the journal of hospitality financial and technology … · the bottomline the journal of...

THE JOURNAL OF HOSPITALITY FINANCIAL AND TECHNOLOGY PROFESSIONALS

October/November 2007Volume 22, Number 7

www.HFTP.ORG • www.HITEC.ORG

Annual Convention & Tradeshow IssueInside: Pricing Strategies; Peer Advice: How to Minimize Club Audit Costs; white Space: Managing a Busy Life; A Contractor’s Perspective: Overseeing a Construction Project; Addressing Guest Bandwidth Demands; Hotel Spas: Profit Centers; Reducing Food & Beverage waste; Chapter Profile: HFTP Greater Milwaukee; Feature Profiles: Steven F. Argo, CHAE, David M. Manglos, CPA, CHAE, and Jerilyn B. Schnitzel, CHAE, CHTP, CAM

The Bottomline �

THE JOURNAL OFHOSPITALITY FINANCIAL AND

TECHNOLOGY PROFESSIONALS

Volume 22, Number 7

14 White SpaceThe magic ingredient for your busy lifeBy Juliet Funt

17 A Contractor’s PerspectiveHow to effectively manage a construction project’s budget and day-to-day accountingBy Paul Baggett

21 Addressing Guest Bandwidth Demands — Now!Cost effective ways to meet expectations and deliver a positive connection experienceBy Trevor Warner

23 Hotel Spas — Profit CentersIndustry research shows that hotel spas are money-making additions to hotels and resortsBy Melih Madanoglu, Ph. D.

25 You Can’t Manage What You Can’t SeeWhere to look to reduce waste and improve food and beverage cost controlBy Bill Schwartz, CHTP

5 Between the LinesAn Eventful Year, For HFTP and Myself — The association has seen positive results as it put into practice many of its strategic goals

6 Q&A From The HFTP Research InstitutePointers for Pricing Strategies — Considerations when naming a price for food & beverage and hotel rooms

8 Industry News and NotesUSALI Highlights, 10th Revised Edition — Multi-ownership Lodging Facilities; How to reduce club audit costs — recommendations from your peers

12 Chapter Profile: HFTP Greater MilwaukeeDedicated to personal and professional growth

13 HFTP News and NotesNew Column! Certification Call; HFTP Event Calendar

27 FEATURE Profiles: New HFTP DirectorsSteven F. Argo, CHAE; David M. Manglos, CPA, CHAE; and Jerilyn B. Schnitzel, CHAE, CHTP, CAM

HFTP® and HITEC® are registered service marks of Hospitality Financial and Technology Professionals. ProLinks and GUESTROOM 2010 are service marks of Hospitality Financial and Technology Professionals.

Submissions and InquiriesIndividuals interested in submitting an article for publication should contact the editor. The Bottomline is a peer review journal. All ma-terials submitted for publication are reviewed by members of the editorial review board or recognized experts in the field.

The Bottomline (ISSN 0279-1889), the jour-nal of Hospitality Financial and Technology Professionals, Inc., is published bimonthly with two special editions by HFTP®. Copy-right © by Hospitality Financial and Technol-ogy Professionals. All rights are reserved. All opinions expressed herein represent the views of the authors. The Bottomline and HFTP disclaim any responsibility for views expressed or statements made in any articles published. HFTP disclaims any liability with respect to the use of or reliance on any such information. The information contained in this publication is in no way to be construed as a recommendation by HFTP or any industry standard, or as a recommendation of any kind to be adopted or binding upon any member of the hospitality industry. Written consent must be obtained from HFTP before reprinting articles. Subscription fee of $30 for HFTP members is included in the membership fee. HFTP is headquartered at 11709 Boulder Lane, Suite 110, Austin, Texas 78726. Periodicals Postage Paid at Austin, Texas. POSTMASTER: Send ad-dress changes to The Bottomline, 11709 Boulder Lane, Suite 110, Austin, Texas 78726, (512) 249-5333.

C o n t e n t s

F E A T U R E S

D E P A R T M E N T S

O C T O B E R / N O V E M B E R • 2 0 0 7

Annual Convention & Tradeshow Issue

� October/November 2007

THE BOTTOMLINE STAFF

Frank I. Wolfe, CAE Executive Vice President/CEO

[email protected]

Eliza R. Selig Editor/Director of Communications

[email protected]

Laura Huffman Advertising Sales/Marketing Account Manager

[email protected]

2006–2007 HFTP OFFICERS

President

Agnes DeFranco, Ed.D., CHAE University of Houston

Houston, Texas

Vice President

Anna McFarland, CPA, CFE, CHAE, CHTP Anna McFarland & Associates

Kaufman, Texas

Treasurer

Jules Sieburgh, CHTP JSI Consulting

Bethesda, Maryland

Secretary

Terry Price, CHAE, CHTP, CPA The Grove Park Inn Resort & Spa

Asheville, N.C.

Immediate Past President

Ralph R. Miller, CA, CBV, CHA, CHAEInntegrated Hospitality Management, Ltd.

North Vancouver, B.C.

2006–2007 COMMUNICATIONS EDITORIAL ADVISORY cOUNCIL

Chair

Franklin John P. Sikich, CPA, CHAE Franklin John Patrick Sikich, CPA

Board Liaison

Karl Munster, CPA, CHAEHRI Lodging, Inc.

Council

Amitava Chatterjee, CHTPIBM Business Consulting Services Travel and

Transportation Hosp and Leisure

Ab M. Echenberg, CHAE, CHTPAME Consulting

Mehmet Erdem, Ph.D, CHTPUniversity of Nevada, Las Vegas

Ted HornerE Horner & Associates Pty Ltd

Peter O’Connor, Ph.D.ESSEC Business School

Arlene Ramirez, MBAConrad N. Hilton College, University of Houston

Kevin F. Reilly, CPA, JDPKF Witt Mares

Raymond S. Schmidgall, Ph.D., CPA, CHAEMichigan State University

Jerilyn B. Schnitzel, CHAE, CHTP, CAMSchnitzel Hospitality Consulting

Joseph Seminerio, MBA, CHAE, CHTPBaltusrol Golf Club

Paul A. Willie, CFM, CHAE, CHTP, CHA, CMANiagara College

11709 Boulder Lane, Suite 110 • Austin, TX 78726–1832001 (512) 249-5333 • (800) 646-4387 • Fax 001 (512) 249-1533

www.hftp.org • www.hitec.org

The Bottomline �

AneventfulyeAr,forHftPAndMyselfThe association has seen positive results as it put into practice many of its strategic goals

Agnes DeFranco, Ed.D., CHAE, is a professor at the Conrad N. Hilton College at the University of Houston in Houston, Texas.

educational conferences. In addition, the certification review courses for the CHAE CHTP certifications will be offered in the UK through BAHA as part of their educational program alongside the current BAHA ETP qualifications.

The HFTP family of chapters has also grown, with new chapters inside and out of the United States. In 2007 we char-tered the Asia Chapter, Greater Missouri Chapter, the Boston University Student Chapter, the Hong Kong Polytechnic University Student Chapter and the École Hôtelière Lausanne Student Chapter.

While HFTP International has been busy expanding its educational opportuni-ties, so have HFTP chapters. I was lucky to attend three different regional confer-ences produced on the chapter level in Southern Alberta, New Orleans and North Carolina. They all provided great educa-tion with a local twist.

Last, I was proud of the success of a new HFTP endeavor close to my heart — The HFTP Assistant Controllers Confer-ence which occurred this past August. A majority of HFTP’s educational programs are designed for experienced profes-sionals, focusing on the details and new trends, and not as much for the up-and-coming next generation of leaders in our industry. Now with the new conference, HFTP offers new professionals essential training taught by HFTP members who have many years of experience. The at-tendees of this year’s inaugural conference were enthusiastic and bright, and have a good professional future ahead of them.

It’s been such an eventful year for me and although I am looking forward to continuing my work with HFTP Interna-tional for my final year on the board, I am

Between the LinesA Letter From the President

®

Agnes DeFranco, Ed.D., CHAE

The end of my term as HFTP presi-dent has suddenly come into sight, and I will soon hand over the role

to my esteemed board member, Anna McFarland, CPA, CFE, CHAE, CHTP. This moment has come so quickly, and when I stop to think about it, I am so blessed to have the opportunity to rep-resent HFTP and am amazed at what I have experienced over the past 12 months — traveling to many parts of the globe, meeting with individuals who participate in all aspects of the industry, and putting into practice HFTP’s strategic goals with the staff, Board and many other talented volunteers.

One of the top priorities for the asso-ciation has been to expand internationally. The association has been actively work-ing with organizations outside of North America for several years now, and this year we have witnessed several fruitful results. HFTP has successfully produced two new conferences in two different regions — EHTEC in Amsterdam, The Netherlands and the Caribbean Hospital-ity Finance and Technology Conference in San Juan, Puerto Rico. The results were very positive, and we can now look forward to a part two for both in the com-ing months. In addition, we have added the 2008 Asian Hospitality Finance and Technology Conference in Singapore.

Just last month HFTP finalized a strategic alliance with the British Associa-tion of Hospitality Accountants (BAHA). As partners, the associations will expand member benefits, including offering re-duced cross-membership rates. HFTP and BAHA will also work jointly on projects relating to financial accounting standards, authoring industry texts and producing

also looking forward to directing more attention to my local Houston chapter and my students at the University of Houston.

My sincere thanks to my fellow board members, our wonderful staff in Austin, all the volunteer leaders, my Greater Houston HFTP family, and most im-portantly, you — each and every one of my HFTP family. Each of you is a part of HFTP, and each of you, in your own special way, makes HFTP not just an association that promotes professional development of its members, but a family who truly cares about the total develop-ment of all of us as better individuals.


POINTERS FOR PRICING STRATEGIESConsiderations when naming a price for

food & beverage and hotel rooms

HFTP News and Notes

Question:

Answer:

®

Pricing strategies can be crucial to the success of a business. Setting prices too high may deter buyers, as well as setting prices too low, which gives the impression of low quality. There are many pricing strategies for hospitality establishments. According to Collins and Parsa, there are several objectives one must think about when pricing a guest-room including:• Optimize/maximize profitability;• Maximize revenues;• Differentiate the product in the

marketplace;• Increase or decrease the pace at which

rooms are being sold;• Increase market share of a specific

brand;• Achieve a targeted contribution margin

per room sold;• Communicate a price-value relation-

ship of the product to the consumer. (Collins & parsa, 2006)

In general, these objectives can be ap-plied to both hotel and restaurant pricing.

In Economics class, everyone was taught that prices are based on supply and demand. Yes, this theory is true, but there are many factors which impact sup-ply and demand and must be considered when developing a pricing strategy. These factors include:• Costs associated with the production

of a product or service;

Can you provide information on pricing strategies for the hospitality industry? I am looking for information applying to both hotels and restaurants.

• Relative quality of one firm’s product as compared to the quality of their competitor’s product;

• The cost of a substitute product;• The value, length and quality of the

relationship between the vendor and the customer; and

• The overall pricing strategy of the firm itself. (Collins and Parsa, 2006)

Pricing StrategiesIn general, there are three basic ap-proaches to pricing: cost-based pricing, customer-driven pricing and competi-tion-driven pricing. In cost-based pricing,

products or services are priced to yield a profit above all costs of producing the product or service. In this model the contribution margin is the most important piece. Customer-driven pricing is the clos-est approach to pure supply and demand pricing. This pricing approach is based on how much customers are willing to pay for the product. With the final pricing type, competition-driven pricing, prices are set to attain the market-share desired by the firm (Collins & Parsa, 2006). Each pricing strategy has positive and negative aspects; therefore, a combination approach will probably work best for most firms.

