

For reasons of simplicity we are going to assume that we have an All Inclusive 480 Double rooms hotel, and only determine the room's division break-even point on the notion that in All Inclusive hotels food and beverage sales, as well as, any other sales, are included in the selling price.

Before deciding whether to close or open the hotel during low season, a deep through analysis of the hotel's sales revenue, total costs and volume of activity has to be undertaken. The interrelashionship between these three elements of profit under different conditions will determine the outcome of the opportunities available to management. Sales revenue, total costs and volume of activity can be expressed in the formula below:

Profit = Total sales revenue – Total costs

To analyse these components the basic equation is expanded into what can be termed the 'cost-volume-profit' equation:

Net profit = (Average room selling price X Rooms sold) - [Fixed costs + (Unit Variable cost X Rooms sold)]

For simplicity it can be written in the mathematical form as follows:

β = px – (a+bx)

where β = net profit for the period

p = Unit selling price

a = fixed cost for the period

b = unit variable cost

To examine this equation we need to use the contribution margin method; it represents the margin from sales revenue minus variable cost which is available to contribute towards covering fixed costs and providing a profit and it can be determined as follows:

Contribution margin = Sales revenue – Variable costs

The basic equation of β = px – (a+bx) can then by adapted to show the contribution margin

β = (p-b) x-a

Therefore, to determine the room's division break-even point in number of units the equation will be:

x = a / (p-b)

where a = Fixed costs

(p-b) = contribution margin per unit  

The follwing step in our work will be to determine the volume of activity (forecast of occupancy), total fixed and variable costs.

Now, we will need to forecast the monthly room sales for the next year and their respective fixed and variable costs. Determining the monthly forecast of rooms sales is a very simple task; all we need is the charts of previous room sales and future reservations which they will be the base of our calculation. If however the marketing department of the hotel is projecting some marketing actions these have to be taken into consideration when computing the room division forecast.

 The monthly breakdown of rooms occupancy forecast in Euro is shown in the table below:

The hotel stops its operations during 5 months: January, February, March, November and December. 

 The next step is to determine the monthly charges, to do so, we need to gather data on total fixed and variable costs.

 Total costs are computed in the table below in Euro: 

Notice that when there are no sales (during the months of January, February, March , November and December) the Charges, that during normal month of operations are considered as variable, will be computed as fixed charges.  

The monthly break-even point is therefore determined as follows: 

On April total costs are higher than revenue; the break-even point will be:

BEP = Total costs / Average room rate = 240369,00 / 45 = 5304 Room Night

For May, June, July, August, September and October the Contribution Margin method can be adapted, and the break-even point is determined as follows:

x = a / (p-b)

where x = Break-even point / Unit (BEP/Unit)

a = Fixed costs

(p-b) = contribution margin per unit

For May for example, contribution margin (p-b) = 50 – 10 = 40

Therefore, break-even point in terms of rooms would be:

BEP = Fixed Costs / Contribution margin per unit = 157 265,00 / 40 = 3852 Rooms

Required Occupancy to break-even = 3852 / 14880 = 25,89% , with 14880 the hotel rooms capacity in May (480 x 31)

Now, to investigate the prospective of opening the hotel all year-long, some calculations has to be made: Our primary objective will be to convince the management that the opportunity of extending the length of the operations period for all the months of the year, while covering the hotel’s fixed costs for the period (January, February, March, October, November and December), it could generate an additional revenue for the same period as well as additional revenue for the normal period; for example stays that begin in March and end in April, or those stays that begin in October and end in November.

 As shown in the table below, to break-even in January, February and March, an occupancy level of respectively 22.17%, 24,86% and 23,49% are needed. If attained these can decrease the variable charges needed in the month of April to launch the operations. 

Marketing effort has to harnessed upon successfully attaining the required occupancy level off normal operating period, with some wise planning, budgeting and a few phone calls, targets can be met.

If the marketing department refuses the tasks it has been assigned, then we’ll do it! And my next posts will focus on producing a Master Marketing Plan!

Thanks for reading! 

Click on the link below to download a full spreadsheet (Room Division Break-even) in Excel Format

Seasonal Hotel Breakeven

Categories: Managerial Accounting, Marketing Planning

Hotel front desk: Humans Vs machines

People say ‘’I will return next year’’ not after being greeted by a ‘kiosk’ but when they experience great customer service

The article that appeared on www.msnbc.com some hotel chains ‘’ditching’’ the front desk got me thinking.

Actually, there is no doubt it is cutting edge for hotels to make customers bypass the front desk for a faster check-in, by using kiosks, check-in pedestals, tablets or iPads, it is also a great way of profit maximization by downsizing or eliminating the front office staff, and appointing grooms or butlers for one-on-one welcomes instead.

