unit i planning and evaluating front office...
TRANSCRIPT
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UNIT – I
PLANNING AND EVALUATING
FRONT OFFICE OPERATIONS
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OBJECTIVES
Introduction
Management Functions
Room Rate Structure
Establishing Room Rates
The Rule of Thumb Approach
The Hubbart Formula
Market Condition Approach
Room Tariff Card
Sample Tariff Card
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INTRODUCTION
Most front office managers will readily admit that
they rarely have all the resources they feel are
necessary. Resources available to managers
include people , money , time, materials ,
energy, and equipment.All these are in limited
supply.
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INTRODUCTION
An important part of a front office manager’s job
involves planning how to apply these limited
resources and to generate maximum revenue.
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MANAGEMENT FUNCTIONS
Planning
Organizing
Coordinating
Staffing
Leading
Controlling
Evaluating
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ROOM RATE STRUCTURE
A front office will almost always have more
than one room rate category for each of its
guest rooms. Room rate categories
generally correspond to types of rooms
(suites, two beds , one bed etc.)
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PRICING STRATEGIES Market condition approach to pricing
Competitive set
TIMS report
Phase report
Rate VIEW
STAR report
(continued)
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ESTABLISHING ROOM RATES
Three rules
Thumb Rule
Hubbart Formula
Market Condition Approach
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THUMB RULE
The rule of thumb
approach sets the rate of
a room at RS 1 for each
Rs 1000 of construction
and furnishings cost per
room, assuming 70
percent occupancy.
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HUBBART FORMULA
Another approach to average room rate
determination is the Hubbart Formula . To
determine the average selling price per room , this
approach consider operating costs , desired profits
and expected number of rooms sold.
It is bottom up approach to pricing rooms because
its initial item – net income (profit) which appears at
the bottom of income statement. It involves 8 steps.
Given By Mr. Roy Hubbart in 1940.
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EIGHT STEPS OF HUBBART FORMULA
STEP 1:
Calculate hotel’s desired profit by multiplying the
desired rate of return (ROI) by the owner’s
investment.
STEP 2:
Calculate pretax profit by dividing desired profit
(Step 1) by 1 Minus the hotel’s tax rate.
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EIGHT STEPS OF HUBBART FORMULA
STEP 3:
Calculate fixed charges and management fees includes
depreciation, interest expense , property taxes, insurance
etc.
STEP 4:
Calculate undistributed operating expenses includes
administrative and general expenses , data processing,
human resources, transportation , energy costs etc.
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EIGHT STEPS OF HUBBART FORMULA
STEP 5:
Estimate non room operated department income or loss , that is food and beverage department income or loss , telephone etc.
STEP 6:
Calculate required room’s department income .The sum of Pretax Profit ,Fixed charges, Undistributed operating expenses and the other . Less other operated department losses and income .
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EIGHT STEPS OF HUBBART FORMULA
STEP 7:
Determine the room department revenue . The required
rooms department income (STEP 6), plus rooms
department direct expenses of payroll and related
expenses, plus other direct operating expenses.
STEP 8:
Calculate Average room rate by dividing rooms department
income by the expected number of rooms to be sold.
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BASIS OF CHARGING ROOM RATES
12 Noon check in
24-Hour Basis
Night Basis
Day-rate
On the basis of meal plans
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ON BASIS OF MEAL PLANS
European Plan (E.P)
Continental Plan (C.P)
Modified American Plan (M.A.P)
American Plan (A.P)
All-inclusive Plan (AIn)
Bermuda Plan (B.P)
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