Price EndingsSomething as simple as a price ending can drastically impact a buyer’s decision to purchase an item. There are several price ending strategies which have been used by retailers and restaurateurs for

Table 1. Summary of Pricing Strategy Exploratory Interviews. Based Upon 12 Interviews with Industry Experts

Topic Response

Factors considered when establishing room rates

• Competition• Demand in the market

Reasons for using a “just-below” strategy with prices ending with $9, 99 cents or 95 cents

• Perceived to be less expensive• Customers expect it

Reasons full-service operators do not use a dollar-and-cents pricing strategy

• Avoid the perception that guests are being “nickel and dimed”

Reasons why upscale, full service hotels use a round-pricing strategy with whole-dollar rates that end in 0 or 5

• Send a message of quality• Price is secondary

Source: Collins, M. & Parsa, H. (2006, March). Pricing Strategies To Maximize Revenues in the Lodging Industry. International Journal of Hospitality Management, 25(1). Retrieved June 4, 2007 from the Science Direct database.

The Bottomline �

Contact Information: Tanya Venegas, MBA, MHMHFTP Research Institute Ph: (713) 743-1839 or

(866) 572-4387 Fax: (713) 743-2548 E-mail: [email protected]

Q & A

years, but are now becoming popular with hotel operators. One very popular price ending strategy is setting prices just below whole dollar amounts. Fast food restaurants have instituted this pricing strategy on their “value” menus where items tend to cost 99 cents. This strategy does not only apply to pennies, but big ticket items are also priced with this strategy. Advertisements can be seen everywhere for items priced at $99, $499 or $999.

Price ending strategies can impact the value a customer perceives in the product. According to a 2001 study by Naipaul and Parsa, the use of a 9 price-ending signals value to the consumer while a 0 price-ending communicates quality (cited in Collins & Parsa, 2006). Collins and Parsa conducted a study on price-ending strategies in which they interviewed in-dustry experts to determine their percep-tion of different price-ending strategies. A summary of these interviews can be found in Table 1 (page 6).

Dynamic PricingThe basic definition of dynamic pricing is a process in which contracted rates fluctu-ate (“A growing …,” 2007). For example, the goal for Hilton hotels is to find the percentage discount off of the best avail-able rate that meets the breakeven point (“A growing …,” 2007). Some hotels have begun trying to implement dynamic pricing on new contracts, and clients do not seem to be buying into the idea. According to a white paper published by The Association of Corporate Travel Executives, 75 percent of buyers are not entering into dynamic pricing contracts (“Dressing up …,” 2007). Some hotels are combating the resistance by offering hybrid contracts. These contracts will of-fer a group static pricing on primary mar-kets such as New York City or Chicago where rates can fluctuate greatly depend-ing on demand, and dynamic pricing on secondary markets. One other option may be offering a rate cap, which minimizes the rate fluctuations to the buyer (“Dress-ing up …,” 2007).

Corporate planners are voicing several major concerns. First of all, the opportu-nity for rates to increase dramatically is on the minds of those entering into these

contracts. Corporate planners like the predictability of a set rate and have a fear of the unknown in major markets where prices could increase overnight. Another major downside to dynamic pricing is that it causes problems with the budget-ing process. Financial managers would no longer have a set rate for budgeting purposes. In general, clients find dynamic pricing too complex (“Dressing up …,” 2007). Hotel sales managers will have to overcome these obstacles when trying to sell clients on the dynamic pricing model.

For further information on these topics contact the HFTP Research Institute.

Sources• A Growing Pricing Strategy. (2007,

February 1). Lodging Hospitality, 63(2). Retrieved August 30, 2007 from the Hospitality & Tourism Index.

• Collins, M. & Parsa, H. (2006, March). Pricing Strategies to Maximize Rev-enues in the Lodging Industry. Interna-tional Journal of Hospitality Manage-ment, 25(1). Retrieved June 4, 2007 from the Science Direct database.

• Dressing Up Dynamic Pricing: Hote-liers Continue to Meet Corporate Re-sistance to Floating Rates. (2007, May 21). Business Travel News, 24(10). Retrieved August 30, 2007 from the Hospitality & Tourism Index.


The Financial Management Committee of the Ameri-can Hotel and Lodging Association (AH&LA), in conjunction with HFTP, has released the 10th edition of the Uniform System of Accounts for the Lodg-ing Industry (USALI). Throughout 2007, the Financial Management Committee is providing a series that highlights the major changes found in the 10th edition of the USALI. This month, Mixed-ownership Lodging Facilities are featured.

The 10th Edition provides guid-ance for reporting operations derived from projects that include elements where ownership is held by a party other than the hotel owner. These projects include condo hotel operations, timeshare, fractional and whole ownership elements where the hotel operator may be providing hotel services for the element owners. Due to the diversity of contractual arrange-

ments that exist between owners and operators, the reporting of revenues and expenses will vary depending on the facts and circumstances of each contract. The 10th Edition provides guidance with respect to determining whether revenues and expenses derived from condo hotel and other mixed ownership situations should be reported in the Rooms Department, Other Operated Departments, or Rental and Other Income. The 10th Edition does not cover the reporting of results from time share operations and fractional operations, both of which are covered by another publication. The following paragraphs summarize the factors to be considered.

Reported in Rooms Department• The hotel assumes the economic risk associated with operat-

ing the third-party-owned units pursuant to a contractual relationship that extends beyond one year. For example, when a hotel operator enters into an agreement with a unit owner to take the economic risk of marketing and filling the “condo” unit for the owner, the revenues and expenses resulting from that activity are integrated in to the opera-tions of the hotel. In other words, the revenues derived from these activities are included in the hotel’s Rooms Revenue, while the expenses incurred are reported in their appropriate departments (i.e. rooms, maintenance, utilities, etc…)

• In this circumstance, the available and occupied room counts should be included in the hotel’s rooms statistics calculations.

USALI Highlights10 th Revised Edition

To purchase a copy of the 10th Edition of the Uniform System of Accounts for the Lodging Industry, please visit the web site of AH&LA’s Educational Institute at www.ei-ahla.org.

Industry News and NotesReference

Reported in Other Operated Departments• If the third-party owner of the unit shares in the risk associ-

ated with the operation of the unit, a management relation-ship exists. For example, the contract dictates that revenues are split between unit owners and management, as well as expenses. In this circumstance, hotel management is operat-ing a condominium operation, and this operation is reported as a Condominium Department within Other Operated Departments.

• In this circumstance, the available and occupied room counts should not be included the hotel’s rooms statistics calcula-tions. However, it is recommended that supplemental rooms statistics tables be created to capture the performance of the third-party owned units, as well as to report the statistics of the entire business unit.

Reported in Rental and Other Income• If hotel management receives a fixed dollar amount, a

percent of revenue, or reimbursement that is net of specified expenses in exchange for marketing the condominium unit, then the fee received by the hotel is reported in Rentals and Other Income. For example, management is responsible for renting and maintaining the units. However, the unit own-ers retain all revenues and pay all expenses associated with ownership and maintenance. One of those expenses is the fee they pay to hotel management.

• In this circumstance, the available and occupied room counts should not be included the hotel’s rooms statistics calcula-tions. However, it is recommended that a supplemental rooms statistics table be created to capture the performance of the third-party owned units.

Mixed-ownership Lodging Facilities

10 October/November 2007

In the 2007 HFTP Research Institute Club Audit Survey, respondents were asked to give advice on how to minimize audit costs. As new audit standards are implemented audit costs will rise and clubs are looking at ways to minimize the impact. The following list provides ways club managers have reduced audit fees at their properties.

1. BE PREPARED: The number one piece of advice is to be pre-pared when the auditors arrive. Write reports and prepare most of the workpapers before auditors are on site. The auditors can then concentrate on sampling and proving the figures; therefore, reducing the need for additional junior staff.

The following list provides a few of the items which should be prepared ahead of time. Your audit firm should provide you with a complete list of all workpapers, which can be completed before they arrive. Some examples include:> Accounts payable listing at year-end> Accounts receivable aging by member> Bank reconciliations at year-end> Copies of loan closing statements and amortization schedules> Copies of new lease agreements> Copy of minutes from board meetings> Final inventory valuation reports> Fixed assets and depreciation schedules> List of current officers and directors> Schedule of insurance> Schedule of non-member and reciprocal income> Schedule of prepaid expenses> Trial balance and internal financial statements at year-end

2. BE ORGANIZED: Being organized and being prepared are re-lated topics, but one could be very organized, but not prepared for the audit. Several respondents indicated that they have bind-ers full of information coded and prepared for auditors when they arrive on site. Also, have files from the prior year easily accessible.

3. DOCUMENT, DOCUMENT, DOCUMENT: Make sure you keep continuous documentation on file. Make copies of all backup documentation to accompany all schedules. When auditors arrive, you are able to provide the appropriate backup. Some of the items you should have on file include board of director’s minutes, changes to club officers, bank signature cards, wire authorizations, corporate resolutions, bank notes, etc.

4. EDUCATE: Many respondents stated that having professional ac-counting staff reduced audit fees. Make sure that current account-ing staff are educated on audit procedures and are able to answer questions posed by auditors. One way to do this is by compiling

HFTP Research InstitueSurvey Results

HOW TO MINIMIZE CLUB AUDIT COSTSRecommendations from Your Peers

a policies, procedures and internal control manual. Respondents also stated that it is important to inform managers and board about fiduciary responsibilities.

5. UTILIZE TECHNOLOGY: Get ahead of the game and e-mail necessary documentation to auditors before they arrive at your property. Auditors are then able to setup files prior to fieldwork.

6. MONTHLY MAINTENANCE: It is important to keep on top of things on a monthly basis so you do not get overwhelmed at the end of the year. You can do this by conducting a monthly internal audit. Also, ensure that each balance sheet account is reconciled monthly.

7. TIME MANAGEMENT: This piece of advice has two meanings. First, club managers must ensure that all documentation is pro-vided to their auditors in the timeframe they requested. Secondly, managers must keep the auditors on a tight schedule which will reduce their billable hours and their resulting fees.

8. BID THE AUDIT: In order to keep rates competitive, many clubs have sent their audit out to receive bids from various firms. When looking at bids, keep in mind that the least ex-pensive audit is not always the best. Also look at what kind of added value each firm offers. Many clubs who responded to this survey are opting for an annual review and conducting an audit every three to five years. Proceed with caution when deciding to switch to a review instead of an audit. Reviews are not as comprehensive and sometimes just as pricey.

9. CLUB FAMILIARITY: Try to find auditors who are familiar with the club industry. Several respondents mentioned that they are forced to go with the auditing firm providing the cheapest fees. This firm may not be familiar with the club industry; therefore, there is no added value to the relationship.

10. ASK FOR HELP: When treading into uncharted territory, con-tact your CPA firm and talk to them about unusual situations.

The HFTP Research Institute wants to thank everyone that participated in the Club Audit Survey and offered advice to their fellow club managers. Find the complete survey results in the September 2007 issue of The Bottomline.


