Hotel Benchmarking Case Study You are a Front Off

his weeks assignment is a benchmarking case study.  Begin by reading the case study:

Benchmarking Case Study Accessible.docx Benchmarking Case Study Accessible.docx – Alternative Formats

Hotel Case Study Information.xlsx
Follow the directions in the case study to complete this assignment. 

Refer to  Benchmarks Case Study.docx Benchmarks Case Study.docx – Alternative Formats as you complete this assignment.

Hotel Benchmarking Case Study

You are a Front Office Manager working for a major global hotel company. The company has 10 separate brands and over 1,700 hotel units in operation. The company owns none of these hotels, but manages about 20% of the hotels. Third party management companies manage the remainder on behalf of the franchise owners.

You have been promoted to a “task force” team of managers to travel to a hotel unit the company is managing that is struggling; to help the on-site managers diagnose problems and implement corrective action. Your team serves as “internal consultants” to the managers of this troubled unit. Your team has one week to diagnose the problems and recommend solutions to the hotel unit managers. They then are responsible for implementing those solutions. The company has specified that all goals from task force recommendations must be equal to the upper quartile benchmark.

Each manager on your team will focus on an operational area of the hotel. You have been assigned to the rooms division. You will analyze the front office (front desk, bell service, guest transportation and valet parking service), housekeeping, and the laundry operations.

Prior to departing for the unit, the company provides your team with access to the various financial statements, guest satisfaction scores and employee satisfaction scores, along with a brief overview of the hotel. You study this information carefully, and begin to formulate a plan based on what you see in these reports.

The company has developed a very specific sequence they use to diagnose problems. Using this sequence:

1. Review all of the information you have, and list all of the items you see which appear to be problems. Your list should be categorized in the same manner as the checklist.

2. From your list, determine which 5 problems should be addressed first, based on your estimate of their likely financial impact. For the 5 items you select, you will need to determine the financial impact (increased profitability) based on the hotel’s current performance and their distance from the company benchmark, using 2014 revenue and volume.

3. For each item on the list, recommend 4 specific action steps the management team must take to correct the problem and reach the benchmark.

4. Submit a written report “addressed to” the unit managers. In this report, for each of the 5 items identify, you need to:

a. Identify what information you used to draw your conclusion for that item. Which report(s) you used in your review.

b. Show the calculation you made to determine the financial impact.

c. List the 4 action steps you are recommending they take. These can be bullet points, but must be specific.

