Module 14: Introduction to Hotel Management

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Introduction to Hotel Management

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Hospitality Management

Introduction to Hotel Operations

Another way to classify hotels is by their ownership,
which can be:

An independent hotel owned by a person, or private enterprise
Local Group
hotels owned by a local enterprise
International Group
A hotel which is part of an international chain of hotels

Hotels can be operated in one of the following ways:

Independently, By Contract, Referrals, Franchising

1. Independently Owned and Operated

This means that the hotel would be independent,
with no affiliation to hotel chains or groups. The hotel would be managed by the owners of the property.

2. Management Contract

Management contracts are hotel management enterprises which operate properties owned by other entities. In some cases, the hotel owners may arrange to run their properties through a management contract with an enterprise that specialises in managing hotels.

The reason for this is that the owner may not:
Have the necessary expertise.
Desire to become involved in the operation of the hotel.

Hotel Owners
Advantages and disadvantages of a management contract ؛or hotel owners.

Acquisition of operational expertise which can reduce the chance of business failure and enhance the services quality.
Gain national or international recognition for the hotel if it is operated by a reputable management enterprise.
The owners are not required to be involved in hotel's operations.

Loss of operational control.
Financially liable for all costs, expenses.
The management enterprise may have less incentive and morale in managing the hotel if only a fixed management fee is paid without any sharing of profits.

3. Franchising

Some investors prefer to use the franchising concept in running the hotel. Franchising in the hospitality industry is a concept that:

Allows interested investors to use an enterprise’s (the franchisor) name and business format

Is made up of properties where the franchisees agree to run the hotel in accordance with the strict guidelines set by the franchisor

Allows a enterprise to expand more rapidly by using others’ capital

Advantages and disadvantages of franchising for franchisees.

Obtain expertise from the franchisors in doing business.
Acquire a brand name with regional or national recognition.
The franchisee has complete control and responsibility over the daily operation of the property.

Need to follow the standard set by franchisors without modification.
Need to pay for a joining fee and an ongoing fee.
Risk of termination of contract or no continuation of new contract if franchisor wants to take back the rights of operation.

4. Referrals
Referral associations, e.g. Leading Hotels of the World (LHW), offer hotels similar benefits as franchising, but at a lower cost. Some hotels choose to become a referral property.

This means that the property is being operated as an independent hotel in association with a certain chain.

These hotels ٢efer guests to one another's properties and share a centralized reservation system, a common logo, image, or advertising slogan.

Hotels pay an initial tee to join a reterral association and turther tees are based on services required. As the property has already been physically developed, the owner may want assistance only with marketing, advertising, management or reservation reterrals.

In addition, guests may tind more variation among the reterral properties as size and appearance standards are less stringent than those in a tranchise agreement.

However, every hotel is assessed and checked regularly to ensure that it maintains the highest standards.


State two drawbacks for a franchisee joining a franchise enterprise.

Browse the Internet and find two international hotel chains that provide management contract and franchising services to the hotel owners.

Classifications of Hotel Departments

Instead of segmenting a hotel structure into departments according to their functions.
Some hotels would also group their departments or units into different categories:
These types of classification are known as:
1. Revenue centered and c.st centered Departments
2. Front-of-the-house and Back-of-the-house Departments.

Revenue Centered and cost Centered Departments
Revenue centers refer to those departments or units which generate direct income to the hotel through the provision of goods and services to guests, e.g. front desk, restaurants, room service, gift shop and business center.
Cost centers, which are also interpreted as support centers, mainly assist the functioning of revenue centers with no generations of any direct income for the hotel, e.g. human resources, purchasing, accounting and engineering departments.
This classification is particularly useful for the accounts department when summarizing the performances of different units under these two main categories.

Front-of-the-house and Back-of-the-house Departments
Front-of-the-house refers to those departments or areas which are accessible and visible by guests, e.g. tront desk counters, restaurants, concierge and bell services.
They are the points ot service encounters where service staff usually have direct contact and interaction with guests.

Back-of-the-house refers to those departments or areas which rarely have staff-to-guest interactions, e.g. kitchen, human resources and engineering departments. It should be emphasized that some back-of-house positions would have limited interaction with guests, e.g. housekeeping.

By referring to the photos provided below:
1. Identity whether they are revenue centered or cost centered units.
2. Identity whether they are front-of-the-house or back-of-the-house