Objectives for a Hospitality Business
Elegant hotels, budget motels, quick service restaurants, upscale dining establishments, travel and tourism are all part of the hospitality business. Setting objectives for your hospitality company is part of the business planning process that leads your company down the path to success. Share the objectives with employees so everyone is on the same track.
Hotels and motels are a $138 billion business in the United States, according to IBISWorld. Hotels generate revenue through renting rooms to guests. Any hotel can generate 100 percent occupancy by cutting the room rate significantly. The key is to find the room rate and occupancy percentage combination that maximizes revenue. For example a 200-room hotel that has a 75 percent occupancy -- 150 rooms filled -- and a room rate of $99 generates $14,850 per day. If the room rate increases to $149 and the occupancy drops to 60 percent, the hotel generates $17,880. Another metric for hotels is RevPAR -- revenue per available room, not just rented room. In the first example, the RevPAR is $74.25. In the second example, the RevPAR is $89.40. The higher the RevPAR, the better the hotel is doing.
Minimize housekeeping costs by training workers to clean each room in an allotted time. Reduce utility bills by turning down air conditioning and heating in unoccupied rooms, although you might want to keep a light on so the hotel looks full from the outside at night. Consider changing the bed linens only on the first day the room is rented and then by guest request on subsequent days. Overstaffing wastes money, and understaffing negatively affects customer satisfaction, so schedule just enough workers to fill need.
Restaurant revenues were projected to reach $660.5 billion in 2013, the National Restaurant Association website reports. Restaurants generate revenue based on the number of customers served each day and the average price per order. Increasing either of these factors increases revenue. As in the hotel industry, the challenge is to find the combination of menu items and prices that generates the highest average order while keeping the restaurant close to or at capacity. Restaurants that turn over tables -- seat new customers -- more often have the potential for higher revenue.
Keeping food and beverage costs as low as possible while maintaining quality and service are the first steps toward generating a profit in a restaurant. The optimum food cost of goods sold is between 25 to 30 percent, which means the gross margin is between 70 to 75 percent, according to the Food Service Warehouse website. Cost out each dish and drink, and modify prices accordingly. Review the menu to see which items are the best sellers. It may be possible to raise the prices on those items without affecting the number of orders.
Guests who have an unpleasant stay, poor service or a dirty room won't return. Patrons notice if the food is cold and the wait staff is rude or inattentive. They may post a detailed account of their negative experience on review sites, and at the very least, they'll tell friends and family what a disaster their visit was rather than recommending your establishment. Keep customer satisfaction high through quality control methods, employee training and monitoring.
High employee turnover costs your business in several ways. Training costs increase as new employees get up to speed on their jobs. For example, a new chef unfamiliar with the kitchen and menu may waste food preparing the dishes or not have a handle on portion control. Unhappy employees convey their emotions to guests through expressions and actions, detracting from the guests' experience.