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Front Office Management Function

Agustinus Agus Purwanto, SE MM www.sunparadisehotelsmanagement.webs.com Email: [email protected] Moblie: +62 812 9444 1224

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10K views

Front Office Management Function

Agustinus Agus Purwanto, SE MM www.sunparadisehotelsmanagement.webs.com Email: [email protected] Moblie: +62 812 9444 1224

Uploaded by

Agustinus Agus Purwanto
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Bali Hospitality Professional

Service

Drs. Agustinus Agus Purwanto, MM


Senior Consultant
Jl. Tukad Batanghari VIII/7A
Denpasar – Bali – Indonesia
E-mail:
[email protected]
Web:
www.linkedin.com/in/aguspurwanto
Chapter 8

The Functions of
Management
POSDCORB
P Planning
O Organizing
S Staffing
D Directing
CO Coordinating
R Reporting
B Budgeting
Front Office Budgeting
The most important long-term planning
function

FOM is responsible for:

1. Forecasting Rooms Revenue


 Use historical trend data

2. Estimating Expenses
 Vary directly with rooms revenue
Forecasting Rooms
Revenue
Forecasted Annual Rooms Revenue =

Rooms Occupancy Average


Available Percentage Daily Rate

Rooms Available = Total Rooms X 365 Days


Forecasting Rooms Revenue
Example
100 Room Hotel
100 x 365 days = 36,500 Rooms
Available

75% Occupancy Percentage


.75

$50 Average Daily Rate

36,500 x .75 x $50 = $1,368,750


Room Forecasting
Ten-Day Forecast
 Done by FOM and Reservations
Manager

House Count
 Expected number of guests in the
hotel
 Divided into group and non-group

Three-Day Forecast
Forecasting Room
Availability
The most important short-term planning
function
Hotel Occupancy History
 The past few months and last year at this time

Reservation Trends
 How far in advance are reservations being
made?

Scheduled Events
 City-wide conventions; sporting events, etc.
Forecasting Data
No-shows
 Expected guests who did not arrive.

Walk-ins
 Guests without reservations.

Overstays
 Guests who stay beyond their departure
date.

Understays
Percentage Of No-
shows
Number of Room No-Shows
Number of Room Reservations

Purpose:
 Helps front office managers

decide when (and if) to sell rooms


to walk-in.
Percentage Of Walk-
ins
Number of Room Walk-Ins
Total Number of Room Arrivals

Purpose:
 Helps front office managers

know how many walk-ins to


expect.
Percentage Of
Overstays

Number of Overstay Rooms


Number of Expected Check-
Outs

Purpose:
 Alerts front office managers to

potential problems when rooms have


been reserved for arriving guests.
Percentage Of
Understays

Number of Understay Rooms


Number of Expected Check-Outs

Purpose:
 Alerts front office manager to

additional room availability.

 20% of hotels charge understay


Rooms Availability Formula
Total number of guestrooms
- Out of order rooms
- Stayovers
- Reservations
+ Reservations x no-show percentage
+ Understays
- Overstays

Number of Rooms Available for Sale


Rooms Availability
Formula Example
150 Guestrooms
- 5 Out of Order
- 45 Stayovers
- 50 Reservations
+ 10% No-show
+ 5 Understays
- 20 Overstays

40 Rooms Available for


Sale
Establishing Room
Rates
Marketing Positioning Statement
 Room rates reflect service expectations to
the hotel’s target markets.

1. Market Condition Approach

2. Rule-of-thumb Approach

3. Hubbart Formula Approach


1. Market Condition
Approach
 Common sense approach.

 Often used, but has many problems.

 Base room rates on your competitions’


rates.

 Doesn’t take into account new properties


and construction costs.

 Allows the local market to determine the


2. Rule-of-thumb Approach
 Sets the minimum average room rate
at $1 for each $1,000 of construction
& furnishing costs per room.
 Assumes 70 % occupancy

 $125,000 in construction and


furnishings
- $125 room rate
 Doesn’t take inflation into account
2. Rule-of-thumb Approach
Average per-room cost for hotel development:
Segment Per-room cost
 Budget/Economy $52,800
 Midscale w/o $85,600
 Midscale with F&B $103,100
 Full Service $165,900
 Luxury/Resorts $516,300
3. Hubbart Formula
Approach
“Bottom-up”approach
 Begin with desired profit based upon expected
Return on Investment (ROI)

 Calculate pretax profits, fixed charge,


management fees, & operating expenses
 Estimate other departmental income
 Determine the required rooms department
income
3. Hubbart Formula
Approach
Average Room Rate =
Rooms Department Revenue
Expected Number of Rooms Sold

 Sets a “Target” Average Price


 Lets you determine if your target is too high
 You may have to finance the difference
Evaluating
Front Office Operations
Occupancy Percentage
 The most commonly used operating
ratio

Average Daily Rate (ADR)


 Average of all room types and rates

Revenue per Available Room (RevPAR)


 Measures revenue capabilities of hotel
Occupancy Percentage
Number of Rooms Occupied
Number of Rooms Available

What does rooms occupied include?


 Rooms sold + comp rooms

What does rooms available include?


 Use the rooms availability formula

2001= 59.20%
Occupancy Percentage
Example
Number of Rooms Occupied
Number of Rooms Available

 Sold 95 rooms with 5 comps


 150 room hotel with 25 out of order

95 + 5 = 100 = 80%
150 - 25 = 125
Daily Occupancy Rates
67.7 68.3 66.5 70.1
65.3
70 62.4
60
47.8
50
40
30
20
10
0
Sun Mon Tues Weds Thurs Fri Sat
Average Daily Rate (ADR)

Rooms Revenue
Number of Rooms Sold

 Number of Rooms Sold includes


comps
Average Daily Rate Example
Rooms Revenue
Number of Rooms Sold

 $10,000 Rooms Revenue


 Sold 95 rooms with 5 comps

$10,000 $10,000 $100 =


95 + 5 = 100
Revenue per Available Room
(RevPAR)
Actual Rooms Revenue
Number of Available Rooms

or:

Occupancy Percentage x ADR

2001 = $49.36
RevPar Example
Actual Rooms Revenue
Number of Available Rooms

 $10,000 Rooms Revenue


 150 room hotel with 25 out of order

$10,000 $10,000 = $80


150 - 25 125
Revenue per Available Room
Example
Occupancy Percentage x ADR

80% x $100 = $80

RevPAR Limitations:
* Does not include Revenue & Costs from F&B and other
outlets

 Is RevPAR higher or lower than ADR ?


 When will they be equal?
RevPAR Index
Hotel RevPAR
Competitive Set RevPAR

 You decide what hotel’s make up your


competitive set of hotels that you compare
yourself too.

 Get your Comp Set RevPAR figures from the


RevPAR Index - Example
Hotel RevPAR
Competitive Set RevPAR

 Your Hotel’s RevPAR is $58; Comp Set is $60


 $58/$60 = .966 x 100% = 96.6%

Below 100% = Under Performing Hotel


100% = Fair Share
Above 100% = Over Performing Hotel
RevPAR Index
Missed Revenue Example
 If your Hotel’s RevPAR is $58 and your Comp
Set’s is $60, you are losing $2 per room in
potential revenue

 Calculate your potential lost revenue per month


RevPAR Difference x Number of Rooms x Days in
Month
Ex.
RevPAR Index
 You need to select a realistic Comp Set of
hotels

 Comparing a luxury hotel to economy hotels


inflates your RevPAR Index but doesn’t help
your revenues

 A consistent increase in RevPAR Index is your


goal

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