JWU1001

College of Online Education

Johnson & Wales University

,

Income Statement

Hotel Dionysus Unit 267
Comparative Income Statement
For the Years Ending December 31
Year 1 % Year 2 % Year 3 % Year 4 %
Revenue
Transient $ 5,052,454 44.0% $ 4,847,383 42.1% $ 5,234,698 45.3% $ 5,256,472 50.2%
Group 6,423,343 56.0% 6,679,599 57.9% 6,320,083 54.7% 5,204,731 49.8%
Total Room Revenue $ 11,475,797 100.0% $ 11,526,982 100.0% $ 11,554,781 100.0% $ 10,461,202 100.0%
Room Nights/ADR
Transient 32,305 $ 156.40 30,072 $ 161.20 31,557 $ 165.88 34,002 $ 154.59
Group 48,457 $ 132.56 49,064 $ 136.14 45,411 $ 139.18 39,915 $ 130.39
Total Room Nights/ADR 80,762 $ 142.09 80,762 $ 145.66 80,762 $ 150.13 80,762 $ 141.53
Payroll and Payroll Benefit Expense
Front Office $ 429,159 3.7% $ 437,743 3.8% $ 446,498 3.9% $ 415,632 4.0%
Housekeeping $ 617,503 5.4% $ 629,853 5.5% $ 642,450 5.6% $ 655,299 6.3%
Guest Services $ 331,631 2.9% $ 338,264 2.9% $ 345,029 3.0% $ 351,930 3.4%
Payroll Taxes and Employee Benefits $ 652,622 5.7% $ 712,068 6.2% $ 769,328 6.7% $ 868,087 8.3%
Payroll Taxes and Employee Benefits $ 2,030,915 17.7% $ 2,117,927 18.4% $ 2,203,305 19.1% $ 2,290,948 21.9%
Direct Expenses CPOR CPOR CPOR CPOR
Amenity Expense $ 149,409 $ 1.85 $ 150,793 $ 1.91 $ 151,062 $ 1.96 $ 149,427 $ 2.02
Cleaning Supplies $ 52,495 $ 0.65 $ 52,981 $ 0.67 $ 50,029 $ 0.65 $ 57,656 $ 0.78
Decorations $ 60,000 $ 0.74 $ 62,500 $ 0.79 $ 59,000 $ 0.77 $ 45,000 $ 0.61
Glassware Expense $ 29,074 $ 0.36 $ 28,489 $ 0.36 $ 27,708 $ 0.36 $ 26,610 $ 0.36
Guest Transportation $ 185,000 $ 2.29 $ 205,000 $ 2.59 $ 215,000 $ 2.79 $ 245,000 $ 3.31
Linen Expense $ 169,600 $ 2.10 $ 174,098 $ 2.20 $ 167,789 $ 2.18 $ 190,707 $ 2.58
Miscellaneous Expense $ 36,343 $ 0.45 $ 35,611 $ 0.45 $ 34,635 $ 0.45 $ 33,263 $ 0.45
Paper Supplies $ 68,647 $ 0.85 $ 64,891 $ 0.82 $ 70,810 $ 0.92 $ 65,786 $ 0.89
Terry Expense $ 130,834 $ 1.62 $ 135,322 $ 1.71 $ 140,081 $ 1.82 $ 149,313 $ 2.02
Uniform Expense $ 40,381 $ 0.50 $ 41,151 $ 0.52 $ 39,253 $ 0.51 $ 48,046 $ 0.65
Total Direct Expenses $ 921,783 $ 11.41 950,836 $ 12.02 955,368 $ 12.41 1,010,808 $ 13.67
Departmental Profit $ 8,523,099 74.3% $ 8,458,219 73.4% $ 8,396,109 72.7% $ 7,159,446 68.4%

Inventory Analysis

Hotel Dionysus Unit 267
Inventory Analysis
For the Years Ending December 31
Year 1 Year 2 Year 3 Year 4
Rooms Available 285 285 285 285
Room Nights Occupied 80,762 79,136 76,968 73,917
Guest Amenities
Soap $ 5,048 $ 5,149 $ 5,663 $ 5,149
Shampoo $ 10,095 $ 10,297 $ 11,327 $ 10,297
Conditioner $ 11,105 $ 11,327 $ 12,460 $ 12,460
Total Guest Amenities Inventory $ 26,248 $ 26,773 $ 29,450 $ 27,905
Linen
Top Sheets $ 8,550 $ 8,721 $ 9,593 $ 10,073
Bottom Sheets $ 10,260 $ 10,465 $ 11,512 $ 12,087
Duvet Covers $ 12,312 $ 12,558 $ 16,326 $ 17,142
Pillow Cases $ 8,123 $ 8,285 $ 8,451 $ 8,873
Total Linen Inventory $ 39,245 $ 40,029 $ 45,881 $ 48,175
Terry
Wash Cloths $ 7,909 $ 8,067 $ 8,874 $ 9,317
Hand Towels $ 10,677 $ 10,890 $ 11,979 $ 12,578
Bath Towels $ 11,744 $ 11,979 $ 15,573 $ 16,352
Bath Mats $ 8,221 $ 8,386 $ 8,553 $ 8,981
Total Terry Inventory $ 38,551 $ 39,322 $ 44,979 $ 47,228

Market Share

Hotel Dionysus Unit 267 Hotel Dionysus Unit 267
Market Share Report – Occupancy Market Share Report – Average Rate
For the Years Ending December 31 For the Years Ending December 31
Year 1 Year 2 Year 3 Year 4 Year 1 Year 2 Year 3 Year 4
Market Occupancy 72.5% 72.1% 71.0% 73.0% Market ADR $ 140.00 $ 141.23 $ 145.62 $ 138.00
Hotel Occupancy 74.5% 73.0% 71.0% 68.0% Hotel ADR $ 142.09 $ 145.66 $ 150.13 $ 141.53
103% 101% 100% 93% 101% 103% 103% 103%

