Business Process in a Hotel

Creating Customer Value in Tourism and Hospitality Industry, pp. 752-763 M. Drljaca: METHODOLOGY OF BUSINESS PROCESS DEVELOPMENT IN A HOTEL MIROSLAV DRLJACA, MSc, Researcher Zagreb Airport, Ltd. , Zagreb, Croatia METHODOLOGY OF BUSINESS PROCESS DEVELOPMENT IN A HOTEL UDC 65. 012. 4:640. 4 Preliminary communication Requests of interested parties, amongst which the customer has the central position, are starting points of quality management system that complies with requirements of ISO 9000ff international norms.

Regardless of the fact whether we want to arrange hotel management system to meet the requirements of these norms, one should be able to recognize exact requests of interested parties, especially of the customer of services. Correct recognition of these requests presents the beginning of quality system management in a hotel. In order to fulfill the expectations and requests of guest, the management system in a hotel must be developed, documented, implemented and managed in such way to ensure realisation of the actual and foreseen guests' requests.

Function structure of hotel organisation will not be sufficient for a long-run achievement of this goal. Classic structural model of hotel organisation must be upgraded through developed, documented and implemented business processes. In order to run hotel successfully, numerous interrelated activities must be defined and managed. The application of business process systems in the hotel, their definition and interaction, together with the management, can be defined as process approach.

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Business processes are one of structural elements of hotel management system. If they are not developed, documented and implemented, we can justly ask whether hotel management system is capable of meeting requests of interested parties. For running businesses, as well as hotels, there are three characteristic types of business processes: core business processes, management business processes and support processes.

Scientists and experts do not agree about generally accepted methodology of business process modelling. This paper accepts a hypothesis saying that a good methodology is the one which enables managing of business process in a way to ensure the fulfillment of interested parties' requests, specifically the requests of guest. Key words: process, methodology of business process modelling, process approach. INTRODUCTION

Despite the fact that only a small number of hotel industry representatives in Croatia possess ISO 9001 certificate as international confirmation of requested quality level of management system, the idea of quality, as marketing orientation, as business 752 Creating Customer Value in Tourism and Hospitality Industry, pp. 752-763 M. Drljaca: METHODOLOGY OF BUSINESS PROCESS DEVELOPMENT IN A HOTEL philosophy and everyday practice, is more and more existing in hotel industry. Independently of the degree of awareness of hotel management, business processes can be developed in any of the following ways: 1) in a long-established manner - which is based on „know-how“ of the most important parametres of business processes, with interventions only in situations when reliability of business process is seriously affected, 2) without any control, when in extreme cases the business process develops in completely uncontrollable conditions, 3) in partly controllable conditions – characterized by business process model according to chosen methodology, in conditions which are controlled in the same amount as the basic parametres that define them, and 4) in completely controlled conditions - those business processes whose basic parametres of definition are under complete control. 2 In order to create completely controlled environment for developing of usiness process in a hotel, it is necessary that hotel business processes be: 1) named, 2) described, 3) structurised/organised, 4) controlled, 5) managed, and 6) always improving. In order to fulfil it, hotel business processes need to be conceived, i. e. developed according to chosen methodology. The problem lies in the fact that ISO 9001:2000 norm (Quality Management Systems – Requirements) requires the proof that business processes are managed, but methodology of business processes developing is not being suggested. 3 The choice of methodology, and often its definition, is left to be made by hotel management. 1. DEFINITION OF TERM „PROCESS“ The word „process“ evolves from Latin word „procedere“, which originally means „move“ or „go ahead“.

This word form was followed by noun „processus“, which is translated as „process“ and means „ … a series of actions, phases or events, development (in any direction or form) and transformation (inputs > outputs) of anything that was took under consideration (element, structure, sub-system, system, etc. ). “ 1 2 3 ISO 9001 certificate, international confirmation of requested quality level of management system, acquired the following hotel industry representatives in Croatia: (in 1999: Hotel Excelsior in Dubrovnik, Hotels Maestral – Hotel Komodor in Dubrovnik; in 2000: Vodicanka Tours – Hotel Punta in Vodice, during change of owners did not retain the certificate, and Hotels Argentina in Dubrovnik).