HFTP News and NotesChapter Profile

®

GREATER MILWAUKEE CHAPTER Dedicated to Professional and Personal Growth

The HFTP Milwaukee Chapter is a group that em-phasizes professional development and exploration — hosting annual roundtable discussions on pertinent

industry topics and actively supporting members to earn professional certifications. The 62-member chapter was founded in 1990, and consists of a blend of professionals working in both the club and hotel industries. Of the origi-nal group that came together almost two decades ago, nine are still on the rolls, with one a founding member — Ken Steltenpohl, CFO of the hospitality and real estate group for Kohler Co.

Milwaukee, WisconsinMilwaukee is the largest city within the state of Wisconsin and is the 25th largest (by population) in the United States. It is located on the southwestern shore of Lake Michigan, and is relatively flat, except for steep bluffs along the lake-shore. Being located in the Great Lakes Region means Mil-waukee experiences all four seasons with rapidly changing weather. Although it was once known as a brewing and manu-facturing powerhouse, the city has reshaped its image in recent years. Major new additions to the city include the Milwaukee Riverwalk, Pier Wisconsin, the Midwest Airlines Center, and the internationally renowned addition to the Milwaukee Art Museum designed by Santiago Calatrava.

Milwaukee and its suburbs are home to the headquarters of 13 Fortune 1,000 companies, including Johnson Controls; Northwestern Mutual; Manpower, Inc.; Kohl’s; Harley-Da-vidson; and more. Milwaukee is also the home of Midwest Airlines, Koss Corp. and Master Lock. Service and manage-rial jobs are the fastest growing segments of the Milwaukee economy, and health care alone makes up 27 percent of the jobs in the city.

The city is home to a variety of sports teams including the Milwaukee Brewers baseball team, Milwaukee Bucks basket-ball team, Milwaukee Admirals minor league hockey team and the Milwaukee Wave MISL soccer team. Just two–three hours north of Milwaukee is the home of the Super Bowl-winning Green Bay Packers football team.

Educational OpportunitiesThe HFTP Milwaukee chapter is focused on providing its members with multiple educational opportunities. It holds seven annual meetings, six of which are educational in nature, while the other focuses on personal development. One unique activity

that encourages thoughtful discussion is its roundtables, held two to three times annually. The roundtable features a specific topic that is pertinent to members’ clubs and hotels. Upcoming are discussions on sales and use tax specific to the hospitality industry; and the future of technology, concentrating on tech-nology that will help members better know and serve custom-ers, as well as help efficiency.

In addition to its meetings, the chapter offers additional support for professional development pursuits. It has recently put together a CHAE study group and has a goal to have five members earn a CHAE. The chapter also maintains a scholar-ship fund for members who are furthering their education.

Value of MembershipWhile professional growth is a primary goal for the chapter, the chapter works in more relaxing ways to get to know each other. It annually hosts a holiday party and summer social. It also raises money for and donates time to charity organizations like the American Cancer Society and the food pantry.

The group has found that its most successful recruitment is done through word-of-mouth — chapter members bringing in new members and talking about HFTP with their peers and others they know in the industry. With the ongoing dedication to professional and personal growth, the chapter needs little else to demonstrate the value of being a member.

Board Members of the HFTP Greater Milwaukee Chapter (l to r): Mary Hoover, Kathy Griswold, Karen Onan, Scott Saeger, Karen Frank and Nichole Bartz

The Bottomline 1�

BAHA Conference 2007November 8 – 9, 2007Radisson Edwardian HotelLondon, United Kingdom

CHAE & CHTP Reviews and ExamsDecember 9, 2007 Rose Hall Resort & Country ClubMontego Bay, Jamaica

Caribbean Hospitality Finance and Technology Professionals ConferenceDecember 10 – 11, 2007 Rose Hall Resort & Country ClubMontego Bay, Jamaica

EHTEC 2008February 10 – 12, 2008 Amsterdam HiltonAmsterdam, The Netherlands

CHAE & CHTP Reviews and ExamsMarch 16, 2008westin San Diego San Diego, Calif.

CAlendAr For more information about HFTP events and CHAE/CHTP reviews and exams, please call (800) 646-4387 or 001 (512) 249-5333, or visit www.hftp.org.

Club and Hotel Controllers ConferenceMarch 17 – 18, 2008westin San Diego San Diego, Calif.

CHAE & CHTP Reviews and ExamsApril 22, 2008 Singapore Expo Center Singapore

Asian Hospitality Finance and Technology ConferenceApril 22 – 25, 2008 Singapore Expo Center Singapore

CHAE & CHTP Reviews and ExamsJune 16, 2008 Austin Convention Center Austin, Texas

HITEC 2008June 16 – 19, 2008 Austin Convention Center Austin, Texas

Greater Milwaukee Chapter 2006 – 2007 Board of Directors

PresidentScott Saeger, CHAEDirector of FinanceMarriott InternationalVice PresidentKaren FrankOffice ManagerBlackhawk Country ClubTreasurerKaren Onan, CPA, CHAEManager of Financial OperationsNorth Shore Country ClubBoard/Committee Members:Mark HaushalterDirector of AccountingMarcus Hotels & ResortsNichole BartzStaff AccountantMilwaukee Athletic ClubSarit SinghalPresidentSuperior Support Resources Inc.

Club and Hotel Controllers ConferenceJune 17 – 18, 2008 Austin Convention Center Austin, Texas

2008 HFTP Annual Convention & Tradeshow September 24 – 27, 2008Gaylord Opryland Resort and

Convention CenterNashville, Tenn.

HITEC 2009June 22 – 25, 2008 Anaheim Convention Center Anaheim, Calif.

The Bottomline is proud to present this new column where questions from the CHAE and CHTP exams will be featured, demonstrating what’s found on the exams.

The managerial accounting section of the CHAE examination includes several questions that relate to cost-volume-profit analysis. A typical question might be as follows:

The monthly fixed costs at the Vista View Hotel are $55,000 with a $20 variable cost per room sold. If 1,000 rooms are sold in July at an average selling price of $75 per room sold, what would be the hotel’s net income (or loss) for the month?

a. $35,000 net income b. $20,000 net incomec. $0 (breakeven) d. $20,000 net loss

To answer this question the candidate needs to understand the relationship between fixed and variable costs and the simple breakeven formula. A breakeven analysis assumption is that all costs can be segregated into their fixed and variable components. Therefore net income is equal to revenue minus total variable costs minus fixed costs.

In this problem, revenue for July was $75,000 ($75 per room times 1,000 rooms sold); variable costs were $20,000 ($20 per room times 1,000 rooms sold); and fixed costs were $55,000. Using the formula, the answer is (c) $0 (breakeven) or $75,000 – $20,000 – $55,000 = $0.

HFTP News & Notes

Certification CallNEW!

Question:

Answer:

1� October/November 2007

Juliet Funt is a keynote speaker and the owner of Talking on Purpose, Inc. To learn more about her hilarious and high-energy speeches and seminars, please visit www.julietfunt.com.

Personal DevelopmentTime Management

I come from a Jewish family, but we are not candle-lighting Jewish. We are more Woody Allen Jewish. Translation: We do not go to temple or avoid bacon; we just feel neurotic all

the time for no apparent reason. Where we are very Jewish is in our love for baked goods.

And that’s why it was so lucky that my grandparents used to live next door to the K-Street Deli in Brooklyn. They made a rye bread that was heralded as the best rye bread in all the five boroughs of New York and so every Friday afternoon my grandma used to send my grandpa to buy one fresh loaf of this delicious bread. All was right with the world. Except when he was waited on at the bakery by a sexy Russian sales girl who worked there from time to time. My grandfather Stanley was a timid man. He would walk into the bakery, the little bell would ding-a-ling-a-ling, and he’d walk up and say, “I would like one loaf of dat great rye bread, please.” At this point she would whap open the bag, toss in the bread, turn to him with just a hint of flour in her cleavage and sexily say, “Vadyelse?”

He didn’t want to disappoint her so he would add something, something he had not previously intended to buy. “Uhh…” he’d say, “And a box of apricot cookies, please.” In went the cookies, and back she came.

“Vadyelse?” And on and on and on this would go. Finally he’d come

home to climb the steps of his brownstone apartment with two huge bags overflowing with cookies and pies and cakes.

My grandma, the matriarch of the family, was about as fierce in bark as bite. As she waited for him at the top of the steps, you couldn’t tell which was going to come first. She would see the spoils of his outing, put her hands on her hips and say, “Ohhh... I see you got some nice treats from ‘Miss Vadyelse’ today. That’s good… ‘Cause you’re not getting any from me.’”

WHITE SPACEThe magic ingredient for your busy life

By Juliet Funt

More, More, MoreThe voice of “Vadyelse” is not unfamiliar today because we live in a culture that loves quantity. Our colloquial language tells the tale: All you can eat, shop till you drop, two for one, the bottomless cup, buy one get one free, more, more, more. We can never be too rich or too thin or too accessorized or too credentialed or too spiritual or too evolved or philanthropic and it seems whatever we do and however hard we work, we get to the end of an exhausting, maximized day of doing our best, lie our weary heads down and hear a little voice say, “Vadyelse?” Vadyelse can you buy? Vadyelse can you achieve? Vadyelse can you conquer? It is exhausting to live each day in the culture of insatiability, but we do. And the trickiest thing about the voice of “Vadyelse,” whether in my family’s folklore or in your head, is that whenever you get where you think you’re going, she moves the finish line.

The consequences of this lifestyle are numerous and varied, but one is that we often are deprived of a sense of arrival, of the gratification and pride that is supposed to come from stepping up at the end of something to a plateau or pinnacle. There is very little time for “Hooray for me!” when the taskmaster is always in the wings. Therefore, in an attempt to achieve that elusive feeling of satisfaction, we go for even more quantity. We stuff our schedules, weekends and brains full of even more to do to no avail.

If you would like to see the whirlwind externalized you can look at any child between the ages of six and 12 in a middle-class-to-affluent community. Every moment of their lives is scheduled. And as they zip from soccer practice, to flute lessons to dinner to homework to bed, their little running shoes never hit the ground. “Downtime” is not in their vocabulary.

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Overcommitted, Overwhelmed and Over ItFriday, Oct 19 • 8:30 – 10:00 a.m.

The Bottomline 1�

Time Management

I had a client who tried to counter this trend and told her five-year-old one afternoon, “Why don’t you just go play in the backyard.” Her little one replied, “And do what exactly?”

I am generalizing and also writing to you from Los Angeles, the overscheduled epicenter of the universe. And because of this, I know that soon after the publica-tion of this piece, I will receive a call, comment or e-mail from someone who I call the Yoga Broccoli reader. They will reach out to me to let me know that the caricature I paint is not them and that in their Zen lives they carve out time, not only for midday naps and reading fiction, but for lots and lots of Yoga and broccoli. Let me here preempt this feedback: I am not talking to you. I am talking to the rest of us, to all the rest of us who are taking off our seat belts 10 feet from the parking space to save a second, to all the rest of us for whom the treadmill of each day is get-ting faster and the lists getting longer.

