Management Dynamics Management Dynamics

Every organization has several stakeholders including customers and vendors, who often visit organization frequently, and in many cases have to stay overnight and in some cases for several days. Enterprise hospitality management (EHM) in a large business firm accordingly becomes an important organizational function as customers, vendors, and other trading partners visit the company every now and then. In view of the importance of EHM, large firms generally maintain their own guesthouses or transit accommodation for the company visitors. However, there can arise many situations when numbers of visitors are much more than they can be internally accommodated in the company guesthouse. Visitors in such situations either have to be turned away or accommodated in hotels for which most organizations generally have some contractual arrangement with them. In this paper it has been attempted to study comparative economics of guesthouse versus hotel accomodation by collecting and analyzing complete one year hospitality data including several hospitality parameters. It was found that at existing levels of visitors movements in the organization, maintaining the company's own guesthouse is very much desirable and economically viable, and accordingly visitors should be diverted to hotels only when guesthouse occupancy is 'full' otherwise they should be accommodated in the guesthouses only.


INTRODUCTION
The study covered analysis of visitors census, bed occupancy and length of stay (LOS) for one year period in the empanelled hotels and guesthouses.Whereas visitors data is directly countable, bed occupancy and LOS can be estimated using the following simple relationship.

Bed occupancy =
Bed-days occupied

Number of visitors
The case is based on complete one year data with regard to visitors' volume, bed occupancy and length of stay in the company empanelled hotels and three company guesthouses for analyzing comparative economics of guesthouse versus hotel accommodation.This involved collecting all fixed and variable cost components of the company's three guesthouses and expenditure incurred in accommodating visitors in hotels for past one year period.Based on comparative study of expenses incurred at three guesthouses versus hotels, it was found that formers are overwhelmingly more economical than hotels at the current volume of visitors flow and more, it is only when visitors volume is exceedingly low that it makes sense to make visitors stay in expensive hotels without the company having its own guesthouse.
An issue thus, often arises is whether a company should have a guest house at all or whether making visitors always stay in hotels is a better option as a policy decision.Outsourcing visitors to hotels can be economically advantageous as long as volume of visitors is limited i.e. less than a minimum threshold or cut-off limit.Maintaining an independent company guesthouse is beneficial only when visitors' volume is more than the threshold limit.

ANALYSIS AND RESULTS
The company maintained three guest-houses in New Delhi where its corporate office is located and large numbers of visitors are in the first instance accommodated therein (Table 1) and as second preferred option as per the company policy, large numbers are diverted to different company empanelled hotels in the city (Table 2) when accommodation in the guesthouse is inadequate Management Dynamics, Volume 8, Number ? (2008) or when visitors are very prestigious for the organization who have to be accommodated in superior hotel accommodation.Comparative costs incurred by the company (which is partly inclusive of the costs of company stafO in accommodating its visitors in different empanelled hotels is given in Table 9. Figures should be seen in the context of understanding the study methodology employed as tariff rates have gone up appreciably since the time of the study.(Average costs per day worked out for empanel led hotels should not be mistaken with their current tariffs of these hotels).It was proposed that bed occupancy should be measured and monitored on month to month basis and visitors should be diverted to hotels only when the guesthouse occupancy is full.Visitors should be diverted to hotel when they have to be provided 'four star' or 'five star' facilities which the company guesthouses are not in a position to provide.Additional guesthouse capacity is recommended when visitors arrival rate has increased on sustained basis when existing capacity is found inadequate on most days.This is because guesthouse accommodation is cheaper in most cases unless visitors volume is very low in which case hotel accommodation for few visitors would always be cheaper.

Parameter
This analysis shows that staying in guesthouse is much cheaper option than hotel stay (Table 10).Thus, visitors should be diverted to hotels only when the guest-house occupancy is full or when prestigious visitors like company's valued customers have to be accommodated in luxury hotels.Mean bed occupancy of three guest-houses at 56.52, 31.55 and 61.93 apparently shows that in this instance visitors were accommodated in empanelled hotels even when 'mean bed occupancy' was far below 'full' occupancy.A low occupancy is OK when actual numbers of visitors are less but when they are large in numbers but made to stay in hotels and not in guesthouses where beds are lying idle, it should be seen as violation of Enterprise Hospitality Management policies.