Market Occupancy Year 1 Year 2 Year 3 Year 4 0.72499999999999998 0.72099999999999997 0.71 0.73 Hotel Occupancy Year 1 Year 2 Year 3 Year 4 0.74500000000000011 0.73 0.71000000000000008 0.68 Hotel ADR 142.09449999999998 145.661055 150.12536185499999 141.52564582960002 Market ADR 140 141.22999999999999 145.62 138

Calculations

To Calculate the Impact of changes in Market Share Index for Occupancy
Benchmark Index A Enter the benchmark index
Current Index B Enter the Current Hotel Index
Current Hotel Occupancy C Enter the Current Hotel Occupancy
Hotel Occupancy at Benchmark D DIVIDE C by B and multiply that result by A.
Difference in Occupancy E Subtract C from D
Availalble Room Nights F From the Room Revenue Report
Difference in Occupancy E From E Above
Difference in Occupied Rooms G F X E
Current Hotel ADR H From the Room Revenue Report
Difference in Hotel Room Revenue I G X H
Current Year Rooms Profit Margin J From the Income Statement
Improved Departmental Profit K I X J
To Calculate the Impact of changes in Market Share Index for ADR
Benchmark Index A Enter the benchmark index
Current Index B Enter the Current Hotel Index
Current Hotel ADR C Enter the Current Hotel ADR
Hotel ADR at Benchmark D DIVIDE C by B and multiply that result by A.
Difference in ADR E Subtract C from D
Current Year Occupied Rooms F From the Room Revenue Report
Difference in ADR E From E Above
Difference in Hotel Revenue G F X E
Difference in Hotel Profit G Note that improvements in ADR flow to profit at 100%
To calculate the impact of changes in Direct Expenses
Benchmark CPOR A Enter the benchmark CPOR for the specific Direct Expense
Hotel Current CPOR B Enter the current hotel CPOR for the specific Direct Expense
Variance C Subtract B from A
Current Year Occupied Rooms D From the Room Revenue Report
Cost Savings E D X C
To calculate the impact of changes in Direct Expenses
Benchmark MHPOR A Enter the benchmnark for the SPECIFIC JOB
Current Year Hotel MHPOR B Enter the hotel MHPOR for the SPECIFIC JOB from the Labor Cost Report
Variance C A – B
Current Year hotel occupied rooms D From the Room Revenue Report
Man Hours Saved E C X D
Payroll rate per hour F 16.65 From the Labor Cost report for the specific job
PTEB % overall G 61.1% From the Labor Cost report for the overall hotel
Total Rate Per Hour H $ 26.82 F X (1+G)
Payroll and Benefit Savings I $ – 0 E X H

Guest Satisfaction

Hotel Dionysus Unit 267
Guest Satisfaction Index – Rooms Division
For the Years Ending December 31
Year 1 Year 2 Year 3 Year 4 Year 4 System Benchmark
I was greeted upon arrival in the driveway 9.8 9.6 9.4 8.5 9.8
I was greeted by the doorman by name 9.9 9.7 9.5 8.6 9.9
I was greeted at the front desk by name 9.2 9.0 8.8 9.1 9.2
Check-in Speed 9.5 9.3 9.1 7.2 9.5
Accuracy of Reservation 9.8 9.6 9.4 9.5 9.8
Guest room cleanliness upon arrival 9.7 9.5 9.3 8.5 9.3
Guest room temperature 9.6 9.4 9.2 9.7 9.6
Guest room lighting 9.7 9.5 9.3 9.0 9.7
Everything in working order 9.8 9.6 9.4 6.2 9.8
The concierge was knowlegable 9.7 9.5 9.3 7.0 9.7
Check-out speed 9.7 9.5 9.3 6.5 9.7
Accuracy of billing 9.2 9.0 8.8 5.0 9.2
I was thanked upon departure and asked to return 9.1 8.9 8.7 8.2 9.1
Value for price paid 9.5 9.3 9.1 8.2 9.5
Value compared to competition 9.0 8.8 8.6 6.5 9.0
I plan to return 9.4 9.2 9.0 8.2 9.4
I would recommend this hotel to my friends 9.8 9.6 9.4 8.0 9.8

