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Contemporary Hospitality Industry

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Contenporary Contemporary Hospitality Industry
Understand the current structure of hospitality industry.
Analyse current scale, scope and diversity of hospitality industry.
The hospitality industry employs seven percent of the working population. In terms of gross value added (GVA) the sector contributed £40.6bn to the UK economy in 2011 or 4.2 percent of the country’s total GVA. In 2012 there were 181,500 individual business sites operating across UK.
Hospitality and tourism is one of the UK’s most diverse sectors all connected to service sector. Besides different size of operations and customers, there are different sub-sectors of the industry: * Pubs, bars and night clubs * Hotels, Hostels and B&B * Restaurants, Bistros, Cafes and Coffee shops * Casinos and Gambling * Take-Always and Mobile catering * Travel services * Tourist Services * Membership clubs * Contract catering * Hospitality services * Events * Visitor attractions
According to State of the Nation Report 2013, in 2012 most of the hospitality businesses were private companies (59 %). Following 20 % were sole traders and remaining were mostly partnerships (15 %).
Restaurants, hotels, pubs, bars and nightclubs represent the greatest number of businesses and equal 70% GVA.
When measured by the number of employees, industry is predominately made up of small businesses; almost half employ less than five people and only one percent of businesses employ 100 people or more. (Chart 1)

Source: Inter-departmental Business Register, 2012, Office for National Statistics
Discuss the organisational structure of different hospitality organisations.
Organisational structure is the fundamental design of a company; it defines its company’s lines of authority and decision making. It also locates in structures employees from different functional group.
Organisational structure of chain restaurant based on Wagamama.
Average size chain restaurant like Wagamama employs between 20 and 30 members of staff, in proportion 60%/40% front of the house to back of the house. Decision-making authority has been centralized; only day to day restaurant running decisions are left to make for branch managers. All the strategic decisions have been reserved for specialized departments in head office, that’s include any changes in menu, local marketing, or employing new line managers. Narrow span of control with distinction on front of the house and back of the house and head chef reporting directly to GM -not to AGM (see below).

Head Chef and GM reporting directly to Area Manager and Area Head chef support BOH. Please see below structure of head office.

Characteristic of BOH
Highly specialized line chefs and kitchen assistants work in different kitchen sections, e.g. wok/ griddle/ fry/ ramen/ preparation, increasing productivity and efficiency,BOH managers and team leaders provide managerial control and coordination and support.
I think the best way to see the difference between FOH and BOH managers is compare key responsibilities from these areas. Head Chef /Senior Sous Chefensure excellent levels of communication between the Front of House and Back of House teamsensure that sufficient stocks of all materials are being kept and stored under the correct conditionsensure all health and safety, food safety standards are adhered to company policy ensure that all staff are constantly trained to effect good portion control and good presentation of dishes ensure that orders are placed with suppliers, complying with the minimum/maximum stock levels and that no variance above or below these levels takes place ensure that maintenance problems are promptly reported ensure all stock levels are managed correctlyresponsible for the cleanliness and upkeep of all back of house areas and storage including correct documentation ensure all new menus are implemented and correct specs are followed ensure all correct documentations are kept up to date and followed by companypolicy liaising with employees, suppliers, area head chef, quality control department, food alert control | General Manager/ FOH manager ensure excellent levels of communication between the Front of House and Back of House teamsensure excellent levels of supervision at all business levels

ensure that staff are recruited and trained on timeensure compliance with company policy, food safety, health and safety matrix/guidelinesensure correct menu and marketing implementation reconciling stock levels along with head chef ensure staff rotas are done on time ensure customers enquiries and complaints are handled correctly and uploaded to systemensure budgets are managed and agreed forecasting weekly and monthly sales/wages preparing and uploading sales/wages reportsensure statistical and financial records are upload on timeassessing and improving profitabilityensure administration and paperwork are handled correctly and up to date liaising with customers, employees, suppliers, area manager, quality control department, food alert control |

Compare Wagamama as a branded chain restaurant to King’s Arms Langham as a local, private owned restaurant
King’s Arms is the locally sourced, based on fresh produce, pub/restaurant.
Compare to Wagamama decision-making structures are decentralized, for example Head Chef build his own menu and choose local suppliers. Span of control is very flat -everyone reports to General Manager and Owner. Part of distinction between front of the house and back of the house specialisation is very wide, for example General Manager covers Head Chef’s time off, Waitresses work in pastry department during service.

