An organization that rates and classifies hotels and awards them diamonds is the

35 Part II Lodging

The hip style of Hotel Indigo is a lifestyle concept hotel

N e w hotels are built as a business venture by a developer, and be- cause the developer expects to make a reasonible return on this substantial investment, a feasibility study is done to assess the via- bi l i ty of the project. Obviously, there needs to be a gap in the mar- ket in which a segment is currently not being served (for example, the h ip , lifestyle boutique hotels such as Hote l Indigo) , plus, a new hotel is expected to take some business away f rom existing proper- ties if the r o o m rates are close in price. There are t w o views on new hotels versus remodeled hotels as far as r o o m rates and profits are concerned. It is often dif f icult for a new property to make a prof i t for a few years because of the higher cost of construction and the need to become k n o w n and gain a good market share. O n the other hand, a remodeled hotel has the cost of remodeling to pay for plus

higher operating costs for energy and maintainence, so they tend to cancel each other out.

Today, many larger hotels are developed as part of a mixed-use project. The hotel could be near or next to a convention center, business, or attraction. The hotel may also have a residential component (as in residencies if it's a Ritz Carlton or a condotel) and may include a spa.

Older hotels are generally renovated about every seven years. This is bacause they become dated and would otherwise lose market share, which equals prof i t . Older hotels have an advantage over new ones—or should have an advantage as a result of positive recognition in the market. Additionally, much or all of their mortgage may be paid off, so their debt service is likely easier on the cash f low than it is for a new hotel. Older hotels may have more charm, but they are more expensive to maintain. Older hotels should have built up repeat business through guest loyalty, something a new hotel has to do.

According to the American Hotel & Lodging Association ( A H & L A ) , the U.S. lodging industry consists of 46,000 hotels and motels, wi th a total of 3.3 mil l ion rooms. The gross volume of business generated from these rooms is $93.1 bil l ion. Unlike many other countries, the United States has no formal government classifi- cation of hotels. However, the American Automobile Association (AAA) classifies hotels by diamond award, and the Mobile Travel Guide offers a five-star award.

The A A A has been inspecting and radng the nation's hotels since 1977. Less than 2 percent of the 41,000 properties inspected annually throughout the United States, Canada, and Mexico earned the five-diamond award, which is the associ- ation's highest award for excellence. In 2000, the five-diamond award was bestowed on 79 lodgings in the United States, Canada, and Mexico. Twelve of the properties received both the five-diamond and the five-star awards.

A A A uses descriptive criteria to evaluate the hotels that i t rates annually in the United States, Canada, Mexico, and the Caribbean (see Figure 3-3) .

100 Part II Lodgmg

• One-diamond properties have simple roadside appeal and the basic lodging needs.

• Two-diamond properties have average roadside appeal, with some landscaping and a noticeable enhancement in interior decor.

• Three diamonds carry a degree of sophistication through higher service and comfort.

• Four diamonds have excellent roadside appeal and service levels that give guests what they need before they even ask for it.

• Five-diamond properties have the highest service levels, sophistication, and offerings.

Hotels may be classified according to location, price, and type of services offered. This allows guests to make a selection on these as well as personal crite- ria. Following is a list of hotel classifications:

City center. Luxury, first-class, midscale, economy, suites

Resort. Luxury, midscale, economy suites, condomimum, time-share, convention

Airport. Luxury, midscale, economy, suites

Freeway. Midscale, economy suites

Casino. Luxury, midscale, economy

Full service.

Convention.

Economy.

Extended stay.

Bed and breakfast.

.Alternatively, the hotel industry may be segmented according to price. Figure 3-4 gives an example of a national or major regional brand-name hotel chain in each segment.