The front office is the core of any hospitality business, apart from it being the check-in and check-out point, it is also where customers go to to enquire about the hotel facilities and surroundings, it is where they compliment and complain, it is certainly a big part of the whole stay experience of the guest; first and last contact place. In fact, I can’t imagine, say a 600 rooms hotel with a daily inhouse guests number of 1000 customer with few or no front office staff at all; how many butlers you will need to answer every enquiry and fulfill every need or want of your beloved guests? Furthermore, not only customers go to hotels to check-in, sleep and then leave; it is a place where they seek unique individual customer service and attention, and it is the service that differentiate one hotel from another - not the brand of the kiosks the hotel uses; people say ‘’I will return next year’’ not after being greeted by a ‘kiosk’ but when they experience excellent customer service and genuine attention.

On one hand, I can’t argue the fact that using kiosks or check-in mobile devices in budget and small hotels is extremely profitable in terms of labor cost, on the other hand, these hotels are generally operating with a limited budget and I am not really sure they can afford that type of technology.

About Taoufik Haraketi

Taoufik Haraketi is a reservations manager and blogger heavily involved in hotel revenue management and hotel online marketing. He holds a BBA Hotel & International Tourism Management from the American University of London. He is currently employed as a reservation manager at Caribbean World Mahdia in Tunisia.

Website: www.taoufikharaketi.com

@taoufikharaketi

Categories: Front Office Management, Marketing Planning

Sources of Finance for hotels: The Basics

The two basic source of long term finance are owners capital and long term loans. The enable the business to obtain tangible fixed assets such as land, buildings and equipment. There are ways however of having the use of buildings and other fixed assets without ownership, of which leasing is a good example. This tends to reduce the amount of long term funds needed.

Short term funds are needed to finance the investment in working capital that supports day to day operations.

Bank finance

Overdrafts

Overdrafts facility is agreed which states the maximum amount the business can overdraw on its current account.

Loans

A loan with the bank is an alternative facility to an overdraft. Loans with repayment up to five years are generally considered as short term.

Partnership

Entering into a partnership agreement is a further way of obtaining more funds whereby an agreed sum will be contributed to the business as initial capital. A partnership is in position to borrow from investment institutions on mortgage and in other ways although it is often difficult to raise substantial amounts of capital without offering a share of the business. A partner investing without taking part in management may limit his liability to the extent of his subscription and this constitutes a limited partnership.

Companies

Private and public companies are owned by shareholders whose liability for the company’s debts is limited to the amount, if any, unpaid on the shares taken up by them.

Private companies

A private company has at least two members. It is prohibited by law from offering its shares to the public.

Public companies

A public company differs from a private company in the following ways:

- Minimum issued share capital of £50,000 of which one quarter needs to be paid up

- Public limited company can make its shares available to the public

Ordinary shares (Called equity capital)

Holders of ordinary shares accept the main risk involved in investing in a limited company but on the other hand stand to gain most when the company makes a high profit.

Preference shares

Although part of the company’s share capital, these shares generally attract limited voting rights or no voting right at all, and since dividends are at a fixed rate, preference shares have much in common with debentures. These shares, however, are a relatively expensive source of capital compared with debentures because dividends are paid from after-tax earnings, whereas debenture interest is an expense which reduces taxable profit.

Rights issues

A company making a definite offer to its own shareholders to make up new shares is said to make a right issue. The price is usually below market price as an attraction.

Bonus issues

Where a company’s reserves are considerable and the market price of ordinary shares far above the nominal value, a bonus issue of new shares may be made to shareholders without a charge to them. The issue is in proportion to existing shares held such as an issue of one new share for every one held.

Retained profit

Profit not distributed to shareholders in one source of finance and goes by the name of retained profit, or ploughed back profits. When large profits are made, some need to be retained to offset the effects of inflation. Cash will be saved by not distributing all the profit that has been generated in a period, but it will not automatically be available for investment as it is likely to be represented by a range of existing assets.

Debentures

There are two main types of debentures, the mortgage debenture secured by the mortgage of particular property owned by the company, and the debenture with a floating charge. If the company goes into liquidation, mortgage debentures rank ahead of floating debentures up to the value of the secured property and floating debentures rank ahead of any unsecured creditors. All creditors rank ahead of any shareholders.

Convertible debentures

Loan stock holders who have the right to convert their stock to ordinary shares at a future date or series dates hold convertible debentures, the final decision to convert resting with the debenture holder.

