Accommodation management Report: Sheraton Hotel

Identification and description of the property

Sheraton Hotel is a 250-room hotel which will enter the market in 2013. The location of the hotel will be at the southeast corner of I-495 and route 110 of county, Huntington, Long Island, New York. This location is a characteristic of the suburbs of New York City with a surrounding environment that has a mixture of office, light industrial and retail property. The location of the hotel is suitable because it is suited in an area where it can be accessed and viewed from the nearby highways. The target customers of the hotel are travelers who are seeking first class quality level. The hotel will be featured with 250 guest rooms, 175-seat restaurant, 150-seat lounge, 40-seat lobby bar and approximately 12,500 square feet of meeting space. There is also an indoor swimming pool and exercise duty.

Key elements of Sheraton’s guest cycle

The guest cycle of an accommodation property involves four stages namely: guest pre-arrival, Arrival, occupancy and departure. These elements are controlled by the accommodation property management which also determines the effectiveness of each of these elements in meeting the company’s corporate objectives. As a manager, I would consider each of these elements in guiding the performance of the company.

  1. Pre-arrival

In this stage, customers are engaged in preparations for acquiring accommodation services from a range of accommodation properties. Each accommodation property should therefore prepare itself for a competitive position in the market. while choosing the best hotel, customers often consider various factors such as past experiences with the hotel, advertisement, friend referrals, hotel name, location among others. A customer may also be influenced to make reservations by the description of the hotel facilities as provided by the hotel’s reservation agent. The room type, room rate, recreation facilities and other attractions near or around the hotel.

In the case of Sheraton Hotel, pre-arrival element is also influenced by the above factors. For instance, the hotel is located in seven-acres of land which has all the necessary utilities for the customers. Therefore, guests will choose to use this accommodation property owing to the availability of utilities (Jones & Lockwood, 2004). The target customers are commercial and meeting/convention market segments. As such, people who seek property for commercial services or those who wish to hold meetings and conventions will always choose Sheraton hotel because the hotel targets them. in this case, the hotel has been able to conduct market segmentation, hence marketing itself to specific segments in the market which form part of the hotel’s customer loyalty.

The location of the company also forms a crucial part in the choice of customers during the pre-arrival stage of the guest cycle (Sheela, 2005). In this case, the hotel is located in a neighborhood surrounded by office, light industrial and retail property. This location enables the company’s guests to access many complementary services from the neighborhood such as acquisition of light industrial products, retail products and office services. The hotel is also located in a region with good access and visibility from nearby highways. This enables the guests to make appropriate choices in favor of the hotel as they pass through the highway in their travelling activities. Therefore, the location of the company plays a crucial role in determining the market position of the hotel. In fact, the hotel is located in a suitable position as can be noticed from the above discussion. This location is necessary for the customers to choose the hotel in their pre-arrival stage of the guest cycle.

Furthermore, the spreadsheet details of Sheraton hotel provides a clear outline of its charges, including Breakfast charges, restaurant food charges, room accommodation charges, phone charges and laundry charges. This forms the basis which clients may place reservations with the hotel (DeFranco, Lattin & Ebooks Corporation, 2006). During these reservations, the hotel uses the spreadsheet details of the above charges accommodation theory and empirical frameworks provide that such reservations can be undertaken in consideration with the hotel’s Automated Revenue Management Systems. In this system, corporate guests are considered to be less price sensitive, flexible, book at the last minute and travel during weekdays, and cannot wait for deals. On the other hand, leisure guests tend to be very price sensitive, travel during the weekend and are always motivated by deals. These facts guides Sheraton Hotel in the formulation of its rates as provided in the spreadsheet. The spreadsheet shows that the accommodation rates range from 56 to 90 while local phone charges range from 1.1 to 5.5.  On the other hand, restaurant beverage ranges from 9.8 to 62.4. These varying rates indicate that the company applies the automated revenue management system to provide differentiated rates depending on each class of client, time of the day or week, type of service and other factors (Sheela, 2005). This strategy leads operating efficiency of the hotel.

  1. Arrival

In this stage, the guest is registered and allocated a room. First, the guest-hotel relationship is established at the front office. The front office questions the guest concerning such facts as room rate allocation on the packages booked by the guest. This element of the guest cycle often impacts on the cost of running the hotel since the front desk is always involved with activities that require administrative assistance and procedures. As a result, the hotel will incur administrative costs (Sheela, 2005). These costs are represented in the data of Sheraton as general administration expenses. They amount to $1,471 in the base year 2010 but is projected over the years as the hotel grows to an amount of $2,044 in 2021. These administrative costs are not entirely derived from the arrival stage. In fact, some of the administrative costs include reservation administrative costs incurred during pre-arrival stage of the guest cycle (Bardi, 2011). However, most of the administration expenses are incurred at the front office where the hotel management attempts to establish relationships with guests as they arrive at the hotel seeking for accommodation.

