HFT1000 Exam 3 Review Chapters 10 11 37 38 39 Chapter 10 Income and Controlling Costs Key Concepts Income in Hotel Restaurant Industry It is important for students to understand that in reality most of the everyday tasks completed by managers are done for the financial wellbeing of the firm o Most hospitality managers increase shareholder values by decreasing expenses and increasing income External forces for why a hotel might not sellout every room are seasons and competition Three tools for measuring revenue occupancy percentage average daily rate and yield management see definitions below Restaurants Income concerns may be even more crucial in the restaurant industry than in the hotel industry because the restaurant business failure rate is very high Independent restaurants cannot purchase in mass volume or afford to spend money on advertising The best means for evaluating labor needs is to have a formula to determine how much labor you need based on the number of customers Employee benefits are a concern in controlling labor costs Maximizing Revenue through Selling and gain a competitive edge Most hotels and restaurants in this competitive environment must determine methods for maximizing revenue o Accomplished by discounting up selling and the top down approach Without proper cost control procedures a hotel may appear to be successful financially in terms of room sales Controlling Costs in the Hotel Industry but miss out on controlling expenses o Energy management and labor costs Controlling Costs in the Restaurant Industry One means of controlling food costs is through volume purchasing restaurants can save money per pound or unit by purchasing in bulk You should always purchase slightly more than you need Two concerns about volume purchasing are the perishability factor and the storage factor Two means of measuring portion control are as purchased AP and edible portion EP o Portion control is a very necessary component of cost control in the restaurant industry Careers in Revenue and Cost Control in the Hospitality Industry A majority of management and supervisory positions in the hotel and restaurant management industry involve revenue and cost control Key Terms AP as purchased before a menu item is prepared and any waste has been removed ADR average daily rate this is computed by dividing room revenue by the number of rooms occupied Cost control the management concept of controlling costs through effective management practices Discounting the method of reducing an item from the regular price EP edible portion after a menu item has been prepared and all waste has been discarded Energy management the management and control of heat air conditioning water usage electric usage and has usage Food cost the cost to produce a food item for sale this includes actual cost of the food labor costs and energy costs Intangibility not perceived by touch cannot be visualized Service would be an example of an intangible in the hospitality industry Labor cost the cost of labor in running your operation this includes wages and benefits cost Mom Pop an independent restaurant or hotel usually owned by one person a group of people or a family without any franchise affiliation Occupancy percentage the ration relating the number of rooms sold to the number of rooms available Perishability a product with a determined shelf life Food would be an example of a perishable product in the hospitality industry POS point of sale a network of electronic cash registers and pre check terminals that interface with a remote central processing unit Portion control the designation of specific portion size as a means of controlling costs Revenue incoming money obtained from guests by the selling of food drink or hotel rooms Top down approach is a method of attempting to sell the most expensive items first and then offering a less expensive item next if there is a continued sales resistance Units a term used in the hotel industry that is more commonly referred to as a hotel room Up selling a selling technique used to convince customers to purchase one of your more expensive items first Volume purchasing purchasing in bulk volume in order to save money as most suppliers will offer a discount for volume purchasing Yield management a combination of occupancy percentage and the average daily rate Chapter 11 Physical Plant Management Key Concepts Primarily the physical plant is comprised of landscaping grounds exterior and interior buildings structure building systems furnishings fixtures and equipment FF E Other elements of the physical plant that are experienced by guests include plumbing electricity heating ventilation and air conditioning HVAC Curb appeal attractiveness of the physical operations Manager Roles and Responsibilities The scope and depth of the knowledge a facility manager must have depends on the type of property and size The responsibilities for many hospitality facilities managers or maintenance engineers and their skill level varies depending on work experience and background In many hospitality situations the facilities manager will have some detailed technical background from contracting firms trade or technical schools or other similar related employment In addition to working closely with other departments the facilities manager must understand the financial relationship between maintenance repair and cost o Another financial responsibility of the facility manger is the evaluation of capital projects Engineering Systems Understanding the basic design and operations of the various engineering systems helps improve the communication between the facility manager and the rest of the management o Water and Wastewater systems Be familiar with backflow devices help prevent water from re entering a building Other keys include a grease separation grease trap a storm sewer system and a sanitary sewer system o Refrigerator Systems In the compressive refrigeration system undesired heat is picked up in one place and carried to another where it is dumped or disposed o Heating Venting and Air Conditioning Systems Heating Venting and Air Conditioning HVAC system provide levels of comfort based on heating cooling and humidity for guests staff and management o Electrical Systems Some hospitality properties operate an on site power production but most operations have electricity delivered by local utilities Management needs to understand electrical utility rates for cost control o Safety and Security Systems
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