Mortgage loans

A mortgage loan in one taken out against land or property and is similar in some ways to secured debenture. However, differences between them include :

- The interest rate of mortgage cannot normally be fixed over the life of the agreement as is the interest on a debenture

- Regular payment of interest and principal are made to liquidate the loan which may be up to 30 years

- The mortgage holder has the first and call on a company's assets in the event of a default in payment

Venture capital

It is a loan or share capital provided by institutions that share the risks as well as the rewards of investing in a business. Such institutions include clearing  and merchant banks, pension funds, private and public investors.

Management buy-outs

A management buy-out is a transaction in which executive managers of a company, jointly with a financial institution, buy the company. It may take place when the future of the business is in doubt through for instance financial losses, possible take-over, or low share price.

Business Expansion Scheme BES

Is a government scheme to promote private investment in business by providing tax relief on the purchase of new ordinary shares from an unquoted company. Investment may be direct from the public through a managed fund

Franchise

A franchise is the gathering of a license by the franchisor entitling the franchisee to use its established trade name, such as Holiday Inn Worldwide, Sheraton Hotel Corporation, and Burger King, and to sell its products or services.

The franchisees' investment cost covers premises, equipment and stocks. There is also an initial fee and a fee based on turnover for management services and marketing/advertising.

Asset use without ownership

Includes leasing, hire purchase, rental and sale and lease back

Leasing

A lease comprises a primary period and a secondary period. During the primary period a rental commensurate with the cost of the equipment is paid by the lessee; the secondary period rentals are nominal. The total length of the lease is negotiated with the lessee but bears a relationship to the anticipated useful working life of the equipment ; the normal primary periods are 3, 4, or 5 years’  duration with 2, 6 or 5 year secondary periods respectively. The primary period rentals may be paid monthly, quarterly, half yearly or annually in advance.

Leasing offers a number of advantages to the lessee including :

-          It is the use of equipment, not its ownership, which is vital for profitability ;

-          Use of equipment is gained on payment of first rental ;

-          Working capital is left free for more profitable employment ;

-          Rentals are fully tax-deductible ;

-          Budgeting is facilitated ;

-          Managers are more easily able to face up to obsolescence of existing plant and equipment because of ease of renewal.

The main reason for buying rather than leasing assets is perhaps that the cost is often higher to lease, although this depends upon the interest cost of raising money to make the purchase, or if money is available, the earnings which would be sacrificed in making the purchase.

Contract hire

Contract hire is a form of leasing which is generally for shorter periods of time. Used for acquiring vehicles and special equipment.

Hire purchase

Hire purchase may be the only means of acquiring certain assets. The purchaser makes a down payment or deposit and enters into a contract to hire goods for a specific time, say two years, making regular periodic payments for the hire, and at once acquires possession but not ownership of the goods. At the end of the hire period the hirer may purchase the goods outright for a small cash consideration, or the ownership may pass on the last payment.

Sale and lease back

Sale and lease back of property is a popular source of finance for hotel companies. Companies owning freehold properties or long leaseholds and having good profit records may benefit from selling such properties or leases to a finance or life assurance company for full market value and then lease back for a long term, frequently 99-120 years, at a rental directly related to the sale price, including cost of purchase, and in the range of 81/2-10%. Provision would be made during the course of the lease for upward rental review at intervals now normally of not more than 7 years.  During the term of lease the vendor would normally be responsible for maintaining and insuring the building.

Gearing (Leverage in the states)

The ideal capital structure for a company is difficult to determine since it is largely a matter of opinion. The capital structure is measured by relating the medium-and long-term fixed interest capital employed. The company is said to be high geared if a large proportion of its capital is in fixed interest securities such as preference shares and debentures. Company gearing may be measured in a number of ways, a common method is:

(Fixed interest capital / Total long term capital) X 100

 

 

About Taoufik Haraketi

Taoufik Haraketi is a reservations manager and blogger heavily involved in hotel revenue management and hotel online marketing. He holds a BBA Hotel & International Tourism Management from the American University of London. He is currently employed as a reservation manager at Caribbean World Mahdia in Tunisia.

Website: www.taoufikharaketi.com

@taoufikharaketi

 

Categories: Managerial Accounting, Marketing Planning

Elements involved in the management of the front office

The primary purpose of hotels is to provide travelers with shelter, food, refreshment, and similar services and goods, offering on a commercial basis things that are customarily furnished within households but unavailable to people on a journey away from home. Historically hotels have also taken on many other functions, serving as business exchanges, centers of sociability, places of public assembly and deliberation, decorative showcases, political headquarters, vacation spots, and permanent residences - Source - WTO.

For the purpose of this assignment focus is going to be on accommodation provision and the elements involved in its management.

The front office is a key area in the management of accommodation provisions; it is the communication Centre of the hotel actually, providing information to the other hotel departments, such as arrival times, or guests’ preferences, and through the switchboard dealing with incoming calls; and more importantly, the front office is the place where guests go to if they need to ask about the hotel facilities or to complain for example.

