Service Management Concepts: Implications for Hospitality Management

In - Service Management Concepts: Implications for Hospitality Management – a study by K. Michael Haywood, Associate Professor, School of Hotel and Food Administration, University of Guelph, Ontario, Canada, Associate Professor Haywood initially proffers: “The study and application of hospitality management has progressed on its own for many years; however, managers are not immune to the knowledge gained from study of other service industries. The author synthesizes what is happening in the area of service management, looks at its relevance to hospitality management, and identifies a few important implications of service management for hospitality managers.” The author draws a distinction between non-denominated service management, and service management as it applies to the hospitality industry. This is done to make an apparent comparison, as many people would assume the two are one in the same. They are not, and the contrast works well here. “While much of what we already know about effective management applies to service industries, some of the traditional concepts of management are inadequate in solving the problems faced by service businesses,” Haywood points out. “If a body of knowledge to be known as service management already exists, or is being developed, where does it fit relative to hospitality management,” Haywood asks. According to John Bateson, Testing a Conceptual Framework for Consumer Service Marketing, there are four criteria used to judge service management. Haywood details these for you, the reader, by way of citation. Haywood points to the difficulty in pin-pointing the intangibles that underpin the service industry. Since service is a concept rather than a touchable good, such as inventory, problems arise for both the organization and the client. Haywood points to a classic study of four service industries in France to illustrate the problems, although no realistic suggestions address the issues. “Over the past few years a variety of system models have been developed to explain the service process, that is, how the service is designed, produced, delivered, and consumed,” Haywood offers. These models are depicted in Appendices A-E. In offering perspectives on how the hospitality industry can gain from the experiences of service management, Haywood observes: “Service management places particular emphasis on a strategic outlook. Hospitality firms would be wise to carefully examine how they are perceived in the marketplace vis-a-vis their service concept, position, competitive situation, and management’s leadership abilities.” “Learning from the experiences of other service firms can help keep a company on track, that is, providing needed and valued services,” he closes the thought.

Indirect Cost Factors In Menu Pricing

In the discussion - Indirect Cost Factors in Menu Pricing – by David V. Pavesic, Associate Professor, Hotel, Restaurant and Travel Administration at Georgia State University, Associate Professor Pavesic initially states: “Rational pricing methodologies have traditionally employed quantitative factors to mark up food and beverage or food and labor because these costs can be isolated and allocated to specific menu items. There are, however, a number of indirect costs that can influence the price charged because they provide added value to the customer or are affected by supply/demand factors. The author discusses these costs and factors that must be taken into account in pricing decisions. Professor Pavesic offers as a given that menu pricing should cover costs, return a profit, reflect a value for the customer, and in the long run, attract customers and market the establishment. “Prices that are too high will drive customers away, and prices that are too low will sacrifice profit,” Professor Pavesic puts it succinctly. To dovetail with this premise the author provides that although food costs measure markedly into menu pricing, other factors such as equipment utilization, popularity/demand, and marketing are but a few of the parenthetic factors also to be considered. “… there is no single method that can be used to mark up every item on any given restaurant menu. One must employ a combination of methodologies and theories,” says Professor Pavesic. “Therefore, when properly carried out, prices will reflect food cost percentages, individual and/or weighted contribution margins, price points, and desired check averages, as well as factors driven by intuition, competition, and demand.” Additionally, Professor Pavesic wants you to know that value, as opposed to maximizing revenue, should be a primary motivating factor when designing menu pricing. This philosophy does come with certain caveats, and he explains them to you. Generically speaking, Professor Pavesic says, “The market ultimately determines the price one can charge.” But, in fine-tuning that decree he further offers, “Lower prices do not automatically translate into value and bargain in the minds of the customers. Having the lowest prices in your market may not bring customers or profit. “Too often operators engage in price wars through discount promotions and find that profits fall and their image in the marketplace is lowered,” Professor Pavesic warns. In reference to intangibles that influence menu pricing, service is at the top of the list. Ambience, location, amenities, product [i.e. food] presentation, and price elasticity are discussed as well. Be aware of price-value perception; Professor Pavesic explains this concept to you. Professor Pavesic closes with a brief overview of a la carte pricing; its pros and cons.