Below I pointed key organisational differences between those restaurants Wagamama International chain of fast food restaurantsGlobally sourced suppliesBased on central kitchen/food production facilityStrictly regulated by company policiesCorporate vertical organisational structureCentrally managed from headquarterHighly specialized staffCentralised decision-making | King’s Arms Local British restaurant Locally sourced suppliesIn house food productionRegulated by owner and General managerFlat organisational structureWide specialisation of staffDecentralised decision-making |

Assess the role of hospitality related organisations and professional bodies
“The hospitality industry should have an umbrella organisation to act as a voice of unity representing all the passion and expertise of the industry's bodies to support professional development and attract new people to the industry.”
Carl Weldon
Chief Executive
HOSPA
There are many different organisations and professional bodies related to hospitality industry, they perform different functions: * Provides recognised standards for training * Increase standards of professional services through greater awareness, education and training * Develop carers and prospects of members * Maintain knowledge skills and abilities * Work with industry, education and media to achieve greater recognition of craft * Connect industry with suppliers and manufacturers * Create new ideas and innovations * Provide skills and knowledge for new businesses

Example of big UK organisations and their main purpose:

* Confederation of Tourism and Hospitality is a qualification awarding and membership body for the hospitality industry in the UK it provides recognised standards for training * Craft Guild Chefs work to win greater recognition of chefs and their profession, try to increase standards of professional cooking, promote British and European produce * AICR UK (The International Association for Front Office Managers of Luxury Hotels) facilitate and strengthen the professional relationships between members and to promote and publicise the importance of their profession * Springboard UK work with the industry to improve perceptions, promote the industry as a great place to work and help attract fresh talent

Understand Staffing in the hospitality industry * Assess the staffing requirements of different hospitality industries
Discuss the roles, responsibilities and qualification requirements for hospitality staff.
Hospitality and tourism sector accounts for more than 2 million jobs. UK figures from 2011 show that the workforce currently stands at 2,076,000 an increase of 0.7 percent on the previous year.
Industry characterise by low level of entry which mean that people can start working with little experience and develop in to higher skilled and management positions. The negative aspect to this easy entry is that creates many transient jobs. While many part-time roles are filled by transient staff, the reality is the sector needs skilled staff. The industry has wide and diverse range of skilled and unskilled jobs, including: * Managers; senior managers and directors, small business owners, line managers, supervisors. * Technical staff; includes chefs, travel agents, croupiers * Front of the house; include waiting staff, receptionists, bar staff * Back of the house; include kitchen and catering assistants; housekeepers * Jobs in other sectors such as IT, marketing, sales , finance or engineering
Restaurants and bars are two sectors in industry that employ most people- 850000 are nearly half of all workers. Table below shows number of people working in core occupations i.e. those that are largely specific to the industry, such as chefs and waiting staff, between 2007 and 2011. | 2007 | 2008 | 2009 | 2010 | 2011 | Five year change | Kitchen and catering assistants | 400,400 | 382,000 | 399,300 | 415,100 | 427,300 | 7% | Chefs, cooks | 254,500 | 251,200 | 258,900 | 270,800 | 267,500 | 5% | Waiting staff | 209,500 | 233,000 | 224,300 | 237,700 | 254,200 | 21% | Bar staff | 203,100 | 201,300 | 197,400 | 202,200 | 200,300 | -1% | Restaurant and catering establishment managers and proprietors | 151,000 | 155,800 | 150,600 | 161,100 | = | = | Publicans and managers of licensed premises | 49,200 | 43,500 | 45,300 | 46,700 | 45,100 | -8% | Housekeepers and related occupations | 60,400 | 61,900 | 57,400 | 64,200 | 43,200 | -29% | Hotel and accommodation managers and proprietors | 55,400 | 58,900 | 58,500 | 54,300 | 43,100 | -22% | Leisure and theme park attendants | 19,500 | 16,900 | 22,000 | 21,900 | 25,400 | 30% |
Source: People 1st analysis of Labour Force Survey 2011, Office of national Statistic
Leisure and theme park attendants show the greatest increase in numbers (30 %) over the last five years, indicating grown in this sector. Kitchen and catering assistants are the largest group, with employee numbers increasing by 7% over the last five years. Chefs and cooks are second largest group; followed by waiting staff, these roles increased by 5% and 21% in the last five years, this show growth in restaurants and dining out and trend of pubs becoming increasingly food-led. Largely as a results of fall in food and service management and hospitality services workforces we can see that the number of catering managers decrease significantly.
Analyse operational, managerial and legislative issues resulting from recent developments affecting the hospitality industry discuss the current image of the hospitality industry.
UK Economy
Current image of the hospitality industry remain positive due to growing customer demand and economy changes. The UK economy has experienced strong recovery over the past year and economists expect this to continue in 2014-2015. Sector showing positive growth trends, with signs that investment is also start to pick up. In longer period that could also have impact on employment and output in services. While the whole economy is quickly recovering, we need to remember that wages and productivity has been poor. Average sector wages still remain below prerecession peaks and national average (£26,500 for 2014), that is expected to recover gradually over next few years.
Issues of staff retention and training
The problem of high staff turnover and lack of training have been ongoing in industry for years. Low staff retention and skill gaps affect productivity. Key objectives to address those issues are: * Make sure staff are taken care of and offered right training * Provide career pathways and ensuring those are promoted both within industry and beyond to ensure our industry is recognized and attract new talents * Adequate training, higher retention rates and clearer career pathways will help with skill gaps and cost of staff turnover
To continue to grow hospitality and respond to rising customer expectations, changing tastes and preferences addressing staff skill shortages is a must.
Growing prices and tight profit margins
UK becomes net importer of fuel and bigger importer of food. Since 2007 food prices have risen dramatically, rising by more than 30% and continuing to grow above inflation level. Food and Drink inflation up to October last year hit 4.2%. In last three years torrential rain falls which caused flooding across parts of Britain badly affected crop yields leading to shortage of supply. That cause decreasing prices of grains and vegetables by almost 5% in 2013. Rising grains prices affect not only prices of pasta and bread but also meat and dairy. Banning rice export by some of south-east Asian countries, stroked prices of rise more than double in last six years.
Respond to that is changing menu, operating on cheaper ingredients for example pork belly as an alternative to pork tenderloin or smoked mackerel instead of salmon. Changing portion size e.g. fillet steaks from 8 oz. to 4 oz. Tweaking up menus by using local and seasonal ingredients it’s also solution to lower food cost; e.g. mild cheddar instead of mozzarella or watercress orange salad in replacement for expensive tomato salad during winter.
Growth of social media
Social media presents great opportunity for hospitality industry to make better contact with customers, giving opportunity for a unique marketing, brand growth and development. Most of business have own websites, they now have to make sure that their site is optimised for search engines, have mobile app, connection into social media like Facebook and alternative Instagram, Twitter. Applications should be clear and more to the point keeping customers involved in conversation about operation. Great potential advantage about social media is that gives customer opportunity to share opinion about their likes and dislikes. By using appropriate analysis tools, can find out sense of what customers want and how to react. Most important is the development of mobile apps, since travellers expect to use their mobile devices to book rooms or other travel services on the spot.Wide strategy of employing all social media to engage customers is needed.