City center hotels, by virtue of their location, meet the needs of the traveling pub- lic for business or leisure reasons. These hotels could be luxury, midscale, busi- ness, suites, economy, or residential. They offer a range of accommodations and services. Luxury hotels offer the ultimate in decor, butler service, concierge and special concierge floors, secretarial services, the latest WiFi or in-room technol- ogy, computers, fax machines, beauty salons, health spas, 24-hour room service, swimming pools, tennis courts, valet service, ticket office, airline office, car rental, and doctor/nurse on duty or on call. Generally, they offer a signature restaurant, coffee shop, or an equivalent recognized name restaurant; a lounge; a named bar; meeting and convention rooms; a ballroom; and possibly a fancy night spot. The Drake Hotel in Chicago is an example of a city center luxury hotel. An example of a midpriced hotel in New York City is the Ramada Hotel ; an economy hotel is the Day's Inn ; a suites property is the Embassy Suites.

Chapters The Hotel Business "tO'i

Economy S49-$69

Midprice i $69-$125 j

1 Upscale

S125-$225 i

Luxury $150-$450

All-Suites $109-$225

Holiday Inn Express

Holiday Inn Fairfield Inn

• Crowne Plaza

Fairfield Inn Courtyard Inn Residence Inn

Courtyard Inn [Harriott Residence Inn

Marriott Marquis Ritz-Carlton

Marriott Suites

Days Inn Omni Renaissance

EconoLodge Radisson Inn Radisson Radisson Suites

1 Ramada Limited ;

Ramada Inn Ramada . Ramada Suites

Sheraton Inn Four Points

Sheraton Sheraton Grande Sheraton Suites

Sleep Inn American Inn Hyatt Hyatt Regency Hyatt Park

Hyatt Suites

Comfort Inn j Quality Inn 1 Wingate

Clarion Hotels Quality Suites Comfort Suites

Extended Stay America

: Hilton Inn Hilton Hilton Towers Hilton Suites

Thrift Lodge I Doubletree Club Doubletree i Doubletree Suites

i Travelodge Hotels 1 Travelodge Hotels Forte Hotels Forte Hotels i

1 i Country Inn & 1 Suites

Westin Westin Spring Hill Suites

Super 8 1 LaQuinta i i Red Roof Inn j Homewood Suites

\y Hilton

\t Western j 1 Hampton Suites

\n Inn 1 j Embassy Suites

Note: Some brands' price ranges may overlap because of location and seasonal pricing.

Figure 3-4 Hotels by Price Segment.

Resort hotels came of age w i t h the advent of rail travel. Increasingly, citydwellers and others had the urge to vacation in locations they found appealing. Traveling to these often more exotic locations became a part of the pleasure experience. I n the late 1800s, luxury resort hotels were developed to accommodate the clientele that the railways brought. Such hotels include the famous Greenbrier at White Sulphur Springs, West Virginia; the Hote l del Coronado near San Diego, California; the Breakers in Florida; and the Homestead at H o t Springs, Virginia.

The leisure and pleasure travelers of those days were drawn by resorts, beaches, or spectacular mountain scenery. A t first, many of these grand resorts were seasonal. However, as automobile and air travel made even the remote resorts more accessible and an increasing number of people could afford to visit, — m y resorts became year-round properties.

'i'i2 Part II Lodging

Resort communities sprang up in the sunshine belt from Palm Springs to Palm Beach. Some resorts focus on major sporting activities such as skiing, golf, or fishing; others offer family vacations. Further improvements in both air and automobile travel brought exotic locations w i t h i n the reach of the population. Europe, the Caribbean, and Mexico became more accessible. As the years passed, some of the resorts suffered because the public's vacation plans changed.

The traditional family month-long resort vacation gave way to shorter, more frequent getaways of four to seven days. The regular resort visitors became older; in general, the younger guests preferred the mobil i ty of the automobile and the more informal atmosphere provided by the newer and more informal resorts.

Hyat t hotels have organized a program consisting of a variety of activities for children, thereby giving parents an opportunity either to enjoy some free time on their own or join their children in fun activities. M a n y resort hotels began to attract conventions, conferences, and meetings so that they could maintain or increase occupancy, particularly during the low and shoulder seasons.