If you are one of us, please read on. If you know some of us, work with us or employ us, read on. Knowing how to tame the beasts of pace and quantity can be a great gift to those around you and also an important professional base of information. Wellness is no longer a tangential side dish reserved for ladies luncheons or for spouse programs. In 2001, the National Council for Com-pensation Insurance found out that U.S. businesses spent $150 billion dollars a year on stress-related disability and they spent even more when you factor in the other tension-related costs to retention, focus and customer satisfaction. On top of that, when an employee finally chooses to leave an environment where the pressure is too much, the cost of replacing that person, factoring in lost time recruiting, rehiring and retraining, can total $40,000 to $140,000 per person. Within this light-hearted and personal conversation, you will find truths and tools that profoundly affect your bottom line.

White SpaceThe à la carte menu of solutions is quite long, but let me give you the house special. There is one thing, simple but not easy, that is the antidote to the graceless hamster wheel of busyness and over-

whelmed. It is called White Space. It is not a metaphor, a spiritual concept or a new aromatherapy scent. White Space means just that — White Space. Open your calendar and see if you have any. Is every available space crammed with things to do? Then read on.

When I ask conference audiences if they have any White Space on their calen-

dars, the response is somewhere between a laugh and a groan. There are of course geographical differences as well. In the big cities and on the coasts, they nod in pain and say Amen. In the south, they oc-casionally don’t even keep a calendar. But the consensus is always clear on a few points: We are doing more with less. We feel pressure to successfully balance fam-


ily and work. Our moods and health often suffer as a result of the first two.

White Space on your calendar is a marvelous addition to the music and flow of your day and gives so much. White Space is a place for creativity and inspira-tion, for instinct and improvisation. It is the place where emergencies are meant to fall without displacing anything. It gives us time to synchronize our human pace with the pace that technologies and driv-ing markets demand. Allow me to give you the crash course…

Three Obstacles to White SpaceWanting it all. Choosing is painful for those who love to do everything and try to cram the maximum into their busy lives. Choosing is a loss and the fear that we would let go of the wrong thing prods us to try to juggle it all. But at what price? Are your children getting used to recognizing you as a blur racing across the house? Has your busy brain gotten so ramped up that it waits for you while you sleep and attacks as your eyes first crack open?

I’m just a girl who can’t say no. Whether you’re male or female, with or without a petticoat and a Broadway tune, the inability to say NO is one of the most common corruptors of White Space. We overcommit for a wide array of interper-sonal reasons. See if any of these fit you. You feel guilty if you say no. You feel like a failure if you can’t take on everything you are asked to do. You like to take on everything so you can see it’s done right.

Here’s a simple program for improving: Answer all requests with “May I take 24 hours and get back to you?” When the interpersonal contact is temporarily bro-ken, the intellect kicks in and can make rational decisions.

Denial. I meet folks every day who say they are actually not overwhelmed. To some I say, “You’re right! Congratula-tions.” To some I wish I could say, “Let’s ask your adrenal glands.” Research shows that Emotional Intelligence (EI) may actually be significantly more impor-tant than cognitive ability and technical expertise combined. In fact, some studies indicate that EI is more than twice as important as standard IQ abilities. A key factor of EI is called ESA or Emotional Self Awareness and ironically the score in this area of competency can be reduced when one is stressed, over-busy or tired. Translation: When you are overwhelmed it is hard to know you are overwhelmed.

Three Ways to White SpaceWhite space for your calendar. Every week scan your schedule and look for the spaces between events. Protect them like your firstborn. Remember daily that everything takes longer than you think it will. Ask yourself spotlight questions like, “What can I let go of?” and “What should I have turned down in the first place?” Slowly you will develop a heightened pre-regret awareness that will kick in at the moments when you are committing to things outside your central focus areas. All calendars should have spots of White

Space in them, and you must vigilantly protect every inch. If you don’t, oth-ers’ needs, inertia and the discomfort of self-prioritization will contaminate your willingness.

White space for your meetings. Often the most purposeful times we as-semble to create and problem-solve are the least productive. Alternately many times we go to a conference or meeting to seek answers and leave jammed with every conceivable idea except for the one that would address the issue vexing us. Try this: Next week at your staff meeting let the agenda be all White Space. You are creating a container for miscellaneous distractions, conflicts and unspoken issues to be aired and solved. You may want to employ a facilitator but no plans, no list; just a white board and markers and spotlight questions like, “What is on your minds? Where are people stuck?” Try this as a problem-solving breakout at your next conference. Your attendees will relish the ability to cull from the wisdom in the room without having to do it in the hallway.

White space for your family. Give a huge gift to your children. Do noth-ing in front of them on a regular basis. Show them that relaxation and daydream-ing should not be met with guilt, but with delight. Let them get to know their bodies, minds and imaginations through the White Space. If you want to take the advanced course, try an occasional White Space weekend. Pick a weekend on the calendar and enter a family pact to plan nothing at all. Then get up on that Saturday morning, pour a little O.J. for everyone, and reclaim the invigorating feeling of making your life up as you go along.

When we finally have some White Space it is hard to enjoy it. The call is powerful to do more and to not “waste time.” We have inside of us that part that asks perpetually and persistently, “Va-dyelse?” And yet, most of us know that every old person we respect, every spiri-tual track and every deepest wise part of ourselves whispers the same message: We are seeking the infinite where it cannot be found. Full doesn’t fill us. The experience of relishing time and being present for our lives is the only prize.

Time Management

White Space on your calendar is a marvelous addition to the music and flow of your day and gives so much. White Space is a place for creativity and inspiration, for instinct and improvisation. It is the place where emergencies are meant to fall without displacing anything. It gives us time to synchronize our human pace with the pace that technologies and driving markets demand.

The Bottomline 1�

There several different types of budgets that can be devel-oped for construction projects. They generally fall into four general types. The sequence is usually the same and

is not dependent on the size and length of the project.The first type of budget is a conceptual budget or estimate.

Typically, there are no drawings, but only a vague verbal or written description of the project. The timing of this budget will usually be during the design process. The preparation of this type of budget is usually based on assumptions and priced using some unit of measurement. An example would be cost per square foot of hotel room, cost per hotel room, cost per parking space or coast per floor.

The second type of budget that follows is known as the pre-liminary budget. Usually, when preliminary plans and specifica-tions are approximately 70 to 80 percent complete, the prelimi-nary cost budget or estimate will be made for review.

The pre-contract budget or project budget is next, which is made after all costs have been allocated and ready for con-tract or contracts to be awarded to the prime contractors. This includes all costs associated with bid documents. The bid docu-ments are the plans, specifications, addenda, special conditions, geotechnical reports and environmental assessments.

The fourth budget is the final construction budget or esti-mate, which incorporates the bid documents and the contract

itself including any exhibits or other items mutually agreed upon. The final construction budget will be the benchmark for all future allocated costs. The final construction budget consists of a cost breakdown of each of the major work activities. Usu-ally, these major work activities are broken down into divisions based on the division of work by cost codes. These major work activities can be broken down into as much detail as necessary for tracking the cost allocations. There are many different types of software programs that can assist in tracking these costs.

How Budgets are Managed Differently From Day-to-Day AccountingThe final budget is used to form a benchmark for the monthly budget reports for each specific construction project. These monthly spreadsheet reports show major column headings including the original budget cost, actual cost of work in place, percent complete in place, differential of over/under budget cost and balance of allocated cost. The rows list the major work activities, which are also known as chart of cost code accounts. This report can also be produced on a weekly basis if the need arises due to time or budget issues. These weekly and monthly reports can be compared to the project schedule and the con-tract milestone dates to track construction project progress. These reports are helpful in alerting project management of financial concerns early.

How Payment Applications and Retainage Impact AccountingIt is crucial to project management to be thoroughly familiar with the Contract payment provisions. Most contracts have contract provisions which have certain key provisions that need to be included to ensure all details are clear, concise and both

ManagementConstruction Project


Project Accounting Management Friday, Oct 19 • 1:45 – 3:00 p.m.

A CONTRACTOR’S PERSPECTIVEHow to effectively manage a construction project’s budgets and day-to-day accounting

By Paul Baggett

Paul Baggett is an estimator for DBS Corp. in Chattanooga, Tenn.


parties must understand the terms of the contract. The first key contract provi-sion is contract price and payment terms. Making payments to the prime contractor is of great importance, but the progress payments are just as equally important. Specific language usually includes who is issuing payment, who approves payments, amount of the payment, form of payment, when the payment will be issued, number of payments, amount of each payment, stage of progress between payments and date of when each one is due.

Retainage is used by the owner to ensure completion of the construction project and provide protection against liens, claims, and defaults. Typically 10 percent retainage is withheld from each progress payment. The retainage may be reduced after substantial completion.

Progress payment provisions should be reviewed and studied along with the project schedule. The progress payment provisions should be negotiated to coin-cide with progress schedule.

How Insurance Matters and Lien Waivers Impact LiabilityMost states provide lien protection to both parties. Liens can be filed by any entity supplying materials or services for the project. “Mechanic lien” may attach to the real estate, to fixtures or machinery furnished or erected. Most state statutes provide an owner a certain degree of pro-tection from liens by filing a “Notice of Completion.” Filing a “Notice of Comple-tion” cuts off lien claims that have not

been properly registered. Consult your at-torney and state officials concerning lien rights and lien laws in the state in which the project is being constructed.

Check with your insurance agent to see if dispute or lawsuit coverage is in the policy. Some polices pay for certain legal fees when defending a lawsuit that is within policy limits. Purchase addi-tional liability insurance in advance to cover likely business risks. Basic business liability insurance does not cover every-thing. Insert a “limitation of liability and damages” clause in the contract. Many states allow “limits of liability and dam-ages” clauses based on the value of acts of negligence and actual damages.

At the beginning of the project, good-will and trust are usually at their high points. This is when parties neglect to re-cord in writing many key agreements and understandings reached. When problems start to arise, trust and goodwill often give way to financial realities of potential construction claims.

How to Manage Change OrdersAny construction project is dynamic in nature. Changes to contract docu-ments occur very often on a construction project. Typically, there will be change orders issued due to unknown subsur-face soil conditions, material delays by a third party, weather delays, mistakes on plans or specifications, and changes to the project plans originated by the owner. Changes are inevitable. They will happen. (Reference the Change

Order checklist to the left when handling change orders.)

A change order can be defined as an alteration, deviation, addition or omission to a preexisting contract. A change order “outside the scope” of a contract alters the nature of the thing to be constructed or which is not an integral part of the project objective. A change order “within the scope” of contract does not alter the nature of the thing to be constructed or which is an integral part of the project objective. Change clauses in contracts are fertile areas for disputes. Proper contract administration and timely written docu-mentation will avoid potential pitfalls.

The purposes of change orders are: (1) Permits owner to unilaterally alter work without voiding contract or rebid-ding entire contract. (2) Protects owner from paying for unwanted work. (3) Protects contractor by providing evidence of changes that require an adjustment in contract price or completion of time.

Owners may request changes in work, but a contractor should not perform any additional work without written approval from the owner. Contracts will have certain time limits for a written notice of changes to be submitted and approved. A contractor must provide formal writ-ten notice of events that may constitute a change. A party who proceeds with changed work without compliance with the contractual requirements does so at his own peril, as a court may be unsympa-thetic to any trade and custom practices of the construction industry (Hendrickson).

There is currently a trend for owners to contractually require prime contrac-tor to submit a preliminary change order budget to the owner within seven days for approval. After the owner’s approval of the preliminary change budget, the prime contractor has 14 days to provide final cost for the change with proper backup documentation. This allows the owner and the owner’s financial management team to be aware that a change is forth coming so that there are no surprises of outstanding changes to be considered at the end of the project. This allows the prime contractor to proceed with the progress of the project to offset claims for delays by the prime contractor later.