Basic parametres of definition of business processes are: a) object of activity (material, information, product, service and similar), b) frequency of operation (continually, sometimes only once, and similar), c) area of activity (state, city, company/organisation, part of company, and similar. ), d) manner of operation (usual, uncontrollable, in partly controllable conditions, in completely controllable conditions). At writing about methodology of business process development the authors avoid presenting final solutions, because methodology of business process development represent intellectual ownership (know how) of the author or consultant. Rare examples in Croatian literature are: Ivan Mamuzic, "Procesni pristup u sustavu upravljanja kvalitetom", Kvaliteta, Broj 3, Infomart, Zagreb, 2002, p. -4, in which author presents possible methodology of business process development and shows part of diagram of process flow; Miroslav Drljaca, "Proces kao ishodiste modela ISO 9001:2000", Kvaliteta, Broj 3, Infomart, Zagreb, 2002, p. 5-6, in which the author presents methodology of business process development and shows break-up of one business process; Zivko Kondic, Kvaliteta i ISO 9000, Tiva, Varazdin, 2002; and partly: Nenad Vulic, Sustavi upravljanja kvalitetom, Veleuciliste u Splitu, Split, 2001. Total presentation of methodology of business process development is written in: Nenad Injac i Marko Besker, Metodologija izgradnje poslovnih procesa u sustavu kvalitete, Oskar, Zagreb, 2003. 753 Creating Customer Value in Tourism and Hospitality Industry, pp. 752-763 M. Drljaca: METHODOLOGY OF BUSINESS PROCESS DEVELOPMENT IN A HOTEL Figure 1. Process presentation

RULES AND CONTROLS INPUT TRANSFORMATION AREA OUTPUT MECHANISMS Process can be also defined as “a course, evolution or manner through which something was born or transformed, it is a development, a procedure …”4 HRN EN ISO 8402:1996 norm defines the process as a “group of mutually independent resources and actions which transform input elements into output elements. ”5 Transformation of input elements into output is in fact a transformation of one into the other. Each process thus becomes unique and special. Transformation of input into output is a system of complex interactions of operations and resources. It is a technology. It is “know how. International norm ISO 9000:2000 defines the process as „group of connected or mutually dependent activities which transform input into results. “6 The application of process system in a company, its definition and mutual interaction, as well as the management of process system – can be called „process approach. “7 The process approach has the advantage of permanent managing of links between – particular processes (within the process structure), which is the structural element of hotel management system, – and – combination and mutual interaction of these elements. 8 When applied in the hotel quality management system, this process approach underlines the importance of the following: ? understanding and meeting of guest's requests, need of supervision of business processes in value added conditions; ? achieving results of business processes and their efficiency, and 4 5 6 7 8 Zelimir Domovic, Sime Anic i Nikola Klaic, Rjecnik stranih rijeci, SANI-PLUS, Zagreb, 1998, p. 1163. HRN EN ISO 8402 Quality management and quality assurance – Vocabulary, (ISO 8402:1994; EN ISO 8402:1995), Quadrilingual version. International norm HRN EN ISO 9000:2002 Quality management systems – Fundamentals and vocabulary (ISO 9000:2000, EN ISO 9000:2000), Version quadrilingue, p. 40. International norm HRN EN ISO 9001:2002 Quality management systems – Requirements (ISO 9001:2000, EN ISO 9001:2000), p. 14.

Except process structure, structural elements of management system of every company, a hotel as well, are: 1) strategic documents of company (mission, vision, strategy, politics, general and special managerial aims), 2) organisation, 3) resources, 4) partnerships, and 5) communication and notification. 754 Creating Customer Value in Tourism and Hospitality Industry, pp. 752-763 M. Drljaca: METHODOLOGY OF BUSINESS PROCESS DEVELOPMENT IN A HOTEL ? permanent improvement of business processes, based on impartial estimation. Regardless of many possible types of business processes, and many diversities of process structures, all business processes in hotel can be divided into three types: ? management processes, ? core processes, ? support processes. Figure 2.

Three types of business processes Management processes Guest' s request Core business processes Guest' s satisfaction Support processes Source: Martyn A. Ould, Business Processes, John Wiley & Sons Ltd, Chichester, England, UK, 1995, p. 2. Many industries have more than one core or „macro“ group of business processes, including: management of business system, management of resources, realisation of products and services, measurement and control. 9 Management business processes are important for progress of core business processes, as well as of support process. These are business processes of development, planning, quality management and management of hotel organisation.

Because of entirety and directions of their influence onto core business processes – Management business processes are called – vertical processes. Core business processes are focused on the achievement of satisfaction of customers, (buyers/users), i. e. hotel guests. They directly add new value to the product, meaning service. They meet requests of hotel guests and are generator of their 9 Herbert C. Monnich, Jr. , ISO 9001:2000 for Small and Medium Sized Businesses, American Society for Quality, Milwaukee, Wisconsin, USA, 2001, p. 3. 755 Creating Customer Value in Tourism and Hospitality Industry, pp. 752-763 M. Drljaca: METHODOLOGY OF BUSINESS PROCESS DEVELOPMENT IN A HOTEL contentment.