Guests go to resorts for leisure and recreation. They want a good climate— summer or winter—in which they can relax or engage in recreational activities. Because of the remoteness of many resorts, guests are a kind of "captured clientele," who may be on the property for days at a time. This presents resort managers w i t h some unique operating challenges. Another operating challenge concerns seasonal- ity: Some resorts either do not operate year-round or have periods of very low occu- pancy. Both present challenges in attracting, training, and retaining competent staff.

Many guests travel considerable distances to resorts. Consequently, they tend to stay longer than they do at transient hotels. This presents a challenge to the food and beverage manager to provide quality menus that are varied and are presented and served in an attractive, attentive manner. To achieve this, resorts often use a

A Ski Lodge in British Coiunnbia

C h a p t e r 3 The Hotel Business 103

cyclical menu that repeats itself every fourteen to twenry-one days. Also, they pro- vide a wide variety and number of dishes to stimulate interest. Menus are now more health conscious—lighter and low in saturated fats, cholesterol, salt, and calories.

The food needs to be presented in a variety of ways. Buffets are popular because they give guests the opportunity to make choices from a display of foods. Barbecues, display cooking, poolside dining, specialty restaurants, and reciprocal dining arrangements w i t h nearby hotels give guests even more options.

W i t h increased global competition, not only f r o m other resorts but also f rom cruise lines, resort managers are challenged to both attract guests and to turn those guests into repeat business, which traditionally has been the foundation of resort viability.

To increase occupancies, resorts have diversified their marketing mix to include conventions, business meetings, sales meetings, incentive groups, sporting events, additional sporting and recreational facilities, spas, adventure tourism, ecotourism, and more.

Because guests are cocooned in the resort, they expect to be pampered. This requires an attentive, well-trained staff; hiring, training, and retaining a competent staff present a challenge in some remote areas and in developing countries.

There are a number of benefits to operating resorts. The guests are much more relaxed in comparison to those at transient hotels, and the resorts are located in scenically beautiful areas. This frequently enables staff to enjoy a better quality of life than do their transient hotel counterparts. Returning guests tend to treat associates like friends. This adds to the overall party-like atmosphere, which is prevalent at many of the established resorts.

Many airport hotels enjoy high occupancy because of the large number of trav- elers arriving and departing from major airports. The guest mix in airport hotels consists of business, group, and leisure travelers. Passengers w i t h early or late flights may stay over at the airport hotel, whereas others rest while wait ing for connecting flights.

Airport hotels are generally in the 200- to 600-room size and are ful l service. To care for the needs of guests who may still feel as if they are in different time zones, room service and restaurant hours may be extended or even offered around the clock. More moderately priced hotels have vending machines.

As competition at airport hotels intensified, some added meeting space to cater to businesspeople who want to fly i n , meet, and fly out. Here, the airport hotel has the advantage of saving the guests from having to go downtown. Almost all airport hotels provide courtesy van transportation to and from the airport.

Convenient locations, economical prices, and easy and less costly transporta- tion costs to and from the airport are some reasons why airport hotels are becoming intelligent choices for business travelers. Airpor t hotels can mean a bargain for groups, especially considering that the transportation to the hotel and back f r o m the airport is usually free or is very inexpensive, says Brian Booth, director of sales and marketing at the Dallas Hyatt Regency Airport Hotel . One of the most conveniently located hotels in the country is the M i a m i International Ai rpor t Hote l , which is located wi th in the airport itself.

Freeway hotels and motels came into prominence, w i t h the help of the Interstate Highway Act, in the 1950s and 1960s. They are smaller than most hotels—usually fewer than fifty rooms—and are frequently mom-and-pop establishments or franchised (such as M o t e l 6). As Americans took to the open road, they needed a convenient place to stay that was reasonably priced w i t h few frills. Guests could simply drive up, park outside the office, register, rent a room, and park out- side the room. Over the years, more facilities were added: lounges, restaurants, pools, soft drink machines, game rooms, and satellite TV.

