Slide Nr. 1 Destination Management Lecture 9 University of Applied Sciences Stralsund Leisure and Tourism Management WS 2009/2010.
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Slide Nr. 1
Destination Management
Lecture 9
University of Applied Sciences Stralsund
Leisure and Tourism Management
WS 2009/2010
Slide Nr. 2
Part Three
Considers the challenges involved in managing attractions such as marketing, financial management, operations
management and human resource management
Slide Nr. 3
Human Resource Management
Slide Nr. 4
• Considered to be the most important aspect of management
• Attitudes and abilities of staff have a crucial impact on the visitors experience
• Labour costs are likely to be the largest single items on the attractions budget
Human Resource Management
Part Three \ Human Resource Management
Slide Nr. 5
Tourism industry suffers from bad reputation in HRM
• High turnover of staff
• Seasonality of demand
• Poor status of jobs
• Lack of career structures
• Unusually demanding jobs
• lack of management expertise
• Lack of widely recognized qualification and training schemes
Problems of HRM at visitor attractions
Part Three \ Human Resource Management \ Problems
Slide Nr. 6
Problems of public sector attractions are often in direct
contrast to the problems mentioned before
• Low turnover of staff
• Inflexible working practices
• Fixed-wage rages
• Standardized recruitment and disciplinary procedures
Problems of HRM at visitor attractions cont.
Part Three \ Human Resource Management \ Problems
Slide Nr. 7
Benefits for organisation of good HRM
• Improves performance of staff
• Provides a competitive advantage to the organization
• Contented staff provide better service to customers, encouraging repeat visitation
• Reputation for good staff will lead to increased first-time visitation
• HRM plays a part in determining the success or failure of any organisation.
Part Three \ Human Resource Management
Slide Nr. 8
Case study
Can the notion of service be fully implemented?
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International benchmarking and best practice
Case study “New Horizons” Page 63 et seq.
Part Three \ Human Resource Management
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Financial Management
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Financial Management
• Is at the core of corporate strategy at most attractions
• Is concerned with ensuring liquidity for operations
• Covers a number of separate functions:
- financial planning
- financial control
- management accounting
- cost accounting
- financial reporting
Part Three \ Financial Management
Slide Nr. 12
Financial management functions
• financial planning- how will the financial resources utilized in the future
• financial control- ensuring most efficient way of using, security issues
• management accounting- providing data for decision-making
• cost accounting- analysing cost structure, fixed/variable costs
• financial reporting- presenting financial performance to stakeholders
Part Three \ Financial Management
Slide Nr. 13
Budgeting
• The budget is the financial management frameworkwith the following functions:
- guide everyday financial management
- basis for evaluating performance and taking decisions on corrective actions
- impress stakeholders such as banks and grant-making bodies
Part Three \ Financial Management \ Budgeting
Slide Nr. 14
Budgeting
• There exist two types of budget
- capital budget (expenditure) salaries, marketing, maintenance, taxes, depreciation, …
- revenue budget (income) entrance charges, rents, franchises, consultancy services
• Profit centres and Cost centres- monitoring financial performance on an individual basis
• Attraction budgets should include a cash flow statement
Part Three \ Financial Management \ Budgeting
Slide Nr. 15
The budgetary process (flowchart)
• Evaluating the existing budget
• Discussion with departments on required changes
• Approval of the budget
• Implementation of the budget through budgetary control
• Monitoring the performance against the budget- identify variances, corrective actions, modify budget
Part Three \ Financial Management \ Budgeting
Slide Nr. 16
Problems with budgeting at attractions
• Basing budgets on past experiencesis critical in rapidly changing attraction business
• Forecasting is very difficult- use contingency plans to cope with variances
• Many influencing factors are outside the control- legislation, reducing market size or increasing costs
• Zero budgeting is a common answer in practice- starting with a clean sheet each year
Part Three \ Financial Management \ Budgeting
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Management information systems
• Designed to provide information for decision making- visitor numbers in total and by type- visitor expenditures and place of spending- other income- staff costs- major unexpected bills- credit situation- stock levels- budget variances
• Some of the data need to be delivered daily
• Reporting procedures need to be established
Part Three \ Financial Management
Slide Nr. 18
Corrective actions
• Revenue generation
- Attracting more visitors
- Pricing
- Increase visitor expenditures
- Obtaining revenue from other sources
- Maximizing use of people and financial resources
• Cost control and reduction
- Staffing
- Goods purchases
Part Three \ Financial Management \ Corrective actions
Slide Nr. 19
Revenue generation
• Attracting more visitors
- increased promotional activity to raise awareness
requires corrective actions in marketing plan and budget ! requires financial resources to pre-finance activities
- sales promotion such as season tickets
designed to increase more frequent use should be connected with communicative activities
- Arranging special events to attract new customers
aimed to win regular visitors
Part Three \ Financial Management \ Corrective actions
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Revenue generation
• Increased visitor expenditures
entrance charges often represent a minority of income!
- Shops (merchandising) suit the taste and pocket of every market segment
- Catering outlets need to be tailored to the desires of the specific market
- Guided tours personal, guide books, walkman tours
- corporate users seminars, conferences, exhibitions
Part Three \ Financial Management \ Corrective actions
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Revenue generation
• Obtaining revenue from other sources
- Rents and tenancies usually fixed income from service facilities
- Franchises and concessions usually income based on financial performance of partner
- Consultancy services may include advice in training, retailing, …
- Grants mainly for public operated attractions
- Sponsorship mainly used for special events
Part Three \ Financial Management \ Corrective actions
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Cost control and reduction
• Is rather more complicated than income generation
- Staffing
simply employ fewer people employing casual- rather than permanent staff spending less on training reducing wage rates contracting out jobs
• Results in demoralized and demotivated staff !!!!!
• Is in stark contrast to what we identified as good HRM !!!!!
Part Three \ Financial Management \ Corrective actions
Slide Nr. 23
Cost control and reduction
• Is rather more complicated than income generation
- Goods purchases
bulk purchase of fast moving items
regular review of suppliers
use „sale or return“ whenever possible
operating „just-in-time“ delivery systems
delaying payments until the last possible moment
pilfering must be minimized through security measures
reducing food wastage
Part Three \ Financial Management \ Corrective actions
Slide Nr. 24
Cost control and reduction
• Is rather more complicated than income generation
- further measures
tackling administrative costs
reducing costs of utilities (water, gas, energy)
selling off unproductive assets
contracting out services
reducing opening hours
• Quality of service must never be adversely affected !!!!!!!!!!!!
Part Three \ Financial Management \ Corrective actions
Slide Nr. 25
International benchmarking and best practice
Case study “New Horizons” Page 54 et seq.
Part Three \ Financial Management
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