Core business processes, processes of fulfillment or realization, are business processes whose result – in form of product or service has direct value confirmation on the market. The plan and the product in their creation are in core business processes strongly integrated. Core business processes are called – horizontal processes. Figure 3. Interactivities of different types of business process Management processes (vertical) Core processes (horizontal) Support processes (vertical) Support processes which are also called logistical or resourceful business processes, are directed towards producing satisfaction of internal users within hotel organisational structure. They are able to create added value for the guest.

However, this influence on making added value is indirect and is fulfilled through support of core business processes. Support processes are auxiliary business processes and represent a support to core business processes. With regard to direction of activities onto core business processes, they are also called – vertical processes. Numerous management, core and support processes develop within this process structure simultaneously. They have a series of interactions. Each interaction in certain measure affects the business process result in terms of meeting the guests' requests. 2. BUSINESS PROCESSES IN A HOTEL „Complete work process of a hotel consists of processes of production activities and service activities.

Purpose of production activities is rendering of services which have product characteristics, like: various food, beverages that are specifically prepared, bread, desserts, and similar. Purpose of service activities is providing guests with: accommodation, serving of meals and beverages, entertainment, sale of goods, various handicraft-and-services, laundry washing, ironing, and similar. “10 „Process contains all activities linked into a chain. It starts with defining of all possible needs a 10 Ivanka Avelini Holjevac, Kontroling – Upravljanje poslovnim rezultatom, Sveuciliste u Rijeci, Hotelijerski fakultet Opatija, Opatija, 1998, p. 379. 756

Creating Customer Value in Tourism and Hospitality Industry, pp. 752-763 M. Drljaca: METHODOLOGY OF BUSINESS PROCESS DEVELOPMENT IN A HOTEL guest (tourist, buyer, etc. ) may have during the trip, until return, only with aim that all guests' needs are met. “ 11 Table 1. Types of business processes in a hotel 1. 2. 3. 4. 5. 6. 7. 8. Process of hotel management. Process of planning. Process of development. Process of marketing. Process of quality management. Process of environment management. Process of social responsibility management. Process of security/safety at work management. 1. Process of producing food and beverages which are specifically prepared. 2. Process of serving meals and beverages. 3.

Process of reception and accommodation of guests. 1. 2. 3. 4. 5. 6. Process of human resources management. Process of financial management. Process of infrastructure maintenance. Process of information management. Process of purchase. Process of sale. Management business processes in a hotel. Core business processes in a hotel. Support processes in a hotel. At identifying of business processes in a hotel and dividing them into types, it is necessary to avoid identification of business function and business process in a hotel. Essential differences are at least these that follows: ? business function is static category, while business process is dynamic category, business function is mostly operated within one structural hotel unit, and is usually named after it, while process implies more participants from more structural hotel units, ? business function is operated within hotel, while process can have participants from outside of hotel structural organisation, but who are important for progress of concrete business process, 11 Zdenko Cerovic, Hotelski menadzment, Sveuciliste u Rijeci, Fakultet za turisticki i hotelski menadzment Opatija, Opatija, 2003, p. 415. 757 Creating Customer Value in Tourism and Hospitality Industry, pp. 752-763 M. Drljaca: METHODOLOGY OF BUSINESS PROCESS DEVELOPMENT IN A HOTEL ? ? ? . business function is run by functional manager, and process is run by business process manager, and identification of these roles must not be a rule but an exception, business process is one of the possible inner aspects of supervision of costs, quality costs as well, while function is not, due to all these differences, function is a narrower concept than business process. METHODOLOGY OF BUSINESS PROCESS DEVELOPMENT Basic task of hotel management during of business processes development is in fact establishing, directing and describing of events during transformation process of input into output. In order this task could be accomplished, we ust have suitable methodology of business process development within the quality system. Different companies use dissimilar methodologies. Modelling of methodology in great measure depends on knowledge about quality management. Regardless of which methodology is used by teams who developing business processes, they should remain consistent when they apply it in developing all business processes in a hotel. Hotel management must create its own methodology or choose already existing methodology of business process development. Teams for business process development in practice often encounter the problem of verification of correctness of their own solutions. This paper presents one of the possible approaches. 3. 1.