Motels are often clustered near freeway off ramps on the outskirts of towns and cities. Today, some are made of modular construction and have as few as eleven employees per hundred rooms. These savings in land, construction, and operating costs are passed on to the guest in the f o r m of lower rates.

The casino hotel industry is now coming into the financial mainstream, to the point that, as a significant segment of the entertainment industry, it is reshaping the U.S. economy. The entertainment and recreation sector has become a very important engine for U.S. economic growth , providing a boost to consumer spending, and thus creating tremendous prosperity for the industry. The fastest- growing sector of the entertainment field is gaming, which is discussed in Chapter 11 .

Casino hotels are leaning toward making their hotels into " family- fr iendly" hotels. The gaming business is strictly for adults; however, these hotels realize that making their hotels family friendly w i l l attract more families to spend a day or two in their hotels. Circus Circus in Las Vegas pioneered the concept more than a decade ago. Various other casino hotels are fo l lowing suit. They have baby-sitters available at any time of the day, children's attractions ranging f r o m parks to circuses and museums, and kids menus in restaurants. For adults, in addition to gaming, a multinational cuisine for dining, health spas for relaxation, dance clubs, and dazzling shows are available.

Casino hotels are now marketing themselves as business hotels. They include in their rooms work space, a fax, a copier, and computer data ports. Other ameni- ties include a full-service business center, travel bureau, and room service. Larger casino hotels also attract conventions, which represent a lucrative business. There are now more than 150 hotels in Native American tribal land. They cater to an increasing number of guests who want to stay and be entertained as well as gamble.

Convention hotels provide facilities and meet the needs of groups attending and holding conventions. Apart from this segment of the market, convention hotels also attract seasonal leisure travelers. Typically, these hotels exceed 500 guest rooms and include larger public areas to accommodate hundreds of people at any given time. Convendon hotels have many banquet areas within and around the hotel complex. These hotels have a high percentage of double occupancies, and rooms have double queen-sized beds. Convention hotels may also offer a concierge

C h a p t e r s The Hotel Business 107

floor to cater to individual guest needs. Round-the-clock room service, an in- house laundry, a business center, a travel desk, and an airport shuttle ser- vice are other amenities found in con- vention hotels.

Another way to classify hotels is by the degree of service offered: f u l l - service, economy, extended-stay, and all-suite hotels. Full-service hotels of- fer a wide range of facilities, services, and amenities, including many that were mentioned under the luxury hotel category: multiple food and bev- erage outlets including bars, lounges, and restaurants; both formal and ca- sual dining; and meeting, convention, and catering services. Business features might include a business center, secre- tarial services, fax, in-room computer hookups, and so on.

Most of the major N o r t h American cities have hotel chain representation, such as Doubletree, Four Seasons, H i l t o n , Holiday Inn, Hyatt , Marr iot t , Omni , Ramada, Radisson, Ritz-Carlton, Loews, Le Meridian, Sheraton, and Westin. Some of these chains are positioning themselves as basic full-service properties. An exam- ple of this strategy is Marriott's Courtyard hotels, which have small lobbies and very limited food and beverage offerings. The resulting savings are passed on to the guests in the form of more competitive rates. Thus, the full-service market may also be subdivided into upscale and midpriced hotels.

The Universal Portofino Bay Hotel in Orlando is a popular convention modeled after Portofino, Italy

hotel

After enjoying a wave of growth for most of the last twenty years, the economy hotel segment may be close to the saturation point. There are about 25,000 prop- erties in this segment wi th many markets. The economic law of supply and de- mand rules: I f an area has too many similar properties, then price wars usually break out as they try to attract guests. Some w i l l attempt to differentiate them- selves and stress value rather than discounting. This adds to the fascination of the business.