CONCLUDING REMARKS
In large business firms, study of this nature should not be a one time activity but should become regular feature of organizational activity.In fact, firms should include hospitality parameters such as arrival rate of visitors, mean bed occupancy and average length of stay on regular basis as part of organization's management information and decision support systems.It is generally seen that while 'mean arrival rate' and 'average bed occupancy' may vary over period, 'average length of stay' generally remains unchanged and shows considerable statistical stability.One method for analyzing visitors flow is by collecting enough data to establish confidence limits for these parameters.Alternatively, check can be made on monthly or quarterly basis to determine if there is shifting trend in values beyond upper or lower confidence limits and then decide whether fresh measurement or analysis is necessary.A shortcut approach could be to simply plot parameter values overtime to observe shifting trend in their values.Management Dynamics, Volume 8, Number 1 (2008) When visitors' volume increases on permanent basis over a time period, company should consider building additional guesthouse capacity rather than diverting additional stream of visitors to expensive hotels as a policy matter.Reducing expenses on hospitality without reducing the comfort level of visitors should be seen as a value creation for the company as an EHM activity as the money thus, conserved can be more gainfully diverted towards value-adding activities of the firm, which are the primary goal of any organization.Management Dynamics, Volume 8, Number ? (2008) This paper presents a case on hospitality of a large business firm based on visitors data pertaining to visitors stay in the company guesthouses versus empanelled hotels.The study was undertaken with a view to study the pattern of stay observed during previous one year period in different company empanelled hotels in New Delhi which included Central Court, Lodhi Hotel, Hotel and three company guesthouses A, B and C, with their actual identity and name of the organization kept as disguised.

data with regard to fixed and variable costs incurred on guest-houses and expenses incurred in accommodating visitors in empanelled hotels were duly compiled for one year period. Expenditure incurred by three guesthouses on electric power, water and telephones (fixed costs) is summarized in Table 3. Expenses incurred by visitors on food bills in three guest-houses are given in Table 4. Cost data was used to determine average cost of staying in company guest-houses and empanelled hotels.
Table 1 Number of Visitors Who Stayed in the Company Guest during Past One Year PeriodTable 4 Expenses Incurred by Visitors on Food Bills in Three Guest Houses during Past One Year Period Table 2 Number of Visitors Who Stayed in Different Company Empanelled Hotels in Past One and Half Year Period Apart from visitors' statistics,

Computations of 'mean bed occupancy' and 'average length of stay' for three company guest-houses A, B and C are summarized in Table 5, 6 and 7, respectively. Data with regard to length of stay in nine empanelled hotels are summarized in Table 8. Average LOS is largest (4.83) in YMCA and lowest in Centaur Hotel (1.12). Average LOS in Centaur Hotel is low as being near Airport, visitors generally use it for catching the flight, etc. It is to be seen that excepting Central Court and YMCA, individuals generally stay longer in company guest-houses as compared to other empanelled hotels.
LOS (

xi) days Ian Feb Mar Apr May lun Jul Sep Oct Nov Dec fi
LOS (

Total LOS in past one year Total number of visitors Average LOS per visitor Total beds available Total bed days available per annum Average bed occupancy 4952 days 1572 4952 1572 24 24x365 4952x100 8760 = 3.15 days 8760 56.52Table 6 :
Occurrences of Varying 'Length of Stay' of Visitors in Guest House

Table 7 .
Occurrences of Varying 'Length of Stay' of Visitors In Guest House 'C during Past OneYear Period LOS (

Table 8 .
Occurrences of Varying 'Length of Stay' of Visitors in Company Empanelled Hotels during Past One Year Period HotelNo.

Table 9
Comparative Costs Incurred by the Company In Accommodating Visitors in Empanelled Hotels in New Delhi (All Cost Figures in Rupees).

Table 10 .
Occupancy Parameters and Fixed and Variable Costs for Running Three Guest Houses in New Delhi (All Cost Figures in Rupees)