In July 2013 Marriott hotels changed standard operational procedure for check-in, by starting mobile application. Here’s how their initial check in works: coolhunting.com; 2013 Guests who are Marriott Rewards members can use their iPhone or Android device to check-in to their hotel room any time after 4:00 P.M. the day before their arrival. The hotel will send an alert when the room is ready, at which point pre-programmed keys will be waiting at a special mobile check-in desk. Guest preferences and credit card information will already have been stored in their profile, so there’s no need to re-supply the information. No more standing in line at reception; Marriott has created an easier and faster process, which is what every traveller wants.
Legislation
In January 2011 UK government introduced increased VAT rate of 20%, striking already struggling during recession hospitality and tourism industry.
On 13 December 2014, new law will be introduced that will require food businesses to provide allergy information on food sold unpacked. That will be legal requirement to provide clear information about allergens on each of the menu items. Verbal information can be provided by the staff but written confirmation about allergies must be available on request. This will require extra staff training but also will affect suppliers whowill be expected to provide specific information about each product.
In UK budget for 2014 duty on spirits and cider has been frozen. Alcohol duty escalator has been scraped and duty for pint of beer has been cut by 1p. This will bring relief for pubs sector, struggling due smoking ban, strict drink driving law and changing customer trends – pubs closing rate went up from 24 to 28 per week in 2013. New duty will make visiting them more affordable, supporting and preserving produce of traditional beers, ciders and whisky. Other key factors in 2014 budget are to keep apprenticeship grants for small businesses and doubling investment allowance which will help to start and grow businesses, invest in people and to create new jobs.
Be able to recognise potential trends and developments in hospitality
Key trends: * Growth in emerging markets * Importance of consumer—facing technology and the sourcing * Growing importance of the sustainability * Development and retention of human capital