An economy or budget hotel offers clean, reasonably sized and furnished rooms without the frills of full-service hotels. Chains such as Travelodge, Motel 6, Micro- tel, Days Inn, and La Quinta became popular by focusing on selling beds, not meals or meetings. This enabled them to offer rates about 30 percent lower than the mid- priced hotels can. Economy properties, which represent about 15 percent of total hotel rooms, have experienced tremendous growth.

10B Part II Lodging

Motel 6, so named because rooms rented for $6 a night when this chain opened, is now owned by Accor Hotels of France

More recent entrants to this mar- ket sector are Prom us's Hampton Inns, Marriott 's Fairfield, and Choice's Comfort Inns. These prop- erties do not have restaurants or offer substantial food and bever- ages, but they do offer guests a continental breakfast in the lobby.

Boutique hotels offer a different lodg- ing experience compared to mid- to large chain hotels. Boutique hotels have a unique architecture, style, decor, and size. They are smaller than their chain competitors, wi th about 25 to 125 rooms and a high level of personal service. Some examples of boutique hotels are the trendy South Beach retro types and the avant-garde hotel George in Washington, D.C.

A good example of a chain bou- tique hotel is Hotel Indigo, an Intercontinental Hotel Company. Hotel Indigo provdies an oasis where guests can escape the hectic pace of travel and think more clearly, work more productively, rest more refreshingly. I t offers an envi- ronment that doesn't just shelter guests, but inspires and reenergizes them. That's the idea behind Hotel Indigo.'*

Some hotels cater to guests who stay for an extended period. They do, of course, take guests for a shorter time when space is available; however, the majority of

I guests are long term. Guests take advantage of a reduction in room rates based on ' the length of their stay. The mix of guests is mainly business and professional/

technical, or relocating families. Residence Inns and Homewood Suites are market leaders in this segment of

the lodging industry. These properties offer full kitchen facilities and shopping services or a convenience store on the premises. Complimentary continental break- fast and evening cocktails are served in the lobby. Some properties offer a business center and recreational facilities.

All-suites extended-stay hotels typically offer approximately 25 percent more space for the same amount of money as the regular hotel in the same price range. The additional space is usually in the f o r m of a lounge and possibly a kitchenette area.

Chapte r 3 The Hotel Business 10-

Embassy Suites, owned and operated by the Promus Corpo- ration; Residence Inns, Fairfield Suites, and Town-Place Suites, all by Marr io t t ; Extended Stay America; Homewood Suites; and Guest Quarters are the market leaders in the all-suites, extended-stay segment of the lodging industry. Several of the major hotel chains have all-suites extended-stay subsidiaries, including Radisson, Choice Hotels (which dominate the eco- nomy all-suites segment with Comfort and Quality Suites), Sheraton Suites, H i l t o n Suites, Homegate Studios, and Suites by Wyndham Hotels. These properties provide a closer- to-home feeling for guests who may be relocating or attending seminars or who are on work-related projects that necessitate a stay of greater than about five days.

There are now almost 1,500 all-suites extended-stay properties. Many of these properties have business centers and offer services such as grocery shopping and laundry/dry cleaning. The designers of extended-stay properties realize that guests prefer a homelike atmosphere. Accordingly, many properties are built to encourage a community feeling, which allows guests to interact informally.

Residence Inn is a market leader in the extended-stay segment of the lodging industry

As the w o r d suggests, a condotel is a combination of a hotel and condominium. Developers build a hotel and sell it as condo units, which the owners can pool for use as hotel rooms and suites. The hotel operating company gets a cut of the money from renting the units and so does the owner. The owner of the condo unit may have exclusive right to the use of the unit for a fixed period of time (usu- ally one month); other than that, the hotel operating company knows that it can rent out the condos.

Some new hotels are developed as mixed-use properties, meaning that a hotel may also have "residences"—real condos that people use, so they are not for renting like condotel—a spa, and sports facilities. Mixed-use hotels can also be a part of a major urban or resort development, which may include office bui ld- ings, convention centers, sporting facilities, or shopping malls.