The Food Service Industry: Beliefs Held by Academics

In his study - The Food Service Industry: Beliefs Held by Academics - by Jack Ninemeier, Associate Professor, School of Hotel, Restaurant and Institutional Management at Michigan State University, Associate Professor Ninemeier initially describes his study this way: “Those in the academic sector exert a great deal of influence on those they are training to enter the food service industry. One author surveyed educational institutions across the country to ascertain attitudes of teachers toward various segments of the industry.” Those essential segments of the industry serve as the underpinnings of this discussion and are four-fold. They are lodging, institutional, multi-unit, and single-unit properties. For each segment the analysis addressed factors relating to Marketing, management and operating concerns: Marketing, operations, fiscal management, innovation, future of the segment Employee-related concerns: quality of work life, training/education opportunities, career opportunities The study uses a survey of academicians as a guide; they point to segments of the food service industry students might be inclined to enter, or even ignore. The survey was done via a questionnaire sent from the campus of the School of Hotel, Restaurant and Institutional Management at Michigan State University to 1850 full-time faculty members in two and four-year hospitality programs in the United States. Through the survey, Ninemeier wishes to reasonably address specific problems now confronting the food service industry. Those problems include but are not limited to: reducing employee turnover, retaining staff, increasing productivity and revenue, and attracting new staff. “Teachers in these programs are, therefore, an important plank in industry's platform designed to recruit students with appropriate background knowledge and interest in their operations,” Ninemeier says. Your author actually illustrates the survey results, in table form. The importance to an employee, of tangibles and intangibles such as morale, ego/esteem, wages, and benefits are each explored through the survey. According to the study, an interesting dichotomy exists in the institutional property element. Although, beliefs the academics hold about the institutional element suggest that it offers low job stress, attractive working conditions, and non-demanding competitive pressures, the survey and Ninemeier also observe: “Academics do not believe that many of their graduates will enter the institutional segment.” “If academic beliefs are incorrect, an educational program to educate academics about management and employee opportunities in the segment may be in order,” Ninemeier waxes philosophically.

The Specialist: Coming Soon To Your Local Hotel

In an article entitled - The Specialist: Coming Soon To Your Local Hotel - by Stan Bromley, Regional Vice President and General Manager, Four Seasons Clift Hotel, San Francisco, the author’s introduction states: “An experienced hotelier discusses the importance of the delivery of a high “quality-to-value” ratio consistently to guests, particularly as the hotel market becomes specialized and a distinction is drawn between a “property” and a “hotel.” The author’s primary intention is to make you, the reader, aware of changes in the hospitality/hotel marketplace. From the embryo to the contemporary, the hotel market has consistently evolved; this includes but is not limited to mission statement, marketing, management, facilities, and all the tangibles and intangibles of the total hotel experience. “Although we are knocking ourselves out trying to be everything to everyone, I don't think hotel consumers are as interested in “mixing and matching” as they were in the past,” Bromley says. “Today's hotel guest is looking for “specialized care,” and is increasingly skeptical of our industry-wide hotel ads and promises of greatness.” As an example Bromley makes an analogy using retail outlets such as Macy’s, Saks, and Sears, which cater to their own unique market segment. Hotels now follow the same outline, he allows. “In my view, two key factors will make a hotel a success,” advises Bromley. “First, know your specialty and market to that segment. Second, make sure you consistently offer a high quality-to-value ratio. That means every day.” To emphasize that second point, Bromley offers this bolstering thought, “The second factor that will make or break your business is your ability to deliver a high "quality/value" ratio-and to do so consistently.” The author evidently considers quality-to-value ratio to be an important element. Bromley emphasizes the importance of convention and trade show business to the hotel industry. That business element cannot be over-estimated in his opinion. This doesn’t mean an operator who can accommodate that type of business should exclude other client opportunities outside the target market. It does mean, however, these secondary opportunities should only be addressed after pursuing the primary target strategy. After all, the largest profit margin lies in the center of the target. To amplify the above statement, and in reference to his own experience, Bromley says, “Being in the luxury end of the business I, on the other hand, need to uncover and book individuals and small corporate meetings more than convention or association business.