Although the front office, in terms of size is not usually the largest hotel department, it is essential to organize it with great care in order to maximize sales revenue. Front office management, like any other form of management is about organizing and controlling people and other resources in order to achieve specific objectives.

One of the most important managerial aspects of the front office department is pricing, while it is a task that is performed generally by the commercial department in the corporate hotels, pricing is an extremely important function because it affects the volume of sales and profit maximization for the hotel. The target of the hotel’s pricing policy is to strike the optimum balance between supply and demand in order to maximize the hotel’s profit.

Control in a hotel’s front office is very important managerial feature. The objective of every control system are to establish specific targets, monitor the performance to see if these targets have been set, and finally if necessary take corrective action to meet these targets. The most common for the front office, however, are cash/revenue sales, guest satisfaction and night audit.

In order to control effectively the front office realizations and performance, a set of report are used, these include the occupancy report, which summarizes the previous day occupancy rate and average room rate.

The revenue report, however, apart from giving the total room revenue for the day, also gives an insight of the average room rate for the day. The arrival list is, as the name suggests, a detailed list of the day’s arrivals.

Also, providing a good quality and effective service in the front office is directly related to the personnel hired. The right staff can make a significant difference to the quality of the service offered. Furthermore, proper and continuous training is essential for the ‘’well-being’’ of the department.

The housekeeping service is an undivided part from the front office department, actually both works in harmony. The purpose of the housekeeping department is to provide clean and serviced bedrooms on a daily basis to the agreed standards, in addition to all corridors and public area.

Actually the housekeeping department is usually the largest employer in the hotel, efficient human resource management practices have to be set in place. Any human resource plan for the housekeeping should focus on the following areas: Recruitment, induction and training, feedback, and development and succession planning.

Due to the ever increasing focus on profit generation with hotel management, productivity is a key influence on the hotel of profit generated by any department. In the housekeeping department, productivity relates primarily to the number of rooms a room attendant is able to service in a shift to the agreed standards. Finding the optimum balance of rooms serviced to standards achieved will vary from hotel to another.

Furthermore, there need to be in place a number of management control systems that are able to supervise and measure the housekeeping department at every level. This is for two specific reasons:

-       To evaluate the success or otherwise of the housekeeping department in terms of standards and profit and;

-       To ensure that goals and objectives set are achieved harmoniously alongside those of the hotel as a whole.

Purchasing forms a large part of the housekeeping manager’s role. This is one area where the profitability of the department can be affected if the purchasing and consumption of the various products and supplies are not effectively managed. The primary areas of purchasing that fall under the control of the housekeeping managers are: Bedrooms supplies, cleaning supplies, uniforms, Tea and coffee making facilities, working replacements (shower curtain, crockery…), line.

In addition, one important element that comes with the management of the room division department is the budgeting and performance evaluation. Prior to each year the budget will be set for the hotel. Overall this relates to the sales and profits to be achieved for the coming year. Included within this are the departmental accounts where the housekeeping department will be allocated expenditure targets on payroll and direct expenses. These targets are subdivided into monthly.

Hotel Engineering and maintenance is also an important aspect of the management of the accommodation department. A basic knowledge of engineering in needed for any modern hotel manager. To be successful in this field the accommodation manager has to be familiar not only with service techniques, rooms booking and customer service, but also with technical installations; and sanitary, electrical, electronic, ventilation and air conditioning equipment.

Hotels are basically buildings used by managers to offer hospitality to their clients. The hospitality industry cells a bundle of services. Therefore, the key to success is client satisfaction. This satisfaction depends to a greater extent on the comfort a client is offered in a given hotel, and comfort in its return, depends to a larger extent on the performance of technology.

There are many technical installations in hotels. Here we will consider only the three most common, and always with special eye for their importance in the room division department.

Sanitary installations: Drinking water, both cold and hot, is vital for any hotel operation. The natural cycle of water is a kind of closed circuit, alternating between evaporating and precipitation, in which the heat coming from the sun causes water from the sea to evaporate and accumulate in the sky. After following the caprices of meteorology water falls back to earth where it is used by the flora and fauna for their living needs. Finally all water returns to the sea to restart cycle. Man interferes with the natural cycle of water by using it for his needs. In hotels, there is a large demand for water from: Guests, kitchen and restaurant, laundry requirements, and, heating and conditioning.

Hot water production, distribution and consumption are very difficult technical problems better left to specialists. However, the room division manager/hotel manager must become familiar with the rudiments of hot water technology. Sanitary equipment is of primary importance for room division managers and this includes the plumbing network in the hotel itself.

