Resort Management

External Challenges for Resort Management

Author: Peter Murphy 1

IntroductionIn order for resorts to sustain their market share, they need to examine their global and task environments, to determine what consumer trends and other changes they can take advantage of and how to integrate them into their current resort business and destination package.

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Changing Market and Competitive Conditions

Helber (1995), a resort development consultant notes that established resorts should give more attention to establishing “new products which cater to emerging markets” than to internal matters such as infrastructure improvement, environment clean ups and cosmetic upgrades.

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GLOBAL MARKET TRENDSSome of the recent major consumer trends that are being adopted by resorts around the world are the following:

New skills

Adventure and Danger

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GLOBAL MARKET TRENDSRest and Recreation

Excitement and entertainment

Health and Wellness

Cash Rich and time poor

Environmental awareness

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GLOBAL MARKET TRENDS

Personal Investment

Mobile Resorts

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SUPPLY CONSIDERATIONTo adjust to the changing market conditions over time, the resort sector continues to monitor the preferences of its potential guests and how best to accommodate them.

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SUPPLY CONSIDERATIONS

Market Segmentation – if resorts can identify a viable and reachable market segments they should start adjusting their product and service to better cater to this desired group. ex. Benefit Segmentation

Process by which customers are grouped into specific clusters based on the personal

benefits they are seeking in a product.

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SUPPLY CONSIDERATIONChanging Transport Technology – good

airline connections are vital to international and national resorts that rely on large market areas.

Internet Marketing – ex. Agoda

Evolving Product Technology – technology advances have permitted resorts to offer more and better activities in a variety of settings.

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SUPPLY CONSIDERATION

Management Skills – for resorts to be successful in the ever changing leisure market they need to focus all their technology and management skills on meeting the expectations of their selected target markets.

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COMPETITIONExamination of the societal-global environment reveals consumers have a wider range of leisure market they need to focus all their technology and management skills on meeting the expectations of their selected target markets

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SEASONALITY

Seasons are a fact of life for both nature and humans. For resorts designed to accommodate various forms of human activity, often in changing natural settings, it becomes a paramount importance to recognize these seasons and integrate them into their offerings.

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Resort Seasonality

Weather is a major determinant of travel and recreation patterns because most tourist and sport activities require optimal condition to create guest satisfaction.

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Management Strategic for Seasonality

Resorts attempt to influence this regular seasonal travel by a modifying process (management strategies) as shown in the figure below:

• Differential pricing• Out of season attractions and activities- the resort will need to develop alternative

attractions outside of the high season activity.• Market diversification- in developing different products, the resorts will be

opening itself up to different markets.

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Management Strategic for Seasonality (Butler and Mao, 1977)

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Modifying ProcessDifferential PricingCreate new attractions/ eventsMarket diversification

Tourism Seasonality

Push demand processResponse to natural seasonInstitutionalized holidayVacation tradition

Pull supply processPhysical satisfactionActivity conditionsSocial/cultural attractions

RESORTS AND HUMAN SEASONS

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Resorts have recognized that humans have their Resorts have recognized that humans have their seasons too; as they pass through the life cycle seasons too; as they pass through the life cycle they age and take on different vacation priorities. they age and take on different vacation priorities. The growth in spas and wellness centers reflect an The growth in spas and wellness centers reflect an aging population’s concern over their health now aging population’s concern over their health now to maintain an active lifestyle as long as possible. to maintain an active lifestyle as long as possible. Aging and retirement offer other opportunities for Aging and retirement offer other opportunities for guests and resorts. A key factor in many resort guests and resorts. A key factor in many resort plans has been the retirees growing interest in plans has been the retirees growing interest in “downsizing and moving to somewhere nice.” “downsizing and moving to somewhere nice.” Resort destinations around the world are catering Resort destinations around the world are catering increasingly to the retirement market, which has increasingly to the retirement market, which has been portrayed as a new form of international been portrayed as a new form of international migration.migration.