Benchmark Report

Hotel Dionysus Unit 267
Benchmark Metrics Report
For the Years ending December 31
Unit 267 Systemwide Variance
Year 3 Year 4 YoY Change Upper Quartile Benchmark Year 4 Unit to System Benchmark Profit Calcluations Hotel
Market Share Hotel Difference Revenue Profit Occupancy 68.0%
Occupancy 100% 93% -7.0% 103% -10% ADR $ 141.53
ADR 103% 103% 0.0% 105% -2% Available 104,025
Occupied 80,762
Productivity (Man Hours Per Occupied Room) Room Profit Margin 68.40%
Front Office Supervisor 0.09 0.10 11.1% 0.08 25.0%
Front Desk Guest Agent 0.19 0.17 -10.5% 0.16 6.3%
Housekeeping Floor Supervisor 0.09 0.10 11.1% 0.09 11.1%
Guest Room Attendant 0.55 0.59 7.3% 0.48 22.9%
Public Space Attendant 0.08 0.08 0.0% 0.08 0.0%
Runners 0.10 0.13 30.0% 0.10 30.0%
Concierge 0.06 0.07 16.7% 0.07 0.0%
Bellmen 0.15 0.15 0.0% 0.15 3.4%
Doorman 0.17 0.19 11.8% 0.17 11.8%
Drivers 0.08 0.09 12.5% – 0
Payroll Taxes and Employee Benefits
FICA 7.65% 7.65% 0.0% 7.65% 0.0%
FUTA 2.30% 2.31% 0.4% 2.31% 0.0%
SUTA 2.80% 3.00% 7.1% 3.00% 0.0%
Medicare 1.45% 1.45% 0.0% 1.45% 0.0%
Workers Compensation 9.00% 9.50% 5.6% 7.50% 26.7%
401k Match 2.00% 2.00% 0.0% 2.10% -4.8%
Employee Meals 5.45% 6.10% 11.9% 5.00% 22.0%
Health Care 19.00% 25.00% 31.6% 19.10% 30.9%
Paid Time Off 4.00% 4.00% 0.0% 3.90% 2.6%
Total Taxes and Payroll Benefits 53.65% 61.01% 13.7% 52.01% 17.3%
Direct Expenses
Amenity Expense $ 1.96 $ 2.02 3.1% $ 1.85 9.2%
Cleaning Supplies $ 0.65 $ 0.78 20.0% $ 0.65 20.0%
Decorations $ 0.77 $ 0.61 -20.8% $ 0.74 -17.6%
Glassware Expense $ 0.36 $ 0.36 0.0% $ 0.36 0.0%
Guest Transportation $ 2.79 $ 3.31 18.6% $ – 0
Linen Expense $ 2.18 $ 2.58 18.3% $ 2.10 22.9%
Miscellaneous Expense $ 0.45 $ 0.45 0.0% $ 0.45 0.0%
Paper Supplies $ 0.92 $ 0.89 -3.3% $ 0.85 4.7%
Terry Expense $ 1.82 $ 2.02 11.0% $ 1.62 24.7%
Uniform Expense $ 0.51 $ 0.65 27.5% $ 0.50 30.0%
Total Direct Expenses 12.41 13.67 10.2% 9.12 49.9%