Heating, ventilating and air conditioning: The physical comfort of hotel guests depends to a great extent on heating, ventilating and air conditioning parameters. Heating provides the right temperature and humidity in hotel rooms, while ventilation provides new oxygen and evacuates bad odors. Air conditioning is, of course, the best system for controlling all aspects of air quality, but it is expensive to install and maintain effectively. There are three principal types of ventilation systems:

-         Air extractions systems: An electro-mechanical ventilator removes spent air from the room and evacuates it outdoors. This creates a depression in the room thereby forcing new air to enter through fissures.

-         Air propulsion systems: An electro-mechanical ventilator takes spent air from outdoors and pushes it into the room. This creates a pressure in the room thereby forcing new air to exit through fissures. This type of ventilation is not very efficient and is seldom used in hotels

-         Air extraction with propulsion systems: A combination of the first two types. This is the best ventilation type but requires more sophisticated installation the previous types. Recommended and actually very often used for large rooms (conference halls, fitness rooms, indoor swimming pools and so on)

Electrical installations and lighting: There are two kinds of electrical current, direct current (DC) and alternating current (AC). DC is the kind we get from batteries. AC is the type of electricity we get from ordinary electric sockets. Electricity is used to produce light, heat, sound and mechanical work. Of there uses, the most visible, by its nature, is of course lighting. In every hotel there are hundreds or even thousands of lighting bulbs. Good lighting design is part of customer comfort and also contributes to the hotel image. Therefore, we must accord this topic a great deal of attention.

Hotel safety and security is also important when it comes to the management of the room division service. There are many hazards in a hotel. Accidents, theft, aggressions and also catastrophes. Here we are especially concerned with fire hazards. Statistics tell us that there is a fire in a hotel every 11 minutes somewhere in the world. It is very important therefore to put in place fire protection manuals, as well, fire evacuation procedures. Staff and guest have to be initiated with these procedures.

Nowadays, we hear a lot about ecology and going green; actually several specific measures have been taken to correct the most blatant mistakes. However, going green is not only about saving the planet but it is also a great opportunity to minimize costs.

 

 

About Taoufik Haraketi

Taoufik Haraketi is a reservations manager and blogger heavily involved in hotel revenue management and hotel online marketing. He holds a BBA Hotel & International Tourism Management from the American University of London. He is currently employed as a reservation manager at Caribbean World Mahdia in Tunisia.

Website: www.taoufikharaketi.com

@taoufikharaketi

 

Categories: Front Office Management, Marketing Planning

Differences in Human Resources practices

The recent globalization of organizations has resulted in a rapid growth in the number of unique national cultures with which corporate hotel chains must successfully manage and work.

When it comes to business, the world is indeed becoming a smaller place. More and more companies are operating across geographic and cultural boundaries. While most have adapted to the global reality in their operations, many are lagging behind in developing the human resource policies, structures, and services that support globalization. The human resource function faces many challenges during the globalization process, including creating a global mind-set within the HR group, creating practices that will be consistently applied in different locations/offices while also maintaining the various local cultures and practices, and communicating a consistent corporate culture across the entire organization. 

To meet these challenges, organizations need to consider the HR function not as just an administrative service but as a strategic business partner.

As a result of its globalization, the human resources practices are characterized by: An Increasing levels of decentralization

- Half of all international hotels reported having one primary HR department with independent regional HR staff.

- Many international (37 percent) and domestic (42 percent) companies reported using a more centralized approach — one primary HR department with dependent regional HR staff.

- More than a third of domestic organizations reported having only a primary HR department with no regional HR staff.

Global business is characterized by the free flow of human and financial resources especially in the developed economies of European Union (EU), the North American Free Trade Agreement (NAFTA), other regional groupings such as the Association of South East Asian Nations (ASEAN), the Economic Community of West African States (ECOWAS), the Southern African Development Community, etc. These developments are opening up new markets in a way that has never been seen before. This accentuates the need to manage human resources effectively to gain competitive advantage in the global market place. To achieve this, organizations require an understanding of the factors that can determine the effectiveness of various HR practices and approaches. This is because countries differ along a number of dimensions that influence the attractiveness of Direct Foreign Investments in each country. These differences determine the economic viability of building an operation in a foreign country and they have a particularly strong impact on HRM in that operation. A number of factors that affect HRM in global markets are identified:

(1) Culture

(2) Economic System

(3) Political System and

(4) Human capital.

Human capital: (the skills, capabilities or competencies of the workforce). This is in consonance with the believe that competency-based human resource plans provide a source for gaining competitive advantage and for countries profoundly affect a foreign country's desire to locate or enter that country’s market (O’Reilly, 1992). This partly explains why Japan and US locate and enter the local markets in South East Asia and Mexico respectively.