GOVERNANCE

Governance involves the setting of policy and the exercise of authority to ensure that policy is followed. Permits from different authorities will always be necessary in order to build and operate a resort.

The legal ramification associated with development permits and operating licenses are significant and to disregard them can lead to major penalties.

In all situations in between resort planning and management, the opportunities and limitations provided by the various types and forms of governance must be considered.

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PROCEDURES:

1. Verify and reserve the availability of the company name with the Securities and Exchange Commission (SEC) - The availability of the proposed company name can be verified via the SEC's online verification system at no charge. Reservation of the name, once approved by the SEC, costs Php40/month for the first 30 days. The company name can be reserved for a maximum of 120 days for a fee of PHP 120, which is renewable upon expiration of the period.

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PROCEDURES:

2. Deposit paid-up capital in the Authorized Agent Bank (AAB) and obtain bank certificate of deposit.- The resort is required by law to deposit paid-up capital amounting to at least 6.25% of the authorized capital stock of the corporation. Some banks in Manila charge a fee up to PHP 105 for each certificate of deposit.

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PROCEDURES:

3. Notarize articles of incorporation and Treasurer's affidavit with notary public

- According to Section 14 and 15 of the Corporation Code, articles of incorporation should be notarized before filing with the SEC.

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PROCEDURES:

4. Register company with the Securities and Exchange Commission

Comments: The resort can register online through SEC i-Register but must pay on site at the SEC.

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The following documents are required for SEC registration:

a. Company name verification slip; b. Articles of incorporation (notarized) and by-laws; c. Treasurer's affidavit (notarized); d. Statement of assets and liabilities; e. Bank certificate of deposit of the paid-in capital; f. Authority to verify the bank account; g. Registration data sheet with particulars on directors, officers, stockholders, and so forth; h. Written undertaking to comply with SEC reporting requirements (notarized);i. Written undertaking to change corporate name (notarized).

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The SEC Head Office issues pre-registered TINs only if the company’s application for registration has been approved.

The company must still register with the Bureau of Internal Revenue (BIR) in order to identify applicable tax types, pay an annual registration fee, obtain and stamp sales invoices, receipts and the books of accounts.

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PROCEDURES:

5. Payment of Documentary Stamp Taxes (DST)

- The company must pay DST on the original issuance of shares of stock. The rate is PHP 1 on each PHP 200 or a fractional part thereof, of the par value of such shares of stock. -This payment with the BIR should be made on the 5th of the month following registration with the SEC

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PROCEDURES:

6. Obtain community tax certificate (CTC) from the City Treasurer's Office (CTO) - To obtain a Barangay clearance, a resort must obtain a community tax certificate. The resort is assessed a basic and an additional community tax. The basic community tax rate depends on whether the company legal form is a corporation, partnership, or association (PHP 500 or lower). The additional community tax (not to exceed Php 10,000.00) depends on the assessed value of real property the resort owns in the Philippines at the rate of Php2.00 for every Php5,000.00 and on its gross receipts, including dividends or earnings, derived from business activities in the Philippines during the preceding year, at the rate of Php2.00 for every Php5,000.00.

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PROCEDURES:7. Obtain Barangay clearance

- This clearance is obtained from the Barangay where the resort is located, and is required to obtain the business permit from the city or municipality. Barangay fees vary for each Barangay since they have the discretion to impose their own fees and charges for as long ast these fees are reasonable and within the limits set by the Local Government Code and city ordinances.The fee charged by the Barangay depends on the company's paid-up capital and the land area it occupies - a PHP 500 minimum plus PHP 300 for the Barangay clearance plate.

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PROCEDURES:

8. Obtain mayor’s permit to operate at the Licensing Section of the Mayor's Office

a. Barangay clearance; b. SEC Registration;c. Public Liability Insurance (for hotels, resorts, restaurants, malls etc);d. Authorization letter of owner with ID;e. Lease contract/tax declaration;f. SSS certification/clearance; and g. Community tax certificate.

