Summary
Proper management of resources of an organization both physical and human resources is one of the crucial initiatives imperative for the purpose of its survival. The success and performance of an organization is dependent upon the management of its available resources.
However, the management of these resources differs from organization to organization depending on the industry a business entity is operating. The above provided case study provides an insight of a unique and peculiar industry, hotel industry where the management of resources is slightly different from other industries.
It is unique in the sense that most of the assets in the industry have a very short lifespan and the high chances of theft and fraudulent activities involved in the industry (Branson & Lennox, 1989).
There is nothing hard like managing the resources of a hotel and cont rolling the costing elements bearing in mind that most of the products in a hotel may not have standard costs and therefore some dishonest employees or managers may manipulate some prices for their own personal gains.
The manager of a hotel must be very keen in ensuring high standards are maintained to achieve the most important goals, which are customer satisfaction and maximization of owners’ equity hence increasing the profitability in the hotel (Jones, 2002).
The assets of the hotel must be used in a way that will guarantee desirable returns to its owners. The manager should be proactively involved in close monitoring of all the physical assets and prevent unexpected losses.
For instance, there are fragile assets involved in the hotel industry that can bring about huge losses if not properly monitored (Jones & Jawell, 1998).
On the bar wing of the hotel there are always drinks that are contained in very fragile bottles that can easily break not to mention the other side of the hotel where the foods might be handled using glass materials that are also highly fragile.
If considerable care is not taken in these medium-term assets, they can impact negatively on the performance of a hotel (Kreek, 1978). There are always challenges involved in the management of hotel’s property to maximize the profitability.
This is because the industry itself is regulated by certain rules and regulations that have to be fully complied with. In some countries, there are laws that stipulate specific hours for alcohol consumption and any one found violating this law could face serious prosecution.
Therefore, some assets in the hotel remain unproductive for quite some time and the.manager should implement a strategy that will ensure this time is compensated.
The hotel manager must also ensure there are set standards that will enable in determination of whether the intended goals are being adequately met (Lawson, 1995).
The actual/achieved standards must be measured against the set standards and the resultant deviation that may be favorable or unfavorable will allow appropriate corrective measures to be taken. Another important section of the hotel that need constant check up is the purchasing/procurement department.
There are two reasons for this. First, the purchasing of hotel consumables constitute huge amount of the hotel’s budget and secondly the hotel items are more vulnerable to theft.
From an economic point of view, it is important that the input prices of various hotel items being thoroughly studied and the ones with the lowest possible prices be purchased when comparing more than one input items that will yield the same quality.
This will reduce the ghost costs incurred in the hotel. However, all the goods must meet the expectations of the guests and other customers, in other words the customers must be fully satisfied. Cost-effective and customer satisfaction are the overriding goals (Loether, 2005).
All the items purchased need to be properly recorded and accurate records concerning the same fully maintained. There must always be proper protocol of handling various assets and other things purchased and this can easily be achieved through specialization in asset handling.
For example, goods ordering, reception and accountability should be handled by separate individuals and this will reduce chances of fraud (Powers, 1995).
Health and safety are other aspects that provide uniqueness in the management of hotel resources. In the recent past, there have always been instances of terrorism attacks with hotels and restaurant facilities being the key targets (Rushmore, 1992).
This has made the managers to be extra cautious to ensure there is adequate security in the hotel facility and its environs since this can drive away many customers hence bringing substantial losses to the business.
Improved technology has enabled the installation of complex and sophisticated surveillance cameras in hotel rooms such that the guests can view all the relevant happenings while still in their own rooms. This can increase the number of guests since they are assured of their safety.
There is also another important issue in the management of resources of a hotel. The hotel lifecycle has to be taken into account monitoring the nature of income and occupancy fluctuations over the years.
Hotels seem to have high income and occupancy during their first years of operations and in most cases during their initial ten years (Schneider & Tucker, 1989).
After that the bed occupancy and income declines and there is subsequent increase in maintenance and repair costs. Therefore, the manager needs to be keen in managing these crucial resources and come up with a strategy that will ensure there is constant income flow in the hotel.
Maintenance planning and house keeping need to be given a priority while managing hotel resources. Though there is always a maintenance department responsible for that role, it should be a shared responsibility and every person must actively participate.
A well-maintained property will attract large number of guests and hence improve the profitability of the business. House keeping department is one of the most important sections in the hotel. This is because it has to continuously communicate with all the other sections for it to operate effectively.
This section maintains the required cleanliness and handling of guests’ belongings rests on their hands (Alexander, 1996). The manner in which some items are handled including beds, tables will determine how such items will last since handling them carelessly can lead to their spoilage (Alexander, 1994).