Globalization requires attention to “more than conducting business across national borders but also entails expanding com­petition for almost every type of organization presenting management with the challenge to operate in diverse cultural settings” (Edwards, 2006). O’Keeffe con­tends that the advent of the global eco­nomy has brought a realization that the only lasting competitive advantage is an organization’s ability to effectively ex­ploit human resources. HRM has become a significant factor in the management for organizational success. The multinational companies (MNCs) and other internatio­nal organizations face the challenge: what kind of a new form of “glue” helps to ma­nage HR worldwide?

The whole challenge of managing across cultures is about balancing the seemingly opposing values and practices in such a ways as to create advantages from them. The research of Evans and Doz is parti­cularly relevant to all areas of strategic HR across cultures of different countries. In addition to recognizing that dualities exist and must be balanced, it is clear that HRM requirements become less a matter of having the right people at the right place at the right time, but more a matter of integrating selection, reward and appraisal practices within organizational values which will allow a balanced outco­me under a range of cultural conditions.

Actually, an understanding of the cultural differences may well provide the competitive advantage that many organizations seek. Cultural awareness is much more that the ability to speak a foreign language or two, although this in itself may be vital.

Cultural awareness is the ability to anticipate, to recognize and to respond to cultural differences. This may include the ability to communicate correctly with staff, customers or potential customers in both written and spoken form but also to anticipate and to meet their particular cultural expectations.

Beside language there are many other differences that exist between cultures. These may include differences in values, attitudes, behavior, communication, personal space, technical differences, dress, religion…

Cultural differences, however, should not be seen as being confined to differences between nationalities. Obviously each country has its own culture. However, cultural differences also exist within national cultures. Some socioeconomic groups from different countries have more in common, in some respects, than with different demographic or socioeconomic from their own country.

How individual hospitality companies demonstrate or develop cultural awareness varies considerably. Hotels may employ staff of appropriate nationalities or who are able to speak appropriate language. Some employers will actively promote acquisition of language by paying ‘language bonuses’ and/or paying for or providing language tuition. Good language education not only equips people with basic communication skills but it also introduces key cultural issues such as forms of addressing others. Some other employers may go further by researching key cultural issues concerning potential cultural customers and setting out to meet these needs, such as the provision of a copy of the Koran in the bedroom rather than the Bible. Finally some employers train staff through role play, etc, in how to meet the needs of people from many different cultures.

To gain a competitive advantage, hotels operating in different countries, have to be aware that cultural differences exist, that they are important, and that they are ignored at risk of giving offence at the very least and of losing business at worst. When working with people of other cultures, whether as managers, employees, customers or owners, the relationship is likely to be more successful if cultural differences are anticipated and accounted for.

About Taoufik Haraketi

Taoufik Haraketi is a reservations manager and blogger heavily involved in hotel revenue management and hotel online marketing. He holds a BBA Hotel & International Tourism Management from the American University of London. He is currently employed as a reservation manager at Caribbean World Mahdia in Tunisia.

Website: www.taoufikharaketi.com

@taoufikharaketi

Categories: Human Resource Management

How does the internal and external environment of a hotel affect Human Resource Planning?

The structure, management and functioning of a hotel are not only determined by its internal environment ‘’relates to the culture and climate and to the prevailing atmosphere surrounding the organization’’, but also are influenced strongly by a range of volatile, external, environment factors. In order to be effective and maintain survival and growth, the organization must respond to the opportunities and challenges, and the risks and limitations, presented by the external and internal environment of which it is part.

The main external factor that affects most hotels is the degree of competition – how fiercely other hotels compete with the services and products that another competitor makes.

The other factors that can affect the hotel business are:

• Social – how consumers, households and communities behave and their beliefs. For instance, changes in attitude towards health, or a greater number of pensioners in a population.
• Legal – the way in which legislation in society affects the business. For example, changes in employment laws on working hours.
• Economic – how the economy affects a hotel in terms of taxation, government spending, general demand, interest rates, exchange rates and European and global economic factors.
• Political – how changes in government policy might affect the business.
• Technological – on-line travel arrangement services.

Human resource planning has traditionally been used by Hotels to ensure that the right person is in the right job at the right time. Under past conditions of relative environmental certainty and stability, human resource planning focused on the short term and was dictated largely by line management concerns. Increasing environmental instability, demographic shifts, changes in technology, and heightened international competition are changing the need for and the nature of human resource planning in leading hotels. Planning is increasingly the product of the interaction between line management and planners.