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P R O C E D U R E S :9 . S p e c ia l b o o k s o f a c c o u n t- S p e c ia l b o o k s o f a c c o u n ts a re re q u ire d fo r re g is te rin g w ith th e B u re a u o f In te rn a l R e v e n u e (B IR ). T h e b o o k s o f a c c o u n ts a re s o ld a t b o o k s to re s n a tio n w id e . O n e s e t o f jo u rn a ls c o n s is tin g o f fo u r b o o k s (c a s h re c e ip ts a c c o u n t, d is b u rs e m e n ts a c c o u n t, le d g e r, g e n e ra l jo u rn a l) c o s ts a b o u t P H P 4 0 0 .- If th e c o m p a n y h a s a C o m p u te riz e d A c c o u n tin g S y s te m (C A S ), it m a y o p t to re g is te r its C A S u n d e r th e p ro c e d u re s la id o u t in B IR R e v e n u e Me m o ra n d u m O rd e r N o s . 2 1 -2 0 0 0 a n d 2 9 -2 0 0 2 . - T h e B IR C o m p u te riz e d S y s te m E v a lu a tio n T e a m (C S E T ) is re q u ire d to in s p e c t a n d e v a lu a te th e c o m p a n y ’s C A S w ith in 3 0 d a y s fro m re c e ip t o f th e a p p lic a tio n fo rm (B IR F o rm N o . 1 9 0 0 ) a n d c o m p le te d o c u m e n ta ry re q u ire m e n ts .

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PROCEDURES:10. Register for taxes at the Bureau of Internal

Revenue (BIR) - After the taxpayer obtains the TIN, the company must pay the annual registration fee of PHP 500 at any duly accredited bank, using payment form BIR Form 0605). - To register the BIR taxpayer must first accomplish BIR Form 1903 and submit the same together with the required attachments to the Revenue District Office having jurisdiction over the registered address of the business establishment.- Moreover, the BIR now requires the submission of the Authority to Print Receipts (BIR Form 1906) as an additional requirement for registration. Companies may be assessed various taxes: VAT, a community tax, a local tax, and income tax. When a company registers as a taxpayer, it must indicate in the application the types of taxes it expects to be liable for, including VAT

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PROCEDURES:

11. Obtain the authority to print (ATP) receipt/invoices from the Bureau of Internal Revenue (BIR)

- The authority to print receipts or invoices must be secured before the sales receipts and invoices may be printed. The company can ask any authorized printing company to print its official forms, or it can print its own forms (i.e., it uses its computers to print loose-leaf invoice forms) after obtaining a permit from the BIR for this purpose.

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To obtain the ATP from the BIR, the resort must submit the following documents to the BIR Revenue District Office (RDO):

a. Duly completed application for authority to print receipts and invoices (BIR Form No. 1906);b. Job order;c. Final and clear sample of receipts and invoices (machine-printed); d. Application for registration (BIR Form No. 1903); and e. Proof of payment of annual registration fee (BIR Form No. 0605).

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PROCEDURES:

12. Print receipts and invoices at the print shops accredited by the BIR

- The cost is based on the following specifications of the official receipt: 1/2 bond paper (8 ½ x 5 ½ cm) in duplicate, black print, carbonless. The minimum print volume is 25 booklets.

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PROCEDURES:

12.Have books of accounts and Printer’s Certificate of Delivery of Receipts and Invoices (PCD) stamped by the BIR

- After the printing of receipts and invoices, the printer issues a Printer’s Certificate of Delivery of Receipts and Invoices (PCD) to the company

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PROCEDURES:

13. Initial registration with the Social Security System (SSS) - Under the new single registration process, the employer is required to register with the SSS using the business registration form (BR-1). Registration with SSS automatically results in registration with the Philippine Health Insurance Company (PhilHealth).