Bed and breakfast inns, or B&Bs as they are famil iar ly k n o w n , offer an alter- native lodging experience to the normal hotel or motel . According to Travel Assist Magazine, B & B is a concept that began in Europe and started as overnight lodging in a private home. A true B & B is an accommodation w i t h the owner, w h o lives on the premises or nearby, providing a clean, attractive accommodation and breakfast, usually a memorable one. The host also offers to help the guest w i t h directions, restaurants, and suggestions for local enter- tainment or sightseeing.

l i O Part II Lodging

There are many different styles of B&Bs w i t h prices ranging f rom about $30 to $300 or more per night. B&Bs may be quaint cot- tages w i t h white picket fences leading to gingerbread houses, tiny and homey, w i t h two or three rooms available. On the other hand, some are sprawling, ranch-style homes in the Rockies; multistoried t o w n homes in large cities; farms; adobe villas; log cabins; lighthouses; and many stately mansions. The variety is part of the t h r i l l , romance, and charm of the B & B experience.^

There are an estimated 25,000 bed and breakfast places in the United States alone. Bed and breakfast inns have flour- ished for many reasons. Business travelers are growing weary of

the complexities of the check-in/checkout processes at some commercial hotels. W i t h the escalation of transient rates at hotels, an opportunity has been created to serve a more price-sensitive segment of travelers. Also, many leisure travelers are looking for accommodation somewhere between a large, formal hotel and staying w i t h friends. The B&Bs offer a homelike atmosphere. They are aptly called "a home away f r o m home." Community breakfasts w i t h other lodgers and hosts enhance this feeling. Each B & B is as unique as its owner. Decor varies according to the region of location and the unique taste of its owner. The owner of the bed and breakfast often provides all the necessary labor, but some employ f u l l - or part-time help.

1 . What characteristics do the fol lowing hotel segments encompass?

a. City center hotels

b. Resort hotels

c. Airpor t hotels

d . Ereeway hotels and motels

e. Eull-service hotels

f. Economy/budget hotels

g. Extended-stay hotels

h . Bed and breakfast inns

A Bed and Breakfast in Yorksliire, England

C h a p t e r 5 Food and Beverage Operations

Kitchen A hotel kitchen is under the charge of the executive chef or chef in smaller and medium-sized properties. This person, in turn, is responsible to the director of food and beverage for the efficient and effective operation of kitchen food production. The desired outcome is to exceed guests' expectations in the quality and quantity of food, its presentation, taste, and portion size, and to ensure that hot food is served hot and cold food is served cold. The executive chef operates the kitchen in accordance w i t h com- pany policy and strives to achieve desired financial results.

Some executive chefs are now called kitchen managers; they even serve as food and beverage directors in midsized and smaller hotels. This trend toward "right-sizing," observed in other industries, euphemistically refers to restructuring organi- zations to retain the most essential employees. Usually, this means cutting labor costs by consolidating job functions. For example, Michael Hammer is executive chef and food and bev- erage director at the 440-room H i l t o n La Jolla in Torrey Pines, Cahfornia. Mike is typical of the new breed of executive chefs: His philosophy is to train his sous chefs, sous being a French w o r d meaning "under," to make many of the operating deci- sions. He delegates ordering, hiring, and fir ing decisions; sous chefs are the ones most in control of the production and the people who work on their teams. By delegating more of the operating decisions, he is developing the chefs de partie (or stations chefs) and empowering them to make their own deci- sions. As he puts i t , " N o decision is wrong—but in case it is unwise, we wi l l talk about it later."