Contemporary human resource planning in hotels occurs within the broad context of organizational and strategic business planning. It involves forecasting the organization's future human resource needs and planning for how those needs will be met. It includes establishing objectives and then developing and implementing programs (staffing, appraising, compensating, and training) to ensure that people are available with the appropriate characteristics and skills when and where the organization needs them. It may also involve developing and implementing programs to improve employee performance or to increase employee satisfaction and involvement in order to boost organizational productivity, quality, or innovation (Mills, 1 985b). Finally, human resource planning includes gathering data that can be used to evaluate the effectiveness of ongoing programs and inform planners when revisions in their forecasts and programs are needed. Because a major objective of planning is facilitating an organization's effectiveness, it must be integrated with the organization's short-term and longer term business objectives and plans. Increasingly this is being done in leading organizations, although in the past business needs usually defined personnel needs and human resource planning, which meant that planning became a reactive process. 

The reactive nature of the process went hand-in-hand with a short-term orientation. Now, major changes in business, economic, and social environments are creating uncertainties that are forcing organizations to integrate business planning with human resource planning and to adopt a longer term perspective.

In fact, human resource planning is divided into two separate and distinct parts: strategic and operational.

-     The strategic part involves ensuring that the right people will be available in the longer term, for example for hotels that are not even built. Strategic human resource planning for larger organizations requires a thorough understanding of the organization and its environment.

-     The operational part: At the operational level, hotels put in place HR management practices to support management and staff in achieving their day-to-day goals. Whether it's determining how many staff are needed to deliver services over the next year or how performance will be monitored, HR management practices and activities need to be planned to answer the question: "Where is our organization going and how will it get there?".

Human resources planning of a hotel can be affected (Size, policy, structure, values, culture, objectives, resources), actually, by each and every component of its environment which will have an effect on the hotel’s outputs (products/services, profits/loss, Employment, Social costs, Taxes).

Political environment of the hotel – Stable, unstable, attitude to state control and ownership, centralized-decentralized locus of power – has a considerable impact on the organization in general and on the human resource planning in particular (size, value, and culture).

Legal environment – investment, employment, consumer protection, food safety, alcohol, discrimination – all affect the human resource planning of the hotel

Social environment – lifestyle, leisure, education

Technological environment – information, communications

Demographic environment – population make-up and trends, male-female, unskilled-skilled

Cultural environment – values, attitudes, crime behavior

Geographic environment – attractions, infrastructure, climate

Economic environment – economic growth/recession, balance of payments, exchange rate, unemployment level, interest rates, access to resources

It seems clear that human resource management in general and human resource planning in particular, will become more closely tied to the needs and strategies of organizations. As this occurs, human resource planning will be the thread that ties together all other human resource activities and integrates these with the rest of the organization. With the growing recognition that different types of organizations require different human resource practice, human resource planners in the hospitality industry are being challenged to develop packages of practices that fit the unique needs of their businesses and contribute to effectiveness.

As organizations change more quickly, so will the knowledge, skills, and behaviors needed from employees. This means that people working in organizations will be asked continually to adjust to new circumstances. Assessing and facilitating peoples' capacity for change are two activities that human resource managers are likely to be called on to do.

Whereas organizations are seeking changes from employees, employees will be demanding that organizations change to meet the needs of the increasingly diverse work force.

Thus a final challenge in human resource planning is balancing current needs-of organizations and their employees-with those of the future. The criterion against which this balancing act is measured is whether employees are currently at the right place doing the right things but yet are ready to adapt appropriately to different activities when organizational change is needed.

About Taoufik Haraketi

Taoufik Haraketi is a reservations manager and blogger heavily involved in hotel revenue management and hotel online marketing. He holds a BBA Hotel & International Tourism Management from the American University of London. He is currently employed as a reservation manager at Caribbean World Mahdia in Tunisia.

Website: www.taoufikharaketi.com

@taoufikharaketi

Categories: Hospitality Management

How can a human resource department demonstrate its effectiveness?

The existence of an efficient human resources department is vital to the overall productivity and efficiency of the strong workforce in any thriving hotel. In most professional organizations, the role of the human resources department is not sidelined or eclipsed by other departments. In fact, good human resources can be one of the most valued and respected departments in an organization; their job is people, and as we all know; people are the company's most important asset.

Actually, each human resource department in a hospitality business is faced-up to a number of issues. As reported in the ‘’Tourism Training Initiative Newsletter, 1989’’ concerned with recruitment and retention problem in hotels and restaurants across London. Human resource leaders have to:

-     Tackle the industry’s image; not that it has a bad one, but that it doesn’t have one,

-     Emphasize the importance of personnel qualities,

-     Distinguish between jobs and careers,

-     Foster job satisfaction,

-     Look for ways to attract young people into the permitted areas of the licensed sector.