Identify and discuss five or six standards that could be established; include how variance from such standards could be measured
Measurement standards can be used in hotel business to provide an analysis of the deviations realized from the achieved rather than anticipated results. Always the set standards are measured against the actual standards (Anderson & McAdam, 2004).
This is so obvious since in most cases the achieved results may not precisely match what was expected by the management. Some standards can be applied using variance analysis. Standard measurements cannot be established without incorporating variance analysis.
Variance is the difference between a budgeted, anticipated outcome and the actual outcome realized from a process. Variance analysis is a budgetary tool control used to analyze the difference between the standard and actual costs.
Every manager sets what he wants to achieve and strictly put some structures in place to ensure the set goals are achieved through the joint efforts of other employees. The following are some of the standards that can be applied.
- Labor Efficiency Variance (LEV): It is the difference between how many hours were worked for a given number of units actually produced and how many hours should have been worked valued at the standard rate per hour (Hronec, 1993). This can be applied with regard to how many guests have been attended over a particular period in time and compared to planned time in hours. In addition, the number of hours utilized in the kitchen to produce a given number of can be compared with actual planned hours. In the event that lesser time is taken than the anticipated one, then the variance is said to be favorable and the reverse is unfavorable.
- Material Price Variance (MPV): It occurs when there is a disparity between the actual cost of the material and the budgeted cost. The hotel purchasing department may incur more costs than anticipated or lesser costs due to factors like quantity discounts or abrupt price cut of raw materials used in the hotel due to unforeseen factors. In the event that the actual costs are more than the budgeted costs, there is unfavorable variance and this calls for appropriate measures to be taken.
- Labor Rate Variance (LRV): This is the difference between what the actual number of hours worked did cost and what it should have cost. This in most cases is attributable to casual employees in the hotel. Sometimes a situation may arise where the costs incurred in production for a particular time period is less than what had been initially planned. This may be due to high efficiency machines in the hotel or costs may be high than expected due unexpected overtime hours worked. The variance will be unfavorable if the actual hours cost more than the planned.
- Material Quantity Variance (MQV): It occurs when there is disparity between the actual material that was used and the budgeted material quantity at standard cost. Sometimes the material used and in this context may refer to ingredients used by the kitchen department that may be less than what had already been budgeted. This again may bring about favorable or unfavorable variances depending on how much material was used.
- Variable production overhead total variances: This is the disparity between the actual cost of a given output and the budgeted cost in terms of variable costs /overheads. This variance or standard measure costs ignores the fixed aspect of the hotel and takes into consideration only the variable costs (Amaratunga & Baldry, 2003). This may include wages and costs incurred in purchasing consumables to be used in the hotel.
From the perspective of a hotel’s general Manager, evaluate techniques that can be used to control the cost of purchasing
The profit maximization of any business entity is dependent upon the cost control in an entity. It is the role of the manager to minimize costs as much as possible while at the same time maximizing the total revenue. This will ensure the difference between the overall costs and the total revenue is as wide as possible.
The managers need to identify the need for the purchase as well as the person who is handling those services and goods (Massheder & Finch, 1998). The manager must ensure that goods are purchased when they are required. This is aimed at reducing huge storage costs that may be attached to holding of goods.
This is one strategy towards ensuring that minimal costs are incurred. Such a strategy not only reduces the costs in terms of storage costs but also in terms of avoidance of spoilage of some perishable materials used in the business.
The manager must be able to compare the goods or rather materials that are likely to yield the same utility and ensure only those goods with the lowest cost are purchased.
This is because there is no need of going for materials with high costs and there are other materials with relatively lower costs and at the same time, they are of the same quality. As noted earlier, the items purchased in a hotel are small and so numerous making them more vulnerable to theft and misappropriation.
The only way a manager can minimize this is ensuring every single item that has been bought is accounted for and proper records are kept with utmost accuracy (Tidd, Bessant & Pavitt, 2001).
Several operations need to be specialized such that the employees in the hotel do not handle the entire or full system of a particular item. Regular transfers of some workers or inter-departmental transfers may also help reduce costs.
This is because many unnecessary costs incurred in the hotel are as a result of theft cases amongst the employees. If employees are left in one department for along time, they become used to that department and the chances of perpetrating frauds are very high.
Continuous stocktaking and surprise checks of physical stock are other ways of minimizing purchasing costs. This will make those responsible for stock maintenance careful and aware such that the records are up to date and accurate at all times (Amaratunga, Baldry & Sarshar, 2000).
Finally, there should be optimal utilization of materials, very minimal wastes should be witnessed in the hotel, and this is the one area where kitchen department misuse the essential materials.
In general, the manager should keep an eye on all the departments that are directly linked to handling of hotel goods and materials and in particular purchasing and kitchen departments.
References
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