The proposed Sheraton hotel attempts to maintain administration costs at the minimum amount as the guests arrive while at the same time improving its revenue so as to maintain a good operating efficiency as well as improving the company’s performance. For instance, the administrative and general operating expenses are maintained at low percentages so as to reduce the overall expenses in an attempt to increase the hotel’s net income. The percentage of administrative and general expenses is maintained at fairly less than 10%. In fact, the administrative and general expenses are maintained at around 8.3%-8.4%. In the stage of gust arrival, Sheraton hotel also improves its quality management by responding to complaints. First, the front office prepares for complaints and then responds to them by listening in their official front office venue, taking notes, asking the quests what they consider to be a fair deal and settles on the best agreement with the guests (Baker, Bradley & Huyton 2000). What the guest sees on arrival also matters. He/she must get a good reception and impression from the front office. There should also be no poor services such as waiting on long queues. Technologies are used to speed up lines and where necessary single long winding lines are established to provide solutions to long lines. Inspection is then conducted where the identification of each guest is determined. After identification, room allocation is done. This includes the use of property management system algorithms whereby computer program is used to give rooms on reservation based on priority. Upgrading may also be done whereby a guest is given a better room at lower prices. Sometimes, depending on the guest, he/she may be persuaded to take up a better room at a higher price (Baker, Bradley & Huyton 2000). After the registration process, the guests are cross-checked to determine if all the registered guests stayed within the hotel. If they didn’t stay, possible reasons for their departure should be investigated so that a good step is taken. In order for the company to meet the required occupancy rates and the revenue indicated in the data, these aspects of the guest arrival should be put into consideration.

  1. Occupancy

This is the most important element of the guest cycle. This is because occupancy amounts to the sole purpose of accommodation services offered by an accommodation property such as Sheraton. To ensure further income and to encourage guests to pay more on their arrival, the hotel’s quality is often maintained. This includes providing the best of everything, large rooms with many bathrooms, guests’ value and fair affordable prices. This is most especially done through a tradeoff between value and prices (Jones & Lockwood, 2004). Just like in the arrival stage, the hotel’s front office forms a crucial part of the hotel’s performance and operating efficiency in this stage. In order to maintain a desirable occupancy rate and hence receive a good amount of revenue, the hotel management should be able to respond to the guests at the right time and in the right manner. The requests of the guests should be well coordinated and necessary information flow should be created by the front office so as to maintain a good relationship between the hotel and the occupants. If these activities are not carried out, the occupancy rate desired won’t be met.

The occupancy rate for Sheraton Hotel is estimated to be 68% in the first 3 years from the base year and then 54% in the fourth year (2013). The rate is then expected to rise generally thereon until 2021 when the rate is expected to reach 69%. This rate will only be possible if the guests are provided the best and quality services during their occupancy period as explained above (Ford, Sturman & Heaton, 2012). The rates are projected well above 50% which is a good rate for the hotel to attain good revenues. The hotel also maintains its inflated average rate at $161 in the base year which is also projected to increase yearly up to a high of 214.96 in 2021. This rate is attained only if the company follows the above theoretical requirements of occupancy stage of the guest cycle.

During occupancy, security is also a crucial aspect which the hotel needs to consider. Without security the room occupants may opt to vacate the rooms in search for better rooms. As a result, the revenue received from room occupation will decline (Rutherford & O’Fallon, 2009). Currently, the estimated revenue from rooms as per the Sheraton data is about $9,991 which gives a percentage of 54.9%. This rate is projected to rise to $13,534 in 2021 averaging 55.6%. If the hotel’s security is not maintained during the occupancy stage of the company, guests may vacate the buildings and these revenues will decline drastically.

In order to account for the hotel’s income, the hotel management should also keep relevant accounts. This is a requirement in the occupancy stage of guest cycle (Baker, Bradley & Huyton 2000). In this stage, gust and hotel accounts should be kept. The restaurant food and beverage charges, phone charges and room charges affect the guest and hotel account, which in turn affects the hotel’s financial performance as reflected in the financial statements of the hotel. Sheraton company has kept a record of the above charges which are then allocated to each individual guest account and the hotel account the largest charge by Sheraton on the guest folio as suggested by its accounting records is the room charges (Barnes, 2008). Sheraton’s hotel management also checks the charges reflected by guest accounts against each guest’s credit limit. This enables the company to maintain good accounting records without errors or frauds.

  1. Departure

This is the final stage of guest cycle. The accounting aspects of the guests are closed in this stage, Sheraton ensures that the net income is positive by ensuring that at the departure stage all records reflect the desired levels of revenue. The projected net income in 2012 is $3,982 which is predicted to rise to $5,299 at the end of 2021. This may not be possible if the hotel does not ensure that at the departure stage all the accounting records of the departing guest are settled (Jones & Lockwood, 2004). Furthermore, the closing stage involves the return of the hotel’s room keys and gives a feedback on the quality of the services offered. This is important for the planning of the future guests.

 

References list

Andrews, S. (2008). Textbook of front office management and operations. New Delhi: Tata McGraw-Hill.

Bardi, J. A. (2011). Hotel front office management. Hoboken, NJ: Wiley.

Baker, S., Bradley, P., & Huyton, J. (2000). Principles of hotel front office operations. London: Cengage Learning.

Barnes, D. (2008). Operations management: An international perspective. London [u.a.: Thompson Learning.

Boomer, L. M. (2000). Hotel management: Principles and practice. New York: Harper.

DeFranco, A. L., Lattin, T. W., & Ebooks Corporation. (2006). Hospitality financial management. Hoboken, N.J: John Wiley & Sons.

Ford, R. C., Sturman, M. C., & Heaton, C. P. (2012). Managing quality service in hospitality: How organizations achieve excellence in the guest experience. Clifton Park, N.Y:  Delmar, Cengage Learning.

Jones, P., & Lockwood, A. (2004). The management of hotel operations. London: Thomson.

Rutherford, D. G., & O’Fallon, M. J. (2009). Hotel management operations. Hoboken, N.J: John Wiley.

Sheela, A. M. (2005). Economics of hotel management. New Delhi: New Age International.

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