Human resource departments in the hospitality business, started to realize that their success is dependent on their ability to attract, develop, and retain talented employees, because this will be a critical factor in developing a high-performance organization.

An important element of organizational success is the human resource management strategy. The human resource manager must be expected to set goals for the development and satisfaction of employees. Second, every employee is viewed as a valuable resource. The organization’s success is dependent upon high-performing employees, and without such employees there is no competitive advantage for the organization. Finally, through effective human resource programs the organization’s goals are successfully integrated with individual employee needs.

Human resources management needs to be closely integrated with managerial planning and decision making (i.e., international human resources, forecasting, planning, and mergers and acquisitions). Increasingly, an organization’s top management is aware that the time to consider organizational HRM strengths or limitations is when strategic organizational decisions are being formulated, not after critical policies have been decided. A closer integration between top management’s goals and HRM practices helps to elicit and reward the types of behavior necessary for achieving an organization’s strategy. For example, if a hotel is planning to become known for its high-quality services, HRM staff should design appraisal and reward systems that emphasize quality in order to support this competitive strategy.

Strategic management of human resources includes HRM planning. The HRM planning process involves forecasting HRM needs and developing programs to ensure that the right numbers and types of individuals are available at the right time and place. Such information enables an organization to plan its recruitment, selection, and training strategies.

Recruiting and staffing is a far more complex activity than in previous times when HRM staff could rely on recommendations from current employees or a “help wanted” sign in front of the hotel. The increased complexity of positions to be filled and equal employment opportunity (EEO), require more effective and sophisticated procedures to identify and select the right employees.

In modern hotel business, it is all about competence in people, and especially the employee’s qualities. The level of service quality depends on the qualities of employees. The qualities are about knowledge, skills and thoughts which lead to a hotel’s survival and development. Therefore, staff training is essential in many ways; it increases productivity while employees are armed with professional knowledge, experienced skills and valid thoughts; staff training also motivates and inspires workers by providing employees all needed information in work as well as help them to recognize how important their jobs are.

Many of today’s employees look at the chance to develop and move up as important in where they will seek employment. In order to facilitate employee progression, many organizations choose to spend substantial sums to train and develop their employees. Training and development (i.e., orientation, performance management skills training, and productivity enhancement) are planned learning experiences that teach employees how to perform their current and future jobs.

A human resource department can engage in resolving several issues within the hotel, through staff training programs, and be able therefore demonstrate its effectiveness to the owners, a human resource department can help to:

-     Attain targets such as gross profit on food or liquor, turnover, net profit,

-     Increase the level of service,

-     Decrease the labor turnover,

-     Decrease accident, breakage and wastage rates,

-     Adapt and prepare staff to change.

Furthermore, through staff performance appraisal processes, the human resource department can play an important role in the overall hotel success.

Perhaps the most significant benefit of appraisal is that, in the rush and bustle of daily service, it offers a rare chance for a supervisor and subordinate to have "time out" for a one-on-one discussion of important work issues that might not otherwise be addressed.

Almost universally, where performance appraisal is conducted properly, both supervisors and subordinates have reported the experience as beneficial and positive.

Appraisal offers a valuable opportunity to focus on work activities and goals, to identify and correct existing problems, and to encourage better future performance. Thus the performance of the whole organization is enhanced.

Many human resource managers are designing career programs in an attempt to increase overall organizational performance and employee productivity, and to attract, develop, and retain the most qualified employees in this increasingly competitive and global environment.

In addition to being concerned about their own interests organizations are increasingly concerned about the long-term interests of their employees. However, with pressures to improve efficiency and overall effectiveness, organizations have also expected individuals to accept more responsibility for managing their own careers.

However, the human resource management department, to be effective, has to help keep costs down. Recent US research found that, world-class hotels are achieving results superior to their competitors, in both quality and the effectiveness of their operations, with lower levels of complexity and more streamlined processes that allow them to fill open positions faster, see lower voluntary termination rates and demonstrate greater alignment with their company’s business goals.

Effective human resource management requires some research, planning, and creativity. Using part-time employees, benefit planning, and internships can make a human resource department more effective. Internships are another way to accomplish specific association objectives inexpensively and effectively. Careful staffing, such as tapping the talent of retirement-age individuals for full-time employment, can have the added benefit of reducing insurance costs.

About Taoufik Haraketi

Taoufik Haraketi is a reservations manager and blogger heavily involved in hotel revenue management and hotel online marketing. He holds a BBA Hotel & International Tourism Management from the American University of London. He is currently employed as a reservation manager at Caribbean World Mahdia in Tunisia.

Website: www.taoufikharaketi.com

@taoufikharaketi

Categories: Human Resource Management