Based on the employer’s BR-1 submission, the SSS encodes the employer details and issues the following: SSS employer number together with the employer's copy of the processed BR-1; SSS information brochure; employer identification card; and list of employer obligations and post-registration requirements

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PROCEDURES:13.Complete registration with SSS and

Philippines Health Insurance Company (PhilHealth) - Within thirty (30) days from the issuance of the SSS and PhilHealth employer number, the company submits the following:To SSS: a. Employment report (Form R-1A);b. Specimen signature card (Form L-501);c. Sketch of business address;d. Validated miscellaneous payment return form (Form R-6) or special bank receipt showing payment of the employer registration plate, if not paid upon initial registration.

To PhilHealth: a. Member registration forms for each employee with the required supporting documents.

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Resort Management

Internal Challenges and Strategies for Resort

Management

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Environment and Site Management Resorts and the environment are closely

linked both in the minds of guests and management. To develop the resort-environment link to its fullest potential will require careful stewardship and management for many of the environments that attract resorts are sensitive and fragile, and some are dangerous.

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Environment and Site ManagementResorts have the opportunity to differentiate

themselves through features of their environmental setting.

The environment provides the type of activities (sports or recreational)

The environment can also provide an important visual and psychological contributor to the resort image.

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Myth on Environment and Sustainable DevelopmentEnvironmental protection and land

development objectives are incompatible.Development that protects and enhances the

environment adds little market value.Green building practices are too costly and

too complicated.Developers and environmentalists are always

in conflict.

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Sustainable Development PrinciplesCarrying Capacity (CC) Each area of a resort environment can handle

a certain number of visitors before the increasing number of visitors starts to destroy the area through overuse.

The point at which an area starts to deteriorate is its CC threshold and increased use beyond that point will cause environmental stress and eventually degradation

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Growth Management Planning

Growth Management has been proposed as an alternative and more practical development management tool for resort.

“The essence of growth management is how best to capture the benefits of growth while mitigating the consequences.”

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Growth Management Planning Issues

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Protecting community sense of place

Managing tourism demand

Growth management planning issues

Securing stakeholder commitment

Managing tourism related impacts

Identifying community commercial and social

priorities

Product DesignSense of Place Most guest are coming to a resort to

experience something special and something different

It is imperative that when introducing a commercial resort into local unique environments the developers do everything in their power to obtain and enhance the local sense of place as a primary differentiator

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Product DesignMultiple Use Many resorts have developed a multiple use

product design in order to cater for a range of guests and to seasonal variations in demand.

To operate successfully multiple usages requires the development of synergistic relationships and separation of conflicting relationships.

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Product DesignBuilding Design The resort needs to take maximum advantage

to its site location in terms of views and access to its principal attractions, to utilize the most convenient lay out so staff and modern equipment can be used with the maximum efficiency but within the constraints of aesthetics and sustainable development.

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Product Design

Education Resorts must educate the potential guest

regarding the care and attention that has been spent in developing a sensitive and attractive environment to visit.

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Product Design

Waste Management Resorts are certainly excellent locations in

which to promote the 3 R’s of waste management hierarchy because they can easily become scenes of excessive consumption

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Product Design

Waste AvoidanceWaste ReductionWaste ReuseWaste Recycling or ReclamationWaste TreatmentWaste Disposal

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Ecotourism Design Practices1. Use local construction techniques, materials and cultural images.2. Provide building forms and images in harmony with the natural

environment.3. Use canopies to cover high use trails between structures to minimize

erosion.4. Avoid energy intensive products and hazardous materials.5. Prominently post an environmental code of conduct for visitors and staff.6. Select interior furnishings and equipment to represent local resources.7. Design trail systems to respect travel patterns and wildlife habitants.8. Minimize trail crossing points at river and streams.9. Space buildings to allow for wildlife travel patterns and forest growth.10. Discreetly label plant/ tree types around the immediate lodging

facilities to acquaint visitors with species they may encounter.11. Limit and control site lighting to avoid disruption of wildlife diurnal

cycles.