Project Management

A Checklist For Change Orders

❏ Review and understand change order provisions in contract

❏ Make a change order log❏ Require prime contractor to provide

sufficient documentation with backup❏ Price for extra work to be in compli-

ance with contract provisions❏ Incorporate detailed plan for handling

and approving changes❏ Review impact of change to overall

project budget and time restraints

❏ Track all costs and schedule impacts on project

❏ Keep all project correspondence❏ Record all relevant conversations

and send follow up correspondence.❏ Take pictures or videos at all stages

of the project❏ Keep all plans and specifications and

revisions

The Bottomline 19

Project Management

Cost Aggregation: How It Works and Its ImplicationsTypically, cost aggregation is developed in the same way — from allocations for the different types of hospitality construc-tion, from economy to mid-priced to upscale and luxury. When developing cost aggregation, there are usually six main cost categories that are incorporated into the master construction project budget. The six main cost categories are: 1) land costs, (2) development soft costs, (3) site development and building construction costs, (4) furniture, fixtures and equip-ment costs and (5) start up costs prior to opening, and (6) operating capital costs for each project.

Due to the difference in the way the organizations are structured, accounting methods for the construction costs may vary from one organization to another. The location of the project will impact state tax implications and underwriting requirements. Investment structures vary as well. Low cost land may allow for a higher cost construction budget, or high cost land may require a lower cost con-struction budget. These are possible vari-able cost scenarios that can happen. Here are some definitions to help you with cost aggregation:

Project accounting is the continuous process of analyzing, classifying, record-ing and summarizing cost data within the confines and controls of a formal project accounting system and reporting them to users on a regular basis.

A project tracking system allows for the identification and establishment of cost codes to particular activities. The system would be used to record, accumu-late and report personnel costs; equipment costs; material, supplies and subcontracts costs; and allocated overhead to activities identified.

Direct costs represent economic resources that can be specifically identi-fied with a particular construction activity or function. To the extent possible, such costs should be charged directly to the project for purposes of cost determination rather than being subjected to allocation procedures.

A materials, supplies, and subcon-tracts tracking system allows for the identification, recording, accumulation,

and reporting of materials, supplies and subcontracts used on a particular activity.

Overhead costs represent economic resources that are employed for common or joint purposes benefiting several proj-ects or functions. As such, overhead costs are not as readily chargeable to individual projects and, therefore, generally require allocation based upon statistical relation-ships.

A prime contract provides for the use of an outside prime contractor with spe-cialized skills and/or equipment needed to complete an element of work on the project.

A work order is written authoriza-tion for the performance of a particular project. It contains a description and loca-tion of the project and specifications for the work to be performed. Work orders are assigned an identification code and are used to record all costs, both direct and indirect, incurred in completing the project (sco.ca.gov).

Advantages of Proactive Vs. Reactive ManagementWhat is project accounting manage-ment? The management of construction projects requires knowledge of modern management, as well as an understanding of the design and construction process. Construction projects have a specific set of objectives and constraints such as a re-quired time frame for completion. While the relevant technology, institutional arrangements or processes will differ, the project accounting management of such projects has much in common with the management of similar types of projects in other specialty or technology domains.

Generally, project accounting man-agement is distinguished from the general management of corporations by the mission-oriented nature of a project. A project organization will generally be terminated when the mission is accom-plished.

Specifically, proactive project account-ing management in construction encom-passes a set of objectives which may be accomplished by implementing a series of operations subject to resource constraints. There are potential conflicts between the stated objectives with regard to scope, cost, time and quality, and the constraints

imposed on human material and financial resources. These conflicts should be re-solved at the onset of a project by making the necessary trade-offs or creating new alternatives. Subsequently, the functions of proactive project accounting manage-ment for construction generally include the following: 1. Specification of project cost objectives

and plans including delineation of scope, budgeting, scheduling, setting performance requirements and select-ing project participants.

2. Maximization of efficient resource uti-lization through procurement of labor, materials and equipment according to the prescribed schedule and plan.

3. Implementation of various cost analy-sis operations through proper coordi-nation and control of planning, design, estimating, contracting and construc-tion in the entire process.

4. Development of effective communica-tions and mechanisms for resolving conflicts among the various partici-pants.

One of the major roles that a project manager for project cost accounting plays is knowledge of how project elements are integrated to ensure that the various cost elements of the project are effectively coordinated. The various work activities and sequence of work activities make up the project scope. Time management must be efficient and the project sched-ule should be reviewed in order for the project management to be effective. The project cost management must identify needed resources and maintain budget control. This oversight should be imple-mented to ensure functional requirements are met. Finally, project communications are critical to ensure effective internal and external communications.

Reactive project accounting manage-ment is more of a knee-jerk reaction to situations. The reactive manager will react rather than respond to issues im-pacting the project. The proactive project accounting manager will lead and influ-ence others to meet the set goals rather than panic.

The project manager must be able to exert interpersonal influence in order to lead the project team. The project manag-


Project Management

er often gains the support of his/her team through a combination of the following (French and Raven): 1. Formal authority resulting from an of-

ficial capacity which is empowered to issue orders.

2. Reward and/or penalty power result-ing from his/her capacity to dispense directly or indirectly valued organiza-tion rewards or penalties.

3. Expert power when the project man-ager is perceived as possessing special knowledge or expertise for the job.

4. Attractive power because the project manager has a personality or other characteristics to convince others.

How Good Communication and Planning Impact Project PerformanceIn a matrix organization, the members of the functional departments may be accustomed to a single reporting line in a hierarchical structure, but the project manager coordinates the activities of the team members drawn from functional de-partments. The functional structure within the matrix organization is responsible for priorities, coordination, administration and final decisions pertaining to project implementation. Thus, there are potential conflicts between functional divisions and project teams. The project manager must be given the responsibility and author-ity to resolve various conflicts such that the established project policy and quality standards will not be jeopardized. When contending issues of a more fundamen-tal nature are developed, they must be brought to the attention of a high level in

the management and be resolved expedi-tiously.

In general, the project manager’s authority must be clearly documented as well as defined, particularly in a matrix organization where the functional division managers often retain certain authority over the personnel temporarily assigned to a project.

While a successful project manager must be a good leader, other members of the project team must also learn to work together, whether they are assembled from different divisions of the same orga-nization or even from different organiza-tions. Some problems of interaction may arise initially when the team members are unfamiliar with their own roles in the project team, particularly for a large and complex project. These problems must be resolved quickly in order to develop an effective, functioning team.

Many of the major issues in construc-tion projects require effective interven-tions by individuals, groups and organiza-tions. The fundamental challenge is to enhance communication among individu-als, groups and organizations so that ob-stacles in the way of improving interper-sonal relations may be removed. Some behavior science concepts are helpful in overcoming communication difficulties that block cooperation and coordination. The power of the organization should be used judiciously in resolving conflicts (Hendrickson).

What is Communication? Communica-tion is a process by which information is exchanged and understood by two or

more people, usually with the intent to motivate or influence behavior. Managers spend approximately 80 percent of their time every working day in direct commu-nication with others, which is 48 minutes out of every hour. Your quality of life is directly impacted by the quality of your communication.

Good leaders are good communicators. Is there a difference between a leader and a manager? Managers are more task-ori-ented and leaders will motivate and influ-ence others to achieve a set of goals. Can you be a leader and not be in the position of a manager? Can you be in the position of a manager and not be a leader? The an-swer to both questions is yes. Leadership is influencing an individual or a group to achieve the goals of the individual or group. Peter Drucker said, “An efficient leader is one who does things right. An effective leader is one who does the right thing because it is the right thing to do.” John Maxwell said, “Leaders do not cross the finish line first. A real leader brings everyone across the finish line together.”

Bibliography• California State Controller, http://

www.sco.ca.gov/ard/local/cuccac/cuc-cac_man.pdf

• Drucker, P.F. (1973). Management: Tasks, Responsibilities, Practices. New York: Harper & Row.

• French J. & Raven, B. (1959). Studies in Social Power. Ann Arbor: Univer-sity of Michigan Institute for Social Research.

• Hendrickson, C. (2003). Civil and Environmental Engineering. Copyright 1998 Chris Hendrickson. All rights reserved. Carnegie Mellon University, Pittsburgh, PA. http://www.ce.cmu.edu/pmbook/index.html.

• Maxwell, J. (2004). Today Matters. New York: Warner Faith

Some key factors for successful project accounting management are:1. well defined scope 2. Extensive early planning 3. Good leadership, management and

first line supervision 4. Positive client relationship with client

involvement 5. Proper project team chemistry 6. Quick response to changes

Key Factors for Nonsuccess

Conversely, the key factors cited for unsuccessful projects are: 1. Ill-defined scope 2. Poor management 3. Poor planning 4. Breakdown in communication5. Unrealistic scope, schedules and

budgets 6. Many changes at various stages of

progress 7. Lack of good project control

Key Factors for Success

The Bottomline 21

Three years ago properties accepted the fact universally that having high speed Internet access (HSIA) for guests was a necessity and was here to stay. Now, in 2007, guests’

buying decisions have progressed beyond a hotel “just hav-ing” Internet access; but the type, quality and experience of the connection. While network providers continue to try and stay up with the changing guest needs, solving guest bandwidth demands has become the number one connectivity problem and the most important technology issue for hotels today.

Hotel designers and developers have continued to migrate hotel rooms to a “staying at home” feel. The traveling public now has 8 MB cable connections in their home (some resi-dential neighborhoods have fiber), DS3 connections at work, and then travel to a hotel where they share a T1 with 80 other guests. Hotels simply are not keeping pace with consumer ex-pectations and it stands to reason that bandwidth in a hotel has become an issue.

The challenge in a giveaway marketplace is to cost effective-ly meet demands and deliver a positive connection experience for guests. Traditionally hotels had two options for increasing bandwidth. First, if they used the traditional T1 method, they could pay their vendor to increase service by stacking addition-

al T1s. This generally costs $500 per month, per T1. The sec-ond method was to completely change providers. Hotels using DSL or cable modem must change speed packages or move to a T1. Larger hotels could implement fiber or DS3 connections where available. In all instances, the hotel had a single source provider and would greatly increase the expense to deliver guest expectations.

Dynamic AllocationTo meet these challenges, hoteliers need to look beyond the tra-ditional means of addressing these issues and look at leveraging new technologies. With emerging technologies come new op-tions. One such carrier technology is dynamic allocation. This is a carrier grade voice (VoIP) and Internet T1(s) product available in virtually all primary and many secondary markets. Properties can now take advantage of the declining voice traffic by using their existing PBX and having the carrier convert voice calls to VoIP over the Internet T1. Carriers already use VoIP to backhaul traffic behind the scenes, so this product just brings it one step closer to the hotel. Unlike many problems created by VoIP, this is a carrier-grade product which means quality can be main-tained from origination of the call until termination and the hotel can implement without having to change out any equipment.

Dynamic allocation works by using the full T1(s) for Internet access. When a call is made from or received by the hotel, each voice channel takes 40 KB to 80 KB (depending on the carrier) from the 1.5 MB (or more) available. This sliding bandwidth allows the property to provide the guests voice and data in many cases for less than they currently pay for voice alone. Typically dynamic allocation comes in a 1.5 MB package

Trevor Warner is president of Warner Consulting Group in Columbus, Ohio.