Labor Cost

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Hotel Dionysus Unit 267
Labor Cost Analyisis
For the Years Ending December 31
Year 1 MHPOR Year 2 MHPOR Year 3 MHPOR Year 4 MHPOR
Rooms Occupied 80,762 79,136 76,968 73,917
Room Revenue $ 11,475,797 $ 11,526,982 $ 11,554,781 $ 10,461,202
Man Hours
Rooms Division Manager 2,040 0.03 2,040 0.03 2,040 0.03 1,024 0.01
Front Desk
Management 4,080 0.05 4,080 0.05 4,080 0.05 4,096 0.06
Supervisors 5,840 0.07 5,840 0.07 6,570 0.09 7,320 0.10
Front Desk Agents 14,280 0.18 14,280 0.18 14,280 0.19 12,288 0.17
Total Front Desk 24,200 0.30 24,200 0.31 24,930 0.32 23,704 0.32
Housekeeping
Management 2,040 0.03 2,040 0.03 2,040 0.03 2,048 0.03
Floor Supervisors 5,840 0.07 5,840 0.07 6,570 0.09 7,320 0.10
Guest Room Attendants 40,381 0.50 41,151 0.52 42,332 0.55 43,611 0.59
Public Space Attendants 5,840 0.07 5,840 0.07 5,840 0.08 5,840 0.08
Runners 8,076 0.10 7,914 0.10 7,697 0.10 9,609 0.13
Total Housekeeping 62,177 0.77 62,784 0.79 64,479 0.84 68,428 0.93
Guest Services
Concierge 4,080 0.05 4,080 0.05 4,896 0.06 5,100 0.07
Bell Service 12,114 0.15 11,870 0.15 11,545 0.15 11,088 0.15
Door Service 11,680 0.14 11,680 0.15 13,140 0.17 13,870 0.19
Transportation Drivers 5,840 0.07 5,840 0.07 6,059 0.08 6,570 0.09
Total Guest Services 33,714 0.42 33,470 0.42 35,640 0.46 36,628 0.50
Wage Rates Per Hour/Overtime Hours Base Rate OT Hrs Base Rate OT Hrs Base Rate OT Hrs Base Rate OT Hrs
Front Desk
Management $ 19.61 $ 20.00 $ 20.40 $ 20.81
Supervisors $ 15.69 58 $ 16.00 70 $ 16.32 197 $ 16.65 220
Front Desk Agents $ 12.50 143 $ 12.75 171 $ 13.01 571 $ 13.27 737
Total Front Desk
Housekeeping
Management $ 19.75 $ 20.15 $ 20.55 $ 20.96
Floor Supervisors $ 15.69 58 $ 16.00 70 $ 16.32 329 $ 16.65 732
Guest Room Attendants $ 8.95 404 $ 9.13 494 $ 9.31 2,540 $ 9.50 5,233
Public Space Attendants $ 8.95 58 $ 9.13 70 $ 9.31 409 $ 9.50 584
Runners $ 7.85 81 $ 8.01 95 $ 8.17 616 $ 8.33 769
Total Housekeeping
Guest Services
Concierge $ 14.50 41 $ 14.79 49 $ 15.09 59 $ 15.39 61
Bell Service $ 6.95 121 $ 7.09 142 $ 7.23 139 $ 7.38 133
Door Service $ 9.95 117 $ 10.15 140 $ 10.35 158 $ 10.56 166
Transportation Drivers $ 11.50 58 $ 11.73 70 $ 11.96 909 $ 12.20 1,314
Total Guest Service
Year 1 MHPOR Year 2 MHPOR Year 3 MHPOR Year 4 MHPOR
Payroll Expense $ % Room Rev $ % Room Rev $ % Room Rev $ % Room Rev
Rooms Division Manager $ 75,000 0.7% $ 76,500 0.7% $ 78,030 0.7% $ 39,795 0.4%
Front Desk
Management $ 80,000 0.7% $ 81,600 0.7% $ 83,232 0.7% $ 84,897 0.8%
Supervisors $ 92,982 0.8% $ 94,842 0.8% $ 96,738 0.8% $ 98,673 0.9%
Front Desk Agents $ 181,178 1.6% $ 184,801 1.6% $ 188,497 1.6% $ 192,267 1.8%
Total Front Desk $ 354,159 3.1% $ 361,243 3.1% $ 368,468 3.2% $ 375,837 3.6%
Housekeeping
Management $ 40,290 0.4% $ 41,096 0.4% $ 41,918 0.4% $ 42,756 0.4%
Floor Supervisors $ 92,982 0.8% $ 94,842 0.8% $ 96,738 0.8% $ 98,673 0.9%
Guest Room Attendants $ 366,830 3.2% $ 374,166 3.2% $ 381,650 3.3% $ 389,283 3.7%
Public Space Attendants $ 53,052 0.5% $ 54,113 0.5% $ 55,195 0.5% $ 56,299 0.5%
Runners $ 64,349 0.6% $ 65,636 0.6% $ 66,949 0.6% $ 68,288