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HUMAN RELATIONS PRACTICESResorts need to achieve high levels of service

excellence for a competitive workplace. In this tight business community, people often live together as well as work together. Shift work and multi skilling tend to break down more formal industrial classifications and brings into prominence more personal qualities and attitudes and their effects on teamwork. Thus these major human relations issues that confront resorts must be dealt with by management to remain competitive with other forms of tourism and leisure in the world market.

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HUMAN RELATIONS PRACTICESLabor Shortage The traditional labor market for resorts has

been the local labor pool of the surrounding communities with emphasis on young and female workers for the front line positions. However, all these have changed because there are more attractive options available and the number of young people has shrunk because of declining birth rate.

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HUMAN RELATIONS PRACTICES

Resorts have turned to :a.Hiring migrant labor, both legal and illegal

immigrants for back of the house or maintenance work.

b.Employment of retireesc.Hiring disabled

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HUMAN RELATIONS PRACTICESStress“the demand made upon the adaptive capacity of the mind and

the body”

Four General Stressors (Law, 1995)• Anti social work hours- shift work, split shift,

long shift or no shift• Insufficient pay• Poor management• Requirements to deal with the public on a

continuous day to day basis

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HUMAN RELATIONS PRACTICESTurnover It represents the regular movement of staff within

the tourism and hospitality sectors and out of the industry into other forms of employment. It is mostly defined as the number or percentage of employees separated from their employment during a particular period of time.

Turnover can be both avoidable and non-avoidable.Avoidable Turnover occurs when a business fails to make enough effort to retain staff. Unavoidable Turnover, on the other hand, occurs when the employee leaves because of personal reasons.

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Strategies

FlexibilityBeing responsive to change and being pliable

with an ability to switch between products or product emphasis

Resorts need to make adjustments on workforce skills so workers can undertake a wider range of tasks.

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StrategiesEmpowermentEmpowerment encourages front liner workers who

are the major interface with guests to exercise initiative and imagination to prevent problems, to solve actual difficulties or to provide some form of service recovery if there has been a slip in the level of service.

Empowerment respects the ability of a trained professional to make the appropriate decision relating to a front line contact with the guest, which permits the immediate resolution of most problems on the spot and with little fuss.

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Strategies

What empowerment offers to the employees is a further way to become part of the team, by enabling them to show their initiative and judgment in the provision of quality service.

It gives them status and personal satisfaction to be able to function as a caring and capable human being as well as a mechanic performing their trained functions.

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StrategiesQuality Service and Total quality ManagementThe foundation for building and sustaining

customer service and satisfaction is to establish an effective measurement and improvement system which would entail the following:

1.Agree on the requirements of both guests (external customers) and staff (internal customers). To deliver the promised vacation experience requires that both of these groups be on the same page and acting in harmony to produce the best experience of a lifetime.

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Strategies2. Prevention of problems emphasizes pre

planning and pro active managements.3. Ensuring that everybody is involved- different

departments have a role to play and value to add, but this will work only if goals and efforts are coordinated.

4. Measurement of performance- determines how well efforts are meeting customer’s expectations and to detect areas of weakness.

5. Need for continuous improvement.

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IMPORTANCE OF GUEST ACTIVITIES“Good programming does not just happen: it is carefully

planned for, thought about and learned.”When guests are at a resort or on board ship for several days

or weeks, they expect the facility to cater to their need for something to do. This need is met by guest activity programs. What guests actually do is called recreation.

Recreation is “an activity that takes place during one’s free time, is enjoyable, freely chosen and benefits the individual emotionally, socially and physically, cognitively and spiritually.” If these conditions are not adhered to, the guests will not fully enjoy the activity and their stay will be less enjoyable than it could be.

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IMPORTANCE OF GUEST ACTIVITIESFor a guest to leave the resort or ship truly satisfied with

the visit, it is imperative that the guest activity director take an active role in planning activities to ensure that they provide the benefits.