TechnologyInternet Access


Solving Bandwidth DemandsFriday, Oct 19 • 3:15 – 4:30 p.m.

ADDRESSING GUEST BANDWIDTH DEMANDS — NOW!Cost effective ways to meet expectations and deliver a positive connection experience

By Trevor Warner


however several carriers offer packages at 3 MB and 4.5 MB with the voice lines. In an industry where voice utilization is steeply declining, properties can now leverage their costs to allocate money to what guests need — broadband speed.

Link Load BalancingA second technology making an impact in hotels today is Link Load Balancing. With this device, hotels can now imple-ment multiple broadband connections into their guest or admin network, helping to mitigate downtime and greatly increase the bandwidth available to the network. In the past HSIA vendors (like all network vendors) needed one IP scheme to run the network. In layman’s terms, they could only work with one Internet provider.

With the introduction of Link Load Balancing, network providers can operate off the IP scheme of the primary Internet connection to the property while adding a second, third and fourth link or circuit to the Link Load Balancer for Internet speed. The device sits between the Internet connections and the HSIA server effec-tively creating one big pipe to the Internet — adding all the links together. This also allows hotels to open the door to band-width that was considered second rate in the past such as a DSL or cable modem. Since the primary circuit is used to run the network, the additional connections don’t have the same requirements for number of IP addresses, number of users on the circuit, etc. as they did in the past.

What Link Load Balancing provides to the hotel and the guest is a significantly increased broadband connection but, most importantly, with two or more separate Internet providers, it can all but elimi-nate Internet outages. In the past being single vendor reliant meant when the T1 went down, guests realized the issue right away and the front desk ran and hid from the onslaught of upset guests. With such an important amenity, the Link Load Balancer gives the hotel a proactive ap-proach to mitigating Internet outages. In a four circuit configuration, when one link fails, the other three links are operational and all data traffic continues to utilize the operational circuits so guests never know there is a problem. Hotels and network providers can now work to restore an In-ternet connection with the knowledge that the guest’s needs are still being met. No front desk face-offs, no irate guests, and most importantly, nobody checks out.

A third solution for solving bandwidth issues is looking at technologies to see how the bandwidth is being used and to be more efficient in its use. Technology products in the marketplace that allow for greater “bandwidth management” give hotels the capability to define what traffic they want to allow and what traf-fic they want to keep from dominating the network. This becomes increasingly important with consumer applications like Skype, iTunes and Slingbox becoming more pervasive, guests downloading mov-ies, YouTube users hogging large amounts of bandwidth, file sharing, etc. all of which can saturate a hotel’s broadband ca-pacity and negatively impact other guests’ experience. Bandwidth management tech-nology combined with the HSIA server gives network providers and hoteliers the resources to specifically isolate Internet traffic, bandwidth and utilization. With this information the hotelier or network provider can implement rules that allow certain activities an allocated portion of total bandwidth. No one user, applica-tion or Internet port can overwhelm the hotel bandwidth, thus allowing for more efficient use of the existing bandwidth connectivity. It’s important to note that bandwidth management can only be done effectively when there is sufficient band-width to truly support the guest’s needs.

Hotels also can leverage multiple technologies such as the ones listed above to effectively solve bandwidth issues. For example, if a hotel already has an Internet connection, the introduction of dynamic allocation will give the property a new Internet connection that can be combined with the existing Internet connection through Link Load Balancing. This smart growth strategy allows the hotel to add bandwidth without adding significant monthly cost, and detracting from the bottom line. Once the Link Load Bal-ancer is in place, the hotel has open ports for future growth capability to meet guest demands.

Let’s look at a real example: The Courtyard Denver Downtown had one tier-one data T1. However, with the existing clientele already having con-nectivity issues and Microsoft coming to town for a worldwide users convention, the hotel needed to quickly enhance its Internet connectivity. The hotel imple-mented a new strategy by changing its voice services to dynamic allocation and delivering a 3 MB circuit to the network as the primary connection. Since the hotel already had an aggressive rate on a tier one data T1, this was kept as the second connection. Finally, two lower-cost 6 MB x 768 MB DSL lines were added as the third and fourth connection. To bring the bandwidth together and balance the traffic on the network, the hotel purchased a four port Elfiq Link Load Balancer. When completed, the hotel had reduced its cost by $6,000 per year, but had implemented a 16 MB x 6 MB redundant Internet connection. Connectivity issues were im-mediately resolved and the property now had a proactive, scalable system in place to change with the needs of the guests.

Guest expectations for bandwidth are high and they will continue to grow as more and more bandwidth becomes accessible in the residential marketplace. Hotels can stay ahead of the curve by developing strategies to make sure every connecting experience results in a posi-tive experience. Ultimately, a positive connecting experience results in the one thing all hoteliers covet most, room nights — the only reason hotels are in business.

Internet Access

Hotels also can leverage multiple technologies such as the ones listed to effectively solve bandwidth issues… This smart growth strategy allows the hotel to add bandwidth without adding significant monthly cost, and detracting from the bottom line.

The Bottomline 2�

Traditionally, spa operations were perceived as amenities which were needed to attract guests to a given hotel/resort. That is, as long as the spa center achieved a breakeven

point and did not lose money, the ability of spas to increase the room occupancy was sufficient to justify the existence of spa facilities (Anderson, 2001). However, in recent years, hotel spas have followed the path of the other hotel operating departments and evolved from support facilities to profit centers.

Spas appeal to resort guests as they provide a secluded realm where guests can escape from their busy everyday lives and stress. As hotels use more high tech to meet guest demand for increased efficiency and do-it-yourself solutions, such as in-room business services and kiosk check-in, Foster and Mand-belbaum (2005) point out that spa treatments, by their very nature, serve as important tools to fill the void of personalized, human attention in hotels and resorts. These authors claim that this is one of the main reasons why spa treatments became such an important revenue-generator for hotels by offering the anal-ogy of moving from “high-tech” to “high-touch” in the hotel industry.

Spa Revenue and Profit FiguresThe International Spa Association’s (ISPA) 2004 Spa Industry Study reports that U.S. spas earned an average of $172 per square foot; $52,163 per treatment room (where only treatment room revenue is included); $143 per spa visit and $277 per client. Anderson (2001) identified 30 hotels that had extensive spa facilities and reported that in 1999 the resorts in his sample recorded a departmental profit margin of 30.7 percent. In 2004,

HOTEL SPAS — PROFIT CENTERS Industry research shows that hotel spas are money-making additions to hotels and resorts

By Melih Madanoglu, Ph. D.

larger spas at resort hotels achieved an average profit margin of 23.2 percent (Foster & Mandelbaum, 2005) and a study con-ducted by Singer and Monteson (2005) revealed a similar figure for U.S. spas which yielded an average profit margin of 27 per-cent. These figures show that resort spas are not only revenue generators, but also solid contributors to resorts’ bottom line.

Resort/hotel spas possess competitive and operational advan-tages over stand-alone spas both from a revenue and expense perspective. For instance, on the revenue side, resort spas can be either primary demand generators to a given resort or resort spas can benefit from the demand base that has already been generated by the hotel/resort property itself (Foster & Wohlberg, 2006). On the expense side, resort/hotel spas may share many of the fixed costs related to rent and marketing with the operating divisions of the resort. These features enable resort/hotel spas to operate more profitably than stand-alone day spas do.

Spa Performance MetricsAs spas became a center of attention in the hotel industry, Foster and Wohlberg (2006) suggest that resort/hotel spa rev-enue should move beyond being calculated as a percentage of total hotel revenue. Hence, the operators now began to move forward by utilizing specific metrics such as “revenue per treat-


Hotel Spas: Drivers of Hotel Revenue and ProfitabilityFriday, Oct 19 • 3:15 – 4:30 p.m.

Spas

Revenue and Profits

Melih Madanoglu, Ph. D., CHE, is an assistant professor in the program of Resort & Hospitality Management at Florida Gulf Coast University in Fort Myers, Fla.


Revenue and Profits

ment room” (RevPAT) and “spa-specific revenue per occupied room” (SPOR). In 2004, Health Fitness Dynamics, Inc. (HFD) conducted a study of 59 resort spas and reported that average SPOR for the sample was $40.08 and the SPOR figure ranged between $6.7 and $111.

Foster and Wohlberg (2006) found that the average RevPAT was $367 per day with a range between $241 and $443. At first glance, this number may seem high but we should keep in mind that a treatment room is indeed analogous to a restaurant seat and can be sold/rented numerous times throughout the day which. The RevPAT increases even more in properties where the duration of stan-dard treatment is reduced from 60 or 90 minutes to 50 or 80 minutes.

When looking at RevPAT we should also evaluate whether the level of net profit increases as we add more treat-ment rooms. Foster and Wohlberg (2006) point out that this is due to the high, fixed expenses spas face. That is, by adding more treatment rooms, the resorts manage to decrease fixed cost per treatment room and thus, improve the overall efficiency of spa operations. As it can be seen in Figure 1 (shown above), with the excep-tion of properties that have between 11

and 15 rooms, adding more treatment rooms to the spa facility leads to increase in revenues and net profits. Therefore, this graph tells the reader two stories: the first one is that, in terms of profitability, running a mid-size spa (11 to 15 treat-ment rooms) is not superior to operating a small spa (one to six treatment rooms). The second story tells us that the revenue per treatment room reaches a plateau after $420. Once a spa achieves this level of revenue, the addition of treatment room may be justified solely based on their po-tential to decrease fixed costs so that the net profit continues to increase. This point is clearly demonstrated for spa facilities that have between 16 and 20 rooms and spas that have over 21 rooms. Although the RevPAT for spas with over 21 rooms is lower than spas with six to 10 and 16 to 20 treatment rooms, their net profit is considerably higher than their smaller counterparts.

Contribution of a Spa to Hotel RevenueTo better illustrate the impact of a hotel spa on hotel revenue, let us consider a 300-room hotel that has an occupancy rate of 70 percent and a RevPAR of $90. To arrive at the Spa Revenue per Avail-able Room (SPAR) we multiply the

occupancy rate of the hotel (70 percent) by the average SPOR figure ($40.08) for the spa industry and we obtain a SPAR of $28.05. As a next step, we divide SPAR to RevPAR to better understand the ratio of spa revenue to room revenue. This yields a SPAR/Rev par ratio for “Spa Resort” of 31 percent. In business terms this means that for each dollar that an available room brings to this resort, the spa center contributes an additional 31 cents. This percentage is significant not only in statis-tical, but also in practical terms for both resort operators and researchers.

There are also some intangible benefits such as creating repeat business, increas-ing guest satisfaction and influencing the guests’ intention to recommend are not directly discussed here. The future quan-tification of these variables is expected to tip the scale even further in favor of spa resorts. Even without taking intangible benefits into account, spas are important generators of additional hotel revenue and profits as they may contribute, at times, over 20 percent to room revenue by requiring significantly less space than resort/hotel rooms do.