M i k e spends time maintaining morale, a vital part of a manager's responsi- bilities. The kitchen staff is under a great deal of pressure and frequently works against the clock. Careful cooperation and coordination are the keys to success. He explains that he does not want his associates to "play the tuba"—he wants them to conduct the orchestra. He does not hold food and beverage department meetings; instead he meets w i t h groups of employees frequently, and problems are handled as they occur. Controls are maintained w i t h the help of software that costs their standard recipes, establishes perpetual inventories, and calculates potential food cost per outlet. Today, executive chefs and food and beverage directors look past food cost to the actual profit contribution of an item. For example, if a pasta dish costs $3.25 and sells for $12.95, the contribution mar- gin is $9.70. Today, there are software programs such as ChefTec that offer soft- ware solutions for purchasing, ordering, inventory control , and recipe and menu costing; ChefFec Plus offers perpetual inventory, sales analysis, theoretical inventory reports, and multiple profit centers.

Controll ing costs is an essential part of food and beverage operations and, because labor costs represent the most significant variable costs, staffing becomes an important factor in the day-to-day running of the food and beverage locations. Labor cost benchmarks are measured by covers-per-person-hour. For example, in stewarding, it should take no more than one person per hour to clean

The executive chef of a very large hotel manages the kitchen and may not do much cooking

Part II Lodging

37.1 covers. M i k e and liis team of outlet managers face interesting challenges, such as staffing for the peaks and valleys of guest needs at breakfast. Many guests want breakfast during the peak time of 7:00 to 8:30 A . M . , requiring organization to get the right people in the right place at the right time to ensure that meals are prepared properly and served in a timely manner.

At the H i l t o n La Jolla-Torrey Pines, Executive Chef Hammer's day goes something like the fol lowing:

1 . Arrive between 6:00 and 7:00 A.M. and walk through the food and beverage department wi th the night cleaners.

2. Check to make sure the compactor is working and the area is clean.

3. Check that all employees are on duty.

4. Ask people what k ind of challenges they w i l l face today.

5. Sample as many dishes as possible, checking for taste, consistency, feel, smell, and overall quality.

6. Check walk-ins.

7. Recheck once or twice a day to see where department stands production-wise—this helps reduce or eliminate overtime.

8. Approve schedules for food and beverage outlet.

9. Keep a daily update of food and beverage revenues and costs.

10. Forecast the next day's, week's, and month's business based on updated information.

11 . Check on final numbers for catering functions.

Financial results are generally expressed in ratios, such as food cost percentage—the cost of food divided by the amount of food sales. In its simplest form, an example is the sale of a hamburger for $1.00. If the cost of the food is $0.30, then the food cost percentage is 30 percent, which is about average for many hotels. The average might be reduced to 27 percent in hotels that do a lot of catering. As discussed later in this section, in determining the food and bever- age department's profit and loss, executive chefs and food and beverage directors must consider not only the food cost percentage, but also the contribution margin of menu items. The contribution margin is the amount contributed by a menu item toward overhead expenses and is the difference between the cost of preparing the item and its selling price.

Another important cost ratio for the kitchen is labor cost. The labor cost percentage may vary depending on the amount of convenience foods purchased versus those made from scratch (raw ingredients). In a kitchen, this may be expressed as a food sales percentage. For example, if food sales total $1,000 and labor costs total $250, then labor costs may be expressed as a percentage of food sales by the fol lowing formula:

Labor management is controlled with the aid of programs such as TimePro from Commeg Systems. TimePro is a time, attendance, and scheduling package that pro- vides an analytical tool for managers and saves time on forecasting and scheduling.

Labor Cost therefore $250 = 25% labor cost Food Sales $1,000

174 Part II Lodging

CORPORATE P R O F I L E (continued)

• Eighteen Four Seasons Hotels were awarded top honors in the AAA Diamond Awards.

• Eight different Four Seasons Hotels received the Mobile Five-Star Award.

• Gourmet magazine's annual reader's survey of "Amenca's Top Tables" had a total of nine Four Season's restaurants rated in the top twenty listings of their respective cities.

This Corporate Profile drawns on Information from the Four Seasons Hotels and Resorts web site, www.fourseasons.com.

A n executive chef has one or more sous chefs. Because so much of the execu- tive chef's time is spent on administration, sous chefs are often