To be satisfying, an activity must include:• Freedom- guest must be free to select the activities in

which they want to participate.• Perceived Competence- guests must be able to match

their skill level to the activity such that they feel they can successfully participate.

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IMPORTANCE OF GUEST ACTIVITIES

• Intrinsic motivation- truly satisfying activities are those that are chosen to satisfy an inner drive rather than to satisfy or impress others.

• Locus of control- guests need to have degree of control over the experience, be it in the selection of teammates or when or where the activity will take place.

• Positive effect- the result of a satisfying activity is that guest enjoy the experience after participating in it.

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IMPORTANCE OF GUEST ACTIVITIESGUEST ACTIVITY PROGRAMMING MODEL1. Assess needs of guests.2. Define objectives for the activities that will

meet guest needs.3. Perform cluster or activity analysis

designed to meet the objectives.4. Administer the activity.5. Evaluate the experience with respect to its

success in meeting guest needs.

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IMPORTANCE OF GUEST ACTIVITIESDevelopment and operation of any program occurs within the context of and is influenced by, external factors:

• Historical influences- the tradition and philosophy of the resort

• Environmental influences- time of the year, weather, etc.

• Cultural influences- ethnicity, age, and religion of the guest

• Social influences- fads, trends, news• Organizational influences- values and mission of

the company recreation

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IMPORTANCE OF GUEST ACTIVITIESDevelopment and operation of any program occurs within the context of and is influenced by, external factors:

• Historical influences- the tradition and philosophy of the resort

• Environmental influences- time of the year, weather, etc.

• Cultural influences- ethnicity, age, and religion of the guest

• Social influences- fads, trends, news• Organizational influences- values and mission of

the company recreation

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Historical Influences

Organizational Influences

Environmental Influences

Cultural Influences

Social Influences

Assess guest needs

Develop objectives

Cluster/ activity analysis

Activity experience

Evaluation Facilities

Guests Equipment resources

Guest Activity Staff

GUEST ACTIVITY PROGRAMMING MODEL

Needs Assessment Activity programs could be much more meaningful to

participants if the activity director knew what guests expect from the program. People participate in guest activities for a variety of reasons. Some of them may wish to

• Make friends• Belong to a group• Experience Competition• Learn a new skill• Share a talent• Gain prestige• Get in shape

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GUEST ACTIVITY PROGRAMMING MODEL

Needs assessment is “a systematic inquiry about needs, attitudes, behaviors and patterns of both participants and non-participants.”

Its purpose is to identify what is important to guests in order to better design and deliver guest activity programs that leave guests satisfied with the program and consequently the resort.

There are several techniques that can be used for needs assessment:

• Existing guests are asked what interest them or what activities they currently undertake;

• People who do not use the program might also be surveyed;

• National figures are available on trends in recreation68

GUEST ACTIVITY PROGRAMMING MODEL

Defining Goals and Objectives For the guest activity program to be

meaningful and therefore, satisfying to the guest, it is important that the programmer develop some idea of what the outcome of the program should be for guests and design activities to help ensure that objectives are met.

The success of the program is reflected in the extent to which it realizes its objectives.

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GUEST ACTIVITY PROGRAMMING MODEL

Cluster Analysis This cluster activities that yield similar

benefits. Typically, the following criteria are used to

determine clusters: degree of skill required, level of activity, nature of the group needed, amount of risk or danger and special facilities needed.

Likewise, activities can be grouped according to the need for instruction, competition, social activities, trips, special events or spectators.

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GUEST ACTIVITY PROGRAMMING MODEL

Administer the Activity This would have to include leadership,

budgeting, scheduling, facility availability and promoting the program.

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GUEST ACTIVITY PROGRAMMING MODEL

Program Evaluation The aims of program evaluation are twofold:

to determine whether or not the program has value and to determine whether or not the program objectives are being met.

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