the role, cost and management of hospitality...
TRANSCRIPT
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The Role, Cost and Management of
Hospitality Facilities
Chapter 1
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Hospitality Facilities
Hospitality industry relies on well designed and well
maintained facilities
Key element of the business
Guests desire:
Comfortable and safe environment
Conduct business
Entertain
Relax
Dine
Sleep
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Hospitality Facilities
Facility is the guest’s home away from home Want it to be better than home
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Management Involvement
All departments use facilities
Rely on facilities to do their jobs
Efficient design
Proper equipment and systems
Mangers involved in:
Design
Planning renovations
Managers have daily involvement with facilities
department
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Role of Facilities in Hospitality
Facilities plays critical role in the industry
Appealing visual environment
Comfortable thermal environment
Needed supplies
Elimination of unwanted sound and noise
Protection from the elements
Safety
Guests may not directly notice the contribution of the
facilities department
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Other Contributions
Role as “manufacturing plant”
Creation and delivery of services and products
House and interconnect equipment and systems
Safe, efficient and comfortable work environment
Role in image creation
Define the industry and provide identity in the
marketplace
Characteristic roof shapes, signage, colors, and other trademark
elements
Develop ability to identify business by characteristic appearance
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Growth
Largely comes as a result of additions in size or units
Industry dependent on facilities to produce and deliver
services
Recognizing opportunities and challenges involved
in the operation of facilities provides another role for
facilities management
Business opportunity
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ROI
Provides owners with a return on investment
Two basic ways:
Generation of operating profit
Market value of the property
Key role in revenue production
Proper design and mix to meet customer needs
Important to maintain existing facilities
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Revenue Generation
Proper design and mix of facilities important in
meeting needs, want, and desires
Provides appeal to the guest
Little latitude to make extensive changes without
massive infusion of capital
What can be done is maintenance of existing facilities
Linkage between maintenance and revenue
generation
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Cost of Design, Development and
Construction
Construction costs vary significantly depending on:
Type of facility
Complexity
Luxury level
To provide a return on investment, facilities must be
operated and maintained to maximize:
Operating profit potential
Real estate appreciation
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Cost of Design, Development and
Construction
Cost include:
Land
Building and Site Improvements
Soft Costs
FF&E
Pre-Opening and Working Capital
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Cost of Design, Development and
Construction
Total Cost Breakdown
Construction (60% - 65%)
FF&E (15% - 18%)
Development (10% - 12%)
Financing (8% - 10%)
Pre-Opening (3% - 4%)
Working Capital (1% - 2%)
Reserve fro Operating Shortfall (3% - 5%)
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Cost of Design, Development and
Construction
Proper design, quality, and budget control lead to
predictable costs
Maintenance
Renovation
Operation
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Cost of Operation
Following construction, there will be ongoing costs of
operation
Two principle cost entries:
Property operations and maintenance (POM)
Utilities
POM correlates with initial construction cost
The more you spend to build, the more you spend to
maintain
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Cost of Operation
Property operations and maintenance (POM) costs:
Labor and benefits
Supplies
Contract costs
Utilities costs:
Electricity
Fuel
Steam
Water
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Cost of Operation
Costs for POM and utilities average between 9.5%
and 11.1% for lodging properties
Restaurant repair and maintenance (R&M) generally
does not include the cost of labor
Results in lower maintenance value
Restaurants are more energy intensive than lodging
properties
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Cost of Operation
Contributing factors Occupancy
Sometimes correlated and sometimes not
Fixed portion unaffected by occupancy
Weather
Usage of system
Occupancy affects needs and access to systems
Business mix
Age of facilities
Types of building systems
Local utility rates
Local labor rates
Differences in construction
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Renovation and Modernization
Capital expenditures (CapEx) clearly facility related Can be significant
Not simply replacement of worn-out FF&E and soft goods
Wear an tear
Obsolesence
Regulatory requirements
Life safety
Franchise product demands
Changing technology
Replacement and renovation of building components
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Renovation and Modernization
Planning and implementation for capital
expenditures represents a significant portion of a
facility mangers duties
Related to building age
Management contracts generally provide for a 3% to
4% reserve for replacement account
Lower during the first years after opening
Cost and timing of capital expenditures can vary
considerably over the life of a facility
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Impact of Facilities Design
Design will dictate scope of facilities management
function
Facilities design focuses on:
Facilities component
Facilities layout
Material
Methods and types of construction
Equipment
Systems
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Components and Layout
Presence of facilities, outlets and grounds will all
create maintenance needs
Layout will affect maintenance needs
High-rise vs. low-rise
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Material, Methods and Types of
Construction
Material effect maintenance needs and operating
costs
Poor material selection causes problems
Well constructed builds focus on maintenance
As opposed to renovation and repair
Construction affects the physical plant
Insurance claims
Maintenance and utility costs
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Equipment
Equipment concerns:
Durability
Lifetime
Reparability
Efficiency
Accessibility
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Systems
Older buildings can be quite challenging
Modern systems can be quite complex
Can define the skill set for facilities manager
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Management Responsibilities
Safety and security
First concern
Legal and regulatory issues
Building codes
Health and environmental regulations
Governmental mandates
Service
To the guest and employees
Cost control
Asset protection
Management function
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Responsibilities of the Department
Systems and Building Design
Systems and Building Commissioning
Building and Systems Operation
Building Maintenance
Guestroom and FF&E Maintenance
Equipment Maintenance and Repair
Equipment Selection and Installation
Contract Management
Utilities Management
Waste Management
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Responsibilities of the Department
Budgeting and Cost Control
Safety and Security
Contractual and Regulatory Compliance
Part Inventory and Control
Renovations, Additions and Restorations
Special Projects
Staff Training
Emergency Planning and Response
Corporate Reporting
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Facilities Managers in Lodging Properties
Chief Engineer, Director of Engineering, Director of
Property Operations, Director of Facilities
Responsibilities vary
Likely to have technical backgrounds
Management skills developed on-the-job or through
continuing education
Not usual to have 4 year engineering or technical degree
Industry requirements changing due to complexity
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Staffing
Varies with:
Age of property
Services offered
Type of systems
Commitment to in-house vs. contract services
Other factors
Staffing level guidelines call for 2.5 to 4 facilities staff
per 100 rooms
May be significantly more