Identification of the process is initial task in business process developing and demands (from the team): naming of the process, appointing of the leader (manager) of business process, defining of its objective(s), defining of input and output requests, description of mechanisms, rules and controls. Afterwards, they must determine outer and inner users of business process results, as well as designate process steps as consisting parts of the business process. 3. 2. Diagram of the context is simple display of business process at the highest level from which an interaction can be seen: rules, controls and mechanisms during transformation of input into output. 3. 3. Display of static model of business process presents logical sequence of process steps development as consisting parts of the business process.

This phase of business process development identifies structural units where individual process step develops, and locates control points at which measurements will be performed – and thus manage the business process. 3. 4. Description of the process describes requests that result from requests and needs of guests, then from specifications, norms, regulations, elaborations, methods and resources. Here are also identified requests, objectives and descriptions of their fulfillment, as well as allowed deviations. By defining of allowed deviations we in fact determine the minimum quality level of business process. 758 Creating Customer Value in Tourism and Hospitality Industry, pp. 752-763 M. Drljaca: METHODOLOGY OF BUSINESS PROCESS DEVELOPMENT IN A HOTEL Figure 4. Diagram of the context

RULES AND CONTROLS GUEST' S REQUEST PROCESS OF RECEPTION AND ACCOMMODATION OF GUESTS A- 0 GUEST' S SATISFACTION MECHANISMS 3. 5. Diagram of decomposition of business process is methodologically confirmed graphical representation of the process with all its consisting parts - process steps. It represents logical sequence of process steps development. It specifies input, rules and controls, mechanisms and output of each process step. Diagram of decomposition represents a technology. It shows process of reception and accommodation of guests per process steps that logically develop in sequence. At least one exit from a process step is also an entry into the next.

Process steps in the process of reception and accommodation of guests are identified as follows: 759 Creating Customer Value in Tourism and Hospitality Industry, pp. 752-763 M. Drljaca: METHODOLOGY OF BUSINESS PROCESS DEVELOPMENT IN A HOTEL Figure 5. Decomposition of process of reception and accommodation of guests Refusal of request Guest' s request ANALYSIS OF GUEST' S REQUEST A-01 ACCOMODATION OF GUEST A-03 RECEPTION OF GUEST A-02 Accommodated guest Orders to departments Invoice issued to guest Invoice forwarded to Financ. Dept. HANDLING OF GUEST A-04 Fulfillment of guest's request CHARGEING AND GREETING OF GUEST A-05 Fulfillment of requests FINAL ACTIVITIES A-06 Reports

New process cycle A-0. 1 Analysis of guest' s request A-0. 2 Reception of guest A-0. 3 Accommodation of guest A-0. 4 Handling of guest A-0. 5 Charging of services and greeting of guest A-0. 6 Final activities 3. 6. Description of process steps must specify input, output, mechanisms, rules and controls of each process step, as well as locate structural hotel unit in which certain process step develops. Also, written procedure is named, if any of process steps should be additionally documented. 3. 7. Presentation of dynamic model of the process is plan of implementation of developed business process into functional structure of organization of the hotel.

The plan shows in which structural hotel unit develop activities of each process step, and which unit of organization is responsible for their execution. Making of presentation of dynamic model business process is a precondition of the process organisation itself. 760 Creating Customer Value in Tourism and Hospitality Industry, pp. 752-763 M. Drljaca: METHODOLOGY OF BUSINESS PROCESS DEVELOPMENT IN A HOTEL Figure 6. Dynamic model of process of reception and accommodation of guests Partners Financial Division Human Resources Div. Accommodation D. Reception Accommodation Divis. Food & bever. Division Commercial Division Controlling Quality Manager Process steps General Manager Structural units Analysis of guest's request A-01 Reception of guest A-02 Accommodation of guest A-03

Handling of guest A-04 Charging of services and greeting of guest A-05 Final activities A -06 3. 8. Establishing of responsibility for the process is logical continuation of work on business process development. It implies exact establishment of responsibility of concrete executor of individual process step. After establishment of responsibility, the conditions for establishment of management team for concrete process are prepared. Management team is headed by manager of business process. In this way we model process organisation, based on team work. 12 3. 9. Plan of measuring within the process is based on description of business process, i. . defined limits of allowed deviations, up to which business process still shows reliability as one of its crucial characteristics. The plan of measuring defines names of control points where certain measurements will be performed. It also defines target value, allowed deviations and measuring method. By all these measurements, comparisons with target values, and possible application of corrective measures and activities – we manage the business process. 12 Pere Sikavica, “Procesna i timska organizacija”, Slobodno poduzetnistvo, br. 18/98, Zagreb, 1998, p. 108116. 761 Creating Customer Value in Tourism and Hospitality Industry, pp. 752-763 M.