References• Anderson, P. (February, 2001). The

Growth of Spas as Hotel Profit Cen-ters. Retrieved on March 1, 2006 from http://www.hotel-online.com/Trends/PKF/Special/SpaCenters_Feb01.html

• Foster, A., & Mandelbaum, R. (Oc-tober, 2005). Hotel Spas: The New Recreational Vehicle For Hotel Profits. Retrieved on January 23, 2006 from http://www.pkfc.com/common/indus-try/october2005.aspx

• Foster, A., & Wohlberg, A. (March 6, 2006). Hotel Spas as Independent Profit Centers. Retrieved on March, 28, 2006 from http://www.hospitali-tynet.org/news/4026556.html

• International Spa Association (2004). The ISPA 2004 Spa Industry Study. Lexington, KY.

• Singer, J., & Monteson, P.A (2005). GHN Special Report. HFD’S 2003 – 2004 Spa Economics Research: A Global Perspective on Resort Based Spas. Retrieved on February 10, 2006 from http://globalhotelnetwork.com/bob/pdf/hfdspa06.pdf

Figure 1.Revenue vs. Net Income per Treatment Room

Source: PKF Consulting and PKF Hospitality Research

RevPAT

Net Income per Available Treatment Room

0

100

200

300

400

500

1 – 5 6 – 10 11 – 15 16 – 20 21+

$305

$423

$58$86

$241

$59

$443$422

$164

$98

The Bottomline 2�

Bad things don’t happen as frequently in broad daylight as they do in the dark. Unfortunately, the food and beverage departments have a number of places where it’s simply

too dark to see what’s going on. Trash cans, drains, container bottoms and closed boxes are just a few of these places. Devel-oping methods for “seeing” what happens in these places leads to improved food and beverage cost control.

Trash Patrol“Many years ago when I was working Room Service in a Las Vegas casino, the F&B Director walked into the kitchen and dumped a full trash receptacle onto the floor,” relates Tim Hicks, director of food and beverage for Augustine Casino in California. “At the time, I thought to myself, this guy is a total idiot. We were extremely busy and the trash made a tremendous mess. The contents were thoroughly searched and there were several items he found that were discarded. Among the trash was silverware, individually wrapped condiments, an oil cruet as well as an unpaid guest check.” Tim now makes it a habit to occasionally check the trash to “see” what’s there, and uses that knowledge to take the appropriate steps.

The concept of dumping the trash is not new. One chain res-taurant client routinely employed a “Trash Patrol,” consisting of two staff members who traveled from store to store dumping

YOU CAN’T MANAGE WHAT YOU CAN’T SEEWhere to look to reduce waste and improve food and beverage cost control

By Bill Schwartz, CHTP

out and inventorying trash cans. By looking at the trash, they were able to identify various theft, waste and overproduction issues. The store manager would shortly thereafter receive a report from the corporate office based on the trash inventory, suggesting changes to production levels, security and identify-ing other steps to help better manage the operation’s costs.

Consistent with the idea of being able to see in order to man-age, some operators now use clear trash bags hanging in wire frames, as opposed to the traditional approach of trash cans with (or without) opaque liners. Not only does it allow for a quick survey when walking by, it also discourages excess waste and outright theft. Every operator has heard about or witnessed theft by employees placing things in the trash and taking the trash out to a car in the parking lot instead of the dumpster, or picking it up from the dumpster later.

Profits Down the Drain?Once something goes down the drain, the only people likely to see it work at the water treatment plant. And those folks aren’t the least bit interested in identifying the stuff they see. On the other hand, it is amazing how much can be learned about waste if it were only possible to identify what went down the drain. For example, one hotel client was showing a huge variance in egg usage each month. Of course, eggs are not typically over-portioned or stolen, and they don’t get casually consumed by kitchen staff during their shifts. After implementing waste sheets, the kitchen manager discovered that the staff was dump-ing out a batch of egg wash (used for French Toast and other products) every night. The end result was a loss of over 1,000 eggs per month!

Armed with information about what’s going down the drain, managers can determine whether to reduce batch sizes, change

Bill Schwartz, CHTP is president of System Concepts, Inc. (SCI), in Scottsdale, Ariz.. SCI is the developer of the FOOD-TRAK Food and Beverage Management System. Bill can be reached at [email protected].

Food & BeverageWaste Management


You Can’t Manage What You Can’t SeeThursday, Oct 18 • 10:15 – 11:30 a.m.


production schedules or take other actions to solve the problem. Without the vari-ance information, nobody would know a problem even existed, and without the waste sheets they would have to guess where the variance was coming from. In fact, the waste sheet alone would have pointed out the problem in this case, and would probably have lead to actions resulting in a reduction of the loss.

Keep Your Head Down and Chop, Chop, ChopThe prep area is another major source of excess waste. Prep waste typically ends up in a trash can or down the drain. Either way, it is hard to see the trim, and there-fore hard to manage it. Kitchen manag-ers make a point of watching people in the prep area to determine if there is any excess trim. Unfortunately, this type of “seeing” requires someone to be stand-ing there. While there is no substitute for the MBWA (management by walking around), approach, there are times when managers simply cannot be present to see what is happening.

One successful approach is to use clear Lexan bins in the prep areas. Instead of discarding trim in a trash can or down the drain, prep staff can be directed to place all trim in the Lexan bins. When manag-ers make their rounds, they can examine the bins to “see” if any excess trim has occurred. Only after the bins have been checked can they be emptied into the trash. Excess waste problems can be more easily identified using this practice, and the responsible individuals are standing right there. Steps can immediately be taken to recover anything salvageable, and instruct the prep staff on the proper approach.

Another way to reduce waste in the prep area is to slow people down. Too

often, the objective seems to be speed-related. If prep staff is rushed to slice tomatoes or onions, they will typically get less yield than they should. By changing the prep area’s primary objective from speed to yield, results can be impressive. Consider how much these people are paid per hour, and the value of the food they waste in one hour by over-trimming. Chances are it would be more profitable to hire twice as many people to work half as fast and focus on getting every useable ounce out of the stuff they trim.

Let Them Cut MeatHuge amounts of money can be lost cut-ting meat and fish. Both skill and speed play a role here, and while most operators assume their meat cutters are skilled, they may not have a good way to monitor that. Cutting charts are a great way to “see” exactly what’s happening when meat or fish is butchered. These charts are used to indicate the starting weight, number of portions of each type of cut, and final yield percentage. The actual numbers are compared against carefully developed standards to determine the performance of the meat cutters. If yields are lower than they should be, and the problem is not product-related, improved training or supervision may be necessary.

Simply forcing staff to document starting amounts, cuts produced, ending amounts and resulting yield percentages acts as a deterrent for sloppy work, and encourages better yields. Taking it to the next level and actually reading the charts and reacting to them in a positive manner will virtually guarantee better results and higher profits.

Allowing Others to SeeUp to this point, the focus has been on what managers can do to help them see

problems. Every bit as important, how-ever, is making sure the staff can “see” what is expected of them as well. With the possible exception of psychics, few can see what knowledge lurks in the dark recesses of the brain. And that goes for kitchen staff, as well as management.

Studies have shown that adults don’t learn as well with their ears as they do with their eyes. Posting instructions, educational materials, recipes, cooking procedures, storage techniques and other useful information can help the staff see what management wants them to know.

For example, posting trim guidelines in prep areas improves the odds that prep staff will avoid costly mistakes. Posting storage and food preservation guidelines on coolers can help reduce spoilage due to improper storage. Too many kitch-ens rely on hands-on instruction as the primary tool for kitchen staff training. Labeling shelves in storage areas can improve kitchen efficiency and help avoid over-ordering when staff can’t find what they are looking for.

Perhaps even more important are the recipes kitchen staff are required to pro-duce. In many cases, written recipes are nowhere to be found, even though dozens of people are responsible for knowing them. Posting the prep recipes in the prep areas and line recipes in the line areas can help insure correct portions and recipe consistency.

One way to “see” the effectiveness of training and gauge individual knowl-edge retention is to test staff on things they are supposed to know. Handing out a pop quiz in the kitchen with questions like “How much turkey goes into the club sandwich?” and “What is the recipe for a batch of tuna salad?” can be very enlightening. The quiz can help managers “see” the current knowledge level of their staff. Without the quiz, managers can only guess what information has been retained by the staff. Of course, if the answers to these questions were posted on the walls, the staff could “see” what’s in the dark recesses of the manager’s brain as well.

When it comes to reducing waste, theft, over-prep and other losses, the immortal words “Let There Be Light!” can have new meaning. Perhaps that banner should be posted over the manager’s desk.

Waste Management

When it comes to reducing waste, theft, over-prep and other losses, the immortal words “Let There Be Light!” can have new meaning. Perhaps that banner should be posted over the manager’s desk.

The Bottomline 2�

In 1997 Steve Argo, CHAE began his day distributing freebie advertising magazines from 3:30 to 6:00 a.m. Next came a six-mile run with his buddies. A quick shower, a change of

clothes and he headed to his job as a part-time controller for a national nonprofit. After finishing his work there, he kept ap-pointments with the clients of his management consulting and accounting practice. He says, “It was a flexible schedule.”

Today his knees are less flexible than his schedule once was and running has been replaced by Pilates and Yoga. As control-ler/IT manager of the Charlotte Country Club in North Caro-lina, his work days are still full, but not as fragmented. Argo will join the HFTP Board of Directors with a broad range of experience and an affinity for hard work.

He was born and raised in Kannapolis, N.C. a city named af-ter the Greek word meaning city of looms, and both his parents worked in the local textile mill. After high school he enrolled at the University of North Carolina. It was the mid-’60s, the era of the Vietnam War and the draft. Argo says, “I was having fun, but not doing well, and by 1968 I knew that my name/number was coming up.” (Historical note: The draft worked on a lottery system based on birth dates. A young man with a low number who wasn’t a college student in good standing was eminently eligible to be called.) Argo had just met his future wife Theresa (Tere). Within three months, the two were engaged. They mar-ried in 1968. Argo dropped out of college and joined the Army reserves as a field medic in a 1,000-bed hospital Army unit. He spent one weekend each month working in the emergency room at Carolina’s Medical Center. Because he was due to go on ac-tive duty at any time, the only job he was able to get was for an insurance company selling on commission. Steve later was an industrial marketing representative, in the early-’70s advancing to manager of product and market development for a subsidiary of Weyerhaeuser Corp.

After leaving the reserves in 1974, he got a good job offer, but it required a degree. “That turned me around,” says Argo, who realized that getting ahead meant going back to college. He and Tere sold their house, moved to Charlotte, and Steve finished college. He was 29. His decision was difficult, but re-warding. In 1975, Argo earned his bachelors of science degree in accounting from the University of North Carolina.

STEVEN F. ARGO,CHAEGiving Back

He began his career in public ac-counting, serving on the professional staff of a local CPA firm, eventually becoming manager of client accounting services. In 1981 Argo left to assist a start-up restaurant management company where he spent almost 10 years as comptroller and assistant director of operations. This job would become the foundation for his interest and expertise in the hospitality indus-try. In less than five years, the restaurant company had grown over 800 percent and Argo had acquired a wealth of experience in computer technology, computer networks and hospitality management.

Next came four years at USA Today as controller for the Car-olinas region and supervisor of their regional customer service department. After discovering that life in a large corporation was not for him, Argo left USA Today in 1995 to start his own management consulting and accounting practice working with small- and medium-sized businesses in various industries.