Emerging markets
Due to risk of over- supply of upscale product, growing middle classes and recession, there are needs to develop mid-market and budget product. Demand for supply more budget conscious travellers are growing, especially when occupancy of upper end of the market is falling.
Frits van Paasschen 2013 “Half of humanity is middle class... That middle class needs hotels.”
Main factors on changing customer trends
Current recession is changing values and behaviours among customers, who have become more cautions and changing their spending patterns, which is reflected in future hospitality and tourism trends.
In last year’s technology and growth of social media were helping customers become more and more knowledgeable and aware about the market. With quickly growing mobile app’s technology, widely available 4G network and websites like trip advisor we can clearly see that in the future customers will become very well informed. As a result clients will have high expectations about services and products. Technology also drive trend for special offers and vouchers which increase competition and rise discussion is that really create locality to the brand.
Sustainability
Sustainability will play increasing role in determine customer preferences, will become business norm. Growing importance of sustainability is social issue. Regarding to Deloitte report whole tourism sector contributed in estimated 5% of global CO2 emission. (40% of that belongs to air travel and 21% to accommodation). Hospitality industry is vulnerable to water shortages, relies heavily on build assets and consumes significant amounts of electricity. Those factors ensure that sector will be impacted by sustainability issue in the future. Currently we can find sustainability initiatives in operational changes such as linen or towels re-use programs, energy and water saving programs, development programs such as green building programs and certifications.
Marriott already have ten year water and energy consumption reduction targets per available room, established green goals and green sourcing programs. Big chain restaurants companies like Whitbread, M&B or Wagamama already have strict policies when it’s comes to waste disposal and recycling, which confirm that sustainability is one of strategic priorities.
Development and retention of human capital
Turnover rate is expected to increase rapidly as the economy begins to pick up. Regarding to Deloitte report average hotelier spends 45 % of operating expenses on labour cost when turnover in industry is as high as 31 %, nearly twice the average rate for other sectors, true cost of turnover is even higher:

Source: Tracey and Kruse, How to Keep Your "Stars" from Defecting Tough Times, 4th Annual National HR in Hospitality Conference and Exp, Feb 22-24, 2010
As economy recovers businesses will need to develop new talent programs and solutions targeting reduction of staff turnover. Table below shows employment projections to 2020 by occupational group, using accommodation and food services data as a proxy for the sector. | 2013 | 2020 | Expansion demand | Replacement demand | Total demand | Managers and senior officials | 327,500 | 359,400 | 31,900 | 101,800 | 133,700 | Professional occupations | 54,800 | 63,800 | 9,000 | 14,200 | 23,200 | Associate professional and technicaloccupations | 73,300 | 87,400 | 14,000 | 17,600 | 31,600 | Administrative, clerical and secretarialoccupations | 105,600 | 109,300 | 3,700 | 34,600 | 38,400 | Skilled trades occupations | 286,400 | 245,900 | -40,500 | 80,300 | 39,800 | Personal service occupations | 75,400 | 85,500 | 10,200 | 20,800 | 30,900 | Sales and customer service occupations | 124,600 | 130,300 | 5,700 | 31,500 | 37,100 | Transport and machine operatives | 51,300 | 51,400 | 100 | 15,600 | 15,600 | Elementary occupations | 840,500 | 915,900 | 75,400 | 234,400 | 309,800 | Total | 1,939,300 | 2,048,800 | 109,500 | 550,700 | 660,200 |
Source: Working Futures 2010-2020 (2008), UKCES/IER/CE, electronic resource
Bibliography
Internet sources/ Reports:
State of Nations 2013.pdf
Deloitte Report – Hospitality 2015.pdf available from moodle
An Overview of the UK Hospitality Industry.pdf available from moodle
Working Futures 2010-2020 (2008), UKCES/IER/CE from State of Nations 2013.pdf
Tracey and Kruse, How to Keep Your "Stars" from Defecting Tough Times, 4th Annual National HR in Hospitality Conference and Exp, Feb 22-24, 2010 from Deloitte Report – Hospitality 2015.pdf
Frits van Paasschen 2013 “Half of humanity is middle class... That middle class needs hotels.” from Deloitte Report – Hospitality 2015.pdf
Source: People 1st analysis of Labour Force Survey 2011, Office of national Statistic
Source: Inter-departmental Business Register, 2012, Office for National Statistics

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