Drljaca: METHODOLOGY OF BUSINESS PROCESS DEVELOPMENT IN A HOTEL 3. 10. Plan of providing information within process is necessary in order to clearly define: which participant of business process provides the information, who receives it, what is its contens, and when is the information sent and received. 3. 11. Making of further process documentation implies writing of procedures for particular process step which definitely needs it, and writing of lower level documents, like work instructions, check lists, plans of corrective measures and activities, etc. CONCLUSION In the audit of quality of hotel management system it is necessary to document and prove the request for business process management.

Since this is the requirement of ISO 9001:2000 international norm, and only four representatives of hotel industry in Croatia have certificates related to this international norm, it is justified to ask: which methods were used in hotels to name, describe and organise structural units of business processes, and how were these business processes controlled, managed and constantly improved. In the economy branches, which are the core of tourist industry, the most successful companies, except for food-and-beverages industry, do not have certificates. There is a limited number of companies which possess international certificates, amongst which are: retail trading, hotel industry, road transport and manufacture of furniture. Therefore, repeatedly, the question is put: can we create development strategy for Croatian tourism without developed strategy of these economy branches that realise part of revenue resulting from tourists' expenses. There are no ready universal solutions.

Imitating of another company's solutions or adoptions of lesser adjustments of these solutions as their own optimum solutions are – delusions, and in practice will be causing entropy. Every business process is different. It can even have the same name, same number and same names of process steps, same inputs and outputs, but still there are no identical business processes. Differences and originalities are happening in the interaction of inputs and outputs, rules, and controls, as well as mechanisms in each process step - in the area of transformation of inputs into outputs. In the context of quality management systems we may conclude that ISO 9001:2000 international norm does not suggest methodology of business process development, but demands the proof that business processes are being managed.

It can be concluded that every methodology of business process developing is satisfactory, if it can prove the management of processes. REFERENCES 1. 2. 3. 4. 5. Avelini Holjevac, Ivanka, Kontroling – Upravljanje poslovnim rezultatom, Sveuciliste u Rijeci, Hotelijerski fakultet Opatija, Opatija, 1998. Cerovic, Z. , Hotelski menadzment, Sveuciliste u Rijeci, Fakultet za turisticki i hotelski menadzment Opatija, Opatija, 2003. Domovic, Z. , Anic S. i N. Klaic, Rjecnik stranih rijeci, SANI-PLUS, Zagreb, 1998. Drljaca, M. , „Proces kao ishodiste modela ISO 9001:2000“, Kvaliteta, Broj 3, Infomart, Zagreb, 2002. Drljaca, M. , „Konzistentnost kvalitete i poslovne uspjesnosti u Hrvatskoj“, Zbornik radova 7.

Simpozija Hrvatskog drustva menadzera kvalitete Kvaliteta nas izbor za buducnost, Oskar, Zagreb, Sibenik, 2005. 762 Creating Customer Value in Tourism and Hospitality Industry, pp. 752-763 M. Drljaca: METHODOLOGY OF BUSINESS PROCESS DEVELOPMENT IN A HOTEL 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. HRN EN ISO 8402 Quality management and quality assurance – Vocabulary, (ISO 8402:1994; EN ISO 8402:1995), Quadrilingual version. International norm HRN EN ISO 9000:2002 Quality management systems – Fundamentals and vocabulary (ISO 9000:2000, EN ISO 9000:2000), Version quadrilingue. International norm HRN EN ISO 9001:2002 Quality management systems – Requirements (ISO 9001:2000, EN ISO 9001:2000). Injac, N. i M.

Besker, Metodologija izgradnje poslovnih procesa u sustavu kvalitete, Oskar, Zagreb, 2003. Kondic, Z. , Kvaliteta i ISO 9000, Tiva, Varazdin, 2002. Mamuzic, I. , „Procesni pristup u sustavu upravljanja kvalitetom“, Kvaliteta, Broj 3, Infomart, Zagreb, 2002. Monnich C. H. , Jr. , ISO 9001:2000 for Small and Medium Sized Businesses, American Society for Quality, Milwaukee, Wisconsin, USA, 2001. Ould A. M. , Business Processes, John Wiley & Sons Ltd, Chichester, England, UK, 1995. Sikavica, P. , “Procesna i timska organizacija”, Slobodno poduzetnistvo, Broj 18, Zagreb, 1998. Vulic, N. , Sustavi upravljanja kvalitetom, Veleuciliste u Splitu, Split, 2001. 763

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