He loved being on his own and calls those years, “probably the best of my professional career. I liked helping people cre-ate an environment conducive to their success.” He continued his management consulting after joining the aforementioned educational nonprofit and up until November 2002 when a professional associate told him about an available position as controller at Charlotte Country Club, an old club, formed in 1910. Today membership is about 1,050, and there’s an 18-hole golf course, 16 outdoor tennis courts, three indoor courts, an indoor squash court and an outdoor pool complex.

Argo says, “When I got that phone call, my colleague said, ‘I’ve got the perfect fit for you.’ He was right. It’s all about the situation. I didn’t want to go into another controllership if I didn’t feel the situation was right, and this one was and has worked out well. Personally my job calls upon all my experi-ence and knowledge. It challenges me and gives me an opportu-nity to progress professionally and to be personally satisfied.”

Feature ProfilesNew HFTP Board Members

Introducing HFTP’s newly-elected Board members. Appointed Director, Carson Booth, vice president of I.T., Europe, Africa and Middle East for Starwood Hotels & Resorts worldwide will be profiled in a future issue. The Directors will be installed at the HFTP Annual Business Meeting on October 19, 2007 in Jacksonville, Fla.

Steven F. Argo

By Lou Cook

Argo continued on page 28.


After joining HFTP in 2003, Argo served his local chapter as director, treasurer and president. He says, “Being an HFTP member has broadened my knowledge of the hospitality indus-try and allowed me to travel to conferences and seminars that have enriched my professional and personal life immensely.” In his view, clubs historically have not supported their control-lers or bookkeepers becoming involved [in organizations not specifically club-oriented]. They have begun to realize they need someone to know more than just bookkeeping. He says, “Most clubs of about 300 felt they didn’t need more than a bookkeeper. Now they have to compete because they are losing members or members are aging. Clubs now need someone with an ability to relate to other people and someone with computer knowledge or savvy. Not every CPA is able to be a business or accounting manager.”

As a new board member, Argo plans to continue working with CMAA in encouraging club management to support HFTP

membership and to provide financial support for continuing professional education. He would also like to see an increase in the number and frequency of HFTP regional conferences, which would give more opportunities to current members while simultaneously attracting new ones.

Steve and Tere have two sons, Rick and Jason and two grandsons, and his family is an important priority for Argo. For leisure he likes beach combing on Florida vacations, good food and books leaning towards the philosophical and spiritual, such as energy, healing and meditation. Interesting choices for some-one who describes himself as a 2X4 kind of guy. “I’m direct about what I believe in, but try to resolve any differences with other people. I don’t know what I can contribute to HFTP, but know I do have something to give. The association has provided me with a platform for advancing my professional career, and I would like to give back to HFTP and its members.”

Argo continued from page 27.


The Bottomline 29

David Manglos, CPA, CHAE, has managed financial operations at the top-rated Houston Country Club for the past 15 years. Previously he worked in the hotel business

moving to six cities in six years. As a board member he brings experience from both hotels and clubs, and knows the grass is not always greener on the other side. Empty rooms and empty courses are a problem in either hospitality segment.

Manglos is a Detroit native born in 1957. His introduction to hospitality (specifically food and beverage) came in high school and college when he took jobs as a dishwasher, then pro-gressed to the stove and five years as a cook. After, attending Michigan State University in East Lansing from 1975 to 1979, he graduated with high honors and a bachelors in business administration from the School of Hotel, Restaurant & Insti-tutional Management. (Later from 1993 to 1995 he enrolled at the University of Houston for 20 hours of accounting courses to qualify for the CPA exam. This he earned in May 1994, ranking within the top 150 in the country.)

During his 11 years in the hotel business, Manglos began by working in Los Angeles and ended up in Houston working at the Wyndham Hotel as opening controller. He was age 26. In Hous-ton he also spent five years as controller at the five-diamond luxury hotel, Four Seasons Inn on the Park. In 1986, he married Terie, and the couple now have three boys, ages 28, 18 and 17.

The switch from hotels to country clubs occurred for a num-ber of reasons. High on the list were the benefits of more job security and less turnover resulting from the frequent changes in management companies. Another plus for country clubs — the hours are better. Hotels stay open 24/7 and clubs generally close nights and Mondays. But no field is without its minuses.

“At a club you don’t have corporate offices to give you sup-port and direction and to handle areas like health insurance. A lot of club comptrollers are on their own, but at hotels I could call on many different experts.” He’s been an HFTP member since 1984, and says, “HFTP has been at the center of my career through various companies and from hotels to clubs. It’s a good mix between bean counters and people/people.” He is a past president of his local HFTP chapter and a current board mem-ber. He has served on the HFTP Education Advisory Council and the task force for the Uniform System of Financial Report-ing for Clubs. Manglos has found his membership particularly helpful since making the switch to the club side. He uses ProLinks and says interacting with members at events gives him the greatest benefit. “If you’re having a problem, I guarantee someone else has had it, too.”

DAVID M. MANGLOS, CPA, CHAEKeeping Club Greens in the Black

David M. Manglos

By Lou Cook

As CFO at Hous-ton Country Club, Manglos manages the club’s $17 mil-lion annual budget and the external audit. He is in charge of controls, computer systems, insurance and pension plans, and works with the club’s board of direc-tors, various member committees and the general manager to improve operations and financial results. Thanks to cost savings and improved operations, the club has gone seven years without a dues increase and has corrected numerous inefficiencies. “For example, we didn’t have our own laundry, and now we do. It’s a matter of volume. Many large F&B events in Houston take place here and laundering large numbers of 90" round table-cloths adds up fast. We save by doing our own.”

Through annual conventions, courses on cash management, good budgeting and benefitting from the collective experi-ences of HFTP members, Manglos learned to evaluate and cut services. These practices have paid off in the current economic crunch. He says, “Clubs have had it good; but, now when we are in a down time, it’s a different ball game. Houston has one of the largest increases in golf courses in the nation. However, there’s not enough golf business to go around, and newer clubs may not have enough business to sustain them.”

At Houston Country Club, golf rounds are down 40 percent. Current trends indicate that people are playing less golf at their home courses, and Manglos observes that this is true at his club. “Our members have other options. They play other places; other clubs. It’s partly a lifestyle change, because they can get a fitness workout in less time.” At this point, golf is the club’s biggest money loser. The revenue from cart rentals has dropped, and the cost of chemicals to maintain the grounds has become more expensive. Manglos says, “Golf keeps taking a bigger and bigger chunk out of the club dues.”

The largest chunk is gobbled up by F&B. “We have a certified master chef, an expensive fellow with expensive toys.” The good news is that Houston Country Club is full and has a waiting list.

Manglos probably won’t be found waiting for tee times. His sport of choice is cycling. Every April, he participates in the Multiple Sclerosis fund-raising ride from Houston to Austin. The route covers about 180 miles, and most of his weekend cy-cling centers around training for the MS ride. “It raises a ton of money,” says Manglos, “and with 13,000 participants, it ranks as the largest group bike ride. A regular moving city.”


�0 October/November 2007

HFTP board member Jerilyn Schnitzel, CHAE, CHTP, CAM is more relaxed this year, the second year of running her own business as a hospitality consultant.

Last year she says, “I operated on fear.” But now as one big job winds down, another comes into play, and there’s no more middle-of-the-night panic in the “Where’s my next job coming from?” category. She’s also meeting another challenge of the self-employed, being able to say, “I’m sorry I can’t do that now.”

The bulk of work at Schnitzel Hospitality Consulting comes from local country clubs and community associations. Schnitzel takes on the role of an interim or consulting controller, handling the smooth continuum of financial reporting and set-up needed when clubs are making the transition from developer to mem-ber control. On occasion she has to run the show while a con-troller is on medical leave. Work comes by word-of-mouth or through HFTP contacts, and each project brings new challenges and people, which Schnitzel considers the best part of her job.

Schnitzel, a Navy brat, was born at Maryland’s Bethesda Naval Hospital in 1962. Her two older siblings did their share of moving around, but by the time Jerilyn was born, her father was relatively stationary. He retired from the Navy when she was 11, and the family moved to Buffalo, N.Y. The city had been her par-ents’ home, and Jerilyn calls it hers as well since she established real roots in Buffalo. However, a fierce winter in 1977 had a chill-ing effect on her, and Schnitzel says, “During that winter I vowed that as soon as I could move I would go some place warm.”

Florida’s climate qualified, and in 1980 Schnitzel enrolled in Jacksonville University and received her bachelors in account-ing in 1984. After graduation, her first job was with Careercom Corp. in Harrisburg, Penn. She was north of Florida, but way south of Buffalo and traveled throughout the U.S. training business college accountants and bookkeepers on computerized accounting systems and procedures. She became an accountant at Phillips Business College in Virginia and then accounting manager at PTC Career Institute in Washington, D.C.

In the winter of 1987, Schnitzel took a Florida vacation. When she returned home, she packed her belongings, put her dog in the car, and headed back permanently. “It was the best thing I ever did,” she says. Schnitzel now lives in Punta Gorda on Florida’s west coast and works mainly on that coast in the Sarasota, Naples and Fort Myers area.

“My dad had sent my resumé to a couple of companies, and I interviewed at Burnt Store Marina and Country Club in Punta Gorda.” In February of 1987 she was hired as accounting/data processing manager. Over the next 12 plus years, the property grew and merged with WCI Communities to become a coun-

JERILYN B. SCHNITZEL , CHAE, CHTP, CAMFinancial Pinch Hitter

By Lou Cook

try club resort with two golf courses, a 425-slip marina, yacht brokerage, a pro shop, new home sales and construc-tion. Schnitzel’s responsibilities grew and, by 1999, she was amenities account-ing manager handling these functions for 12 WCI Communities in the southern region.

In August she became club controller at Laurel Oak Country Club in Sarasota, which had recently been turned over from the developer. She set up human resource systems and installed a Jonas point-of-sale and accounting system, human resource sys-tems and benefit packages including, 401K. By now Schnitzel had set up many clubs within WCI communities and earned a reputation as a good turnover person.

Her next turnover was Lexington Community Association in Fort Myers from September 2001 to June 2004. As control-ler she was responsible for the financial aspects of a 1,479 unit master community association and country club. Schnitzel set up all general ledger and reporting activities for five condomini-um associations and two homeowners associations.

She left Lexington to become CFO and consultant with the Florida Gulf Coast Group, a start-up consulting, research and real estate development company in Fort Myers. This job had an added plus, Jerilyn’s sister was a company partner. “My sis-ter is my best friend,” Schnitzel says, “and I enjoyed spending time learning from her.” However, after a company disagree-ment, her sister sold her share. The company began winding down, and in January 2006 Schnitzel left to open her own busi-ness in Punta Gorda.

Her HFTP affiliation began in 1995, and she was a founding member of the Florida Gulf Coast Chapter. This chapter char-tered in 1996 with 25 members and now has over 100. In HFTP, Schnitzel found people she enjoyed, professionals who shared her interests and their knowledge. She earned her CHAE and CHTP, which gave her additional credentials for job searches and increased her salary base.

Jerilyn serves on the Vestry and is treasurer of Good Shepherd Church in Punta Gorda. She has been married 17 years and her husband Greg is a building inspector in Charlotte County. He’s also a baseball fan, and Jerilyn has learned the game by default to spend more time with Greg. The couple watch a lot of baseball, but their ultimate goal is to attend a game in every major league stadium around the country. “We have six to go,” Jerilyn says.

Jerilyn Schnitzel


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