MANAGEMENT IN THE HOSPITALITY
INDUSTRY
LESSON 4
Presented by: Janine Torres-Roxas
Overview
Management is a relatively new field, especially in North
America, where people, particularly management students,
are often very focused on it. However, it's important to
remember that management is still evolving and moving
toward maturity. As a student, it's wise to question any
"eternal truths" or unchanging principles about the field. A
great way to understand management as a developing
concept is to look at its brief history. In this chapter, we
explore how management practices have significantly
impacted the hospitality industry, focusing on the
organizations that led the way in applying modern
management.
MANAGEMENT AND SUPERVISION
Students interested in hospitality management should understand both the profession and the roles of supervisors and managers.
1. Supervision vs. Management:
⚬ Supervision comes from Latin meaning "to oversee." It mainly involves direction and leadership functions.
⚬ Managers deal with the overall organization’s problems, often making long-term plans. They typically supervise supervisors
who, in turn, manage employees.
2.Supervisor’s Role:
⚬ Supervisors must plan and understand senior management's plans.
⚬ Staffing is a key responsibility of supervisors.
⚬ Supervisors help with the control function by providing information and corrective action.
3.Management and Supervision Overlap:
⚬ Supervisors work directly with employees at the operating level.
⚬ In large organizations, supervisors help implement the work directed by managers.
⚬ Management and supervision are closely related, and distinguishing them is mostly theoretical.
These key points cover the basics of supervision and management in hospitality, as well as their development and applications in
various sectors.
THE ECONOMIZING SOCIETY
These key points summarize how management has emerged,
evolved, and continues to change in response to society's
shifting values and economic systems.
• Three Ways of Organizing Society (as identified by economist Robert Heilbroner):
⚬ Tradition: Based on social customs passed down through generations. Change is
feared, and it offers little guidance in the modern world.
⚬ Command: Authority-imposed control, seen in ancient empires and modern
dictatorships.
⚬ Market System: Based on individual choice and competition. It allows
consumers and workers more freedom than other systems, but has
imperfections.
• Market System and Individual Profit:
⚬ The market system encourages individual profit as a core of civilization, which is
unique compared to traditional societies that focus on community interests.
• The Birth of Management:
⚬ Management theory developed in response to the rise of large businesses in the
19th century. It was initially used by organizations like the church and military
but became central to business organizations as society shifted to an economicdriven system.
• Management’s Evolving Role:
⚬ Management is adapting to community values, like environmental concerns,
alongside individual profit. This reflects changing societal values.
⚬ Management has already gone through several changes in its brief history and will
continue to evolve as society changes.
• Management as a Modern Institution:
⚬ Management is a new way of solving work-related problems in a growing and
wealthier society. It has become one of the strongest forces in the development of
civilization in the last 100 years.
• Constant Change:
⚬ The field of management continues to evolve, so those entering management
careers must prepare for ongoing changes in how management is practiced.
• Influence of Early Management Theorists:
⚬ Early theorists contributed powerful ideas that helped shape the field of
management, which continues to develop as society itself changes.
THE MANAGERIAL REVOLUTION
In traditional and command economies,
management didn't face many problems
because people simply did what they were told,
often following in their parents' footsteps.
Motivation wasn't an issue, as not following
orders could lead to starvation. Even in early
modern times, when democracy was still
developing, workers accepted low wages,
knowing there were always more people willing
to take their place. The key figures who laid the
foundation for modern management are
Frederick Taylor and Henri Fayol. Taylor focused
on industrial engineering and task organization,
while Fayol introduced ideas that became the
basis of organizational theory.
MANAGEMENT:
A DYNAMIC FORCE IN A
CHANGING INDUSTRY
The hospitality industry, too, has had its managerial pioneers.
Although we cannot, in the space allotted here, discuss them all,
we will offer a brief description of the work of E. M. Statler and
Vernon and Gordon Stouffer, and describe the development of
modern hospitality franchise systems as exemplified in the work of
Howard Johnson, Harland Sanders, Ray Kroc, and Kemmons
Wilson. The contribution of another conceptual pioneer, Sam
Barshop, founder of La Quinta and inventor of the limited-service
hotel, is detailed in Case History 15.1.
STATLER: THE FIRST “NATIONAL”
HOSPITALITY SYSTEM
llsworth M. Statler’s idea of creating quality
accommodations for the growing middle
class in America developed over time as he
expanded his hotel business. After working
on temporary hotels for major events, he
opened his first permanent hotel in Buffalo in
1908. His hotel offered luxury amenities, like a
room with a bath for a reasonable price,
which was a big change in an industry that
linked baths with high costs. Statler’s hotels
were efficient and affordable, and he
introduced the concept of a centralized
corporate
staff
to
ensure
consistent
standards across his hotels. He was the first
to recognize the power of the middle-class
market, creating what was likely the first
true hotel chain with common operating
standards. Statler also played an important
role in supporting hospitality education.
STOUFFER’S MODERN
MANAGEMENT TECHNIQUES
Vernon and Gordon Stouffer were sons
of the owners of a successful family
restaurant. In the early 1920s, they
attended the Wharton School of
Finance, where they studied the ideas
of Frederick Taylor and the other
management pioneers. As a result of
that experience, the Stouffers
introduced ideas that transformed the
artisan- and craft-based field of
restaurateuring into the modern
American restaurant industry. In short,
the Stouffers adapted the thinking of
Taylor and Fayol to the restaurant.
STOUFFER’S MODERN
MANAGEMENT TECHNIQUES
Vernon and Gordon Stouffer were sons
of the owners of a successful family
restaurant. In the early 1920s, they
attended the Wharton School of
Finance, where they studied the ideas
of Frederick Taylor and the other
management pioneers. As a result of
that experience, the Stouffers
introduced ideas that transformed the
artisan- and craft-based field of
restaurateuring into the modern
American restaurant industry. In short,
the Stouffers adapted the thinking of
Taylor and Fayol to the restaurant.
THE RECIPE KITCHEN: A CONTROLLED SHOP
The Stouffer brothers wanted to build a restaurant chain but realized they
couldn't rely on one person, like their mother, to oversee the kitchen. They
developed a system of standardized recipes to ensure consistency and avoid
the changes that came with hiring new chefs. They hired only women for the
kitchen because they believed women were better at following recipes. The
kitchen was managed efficiently, with a supervisor who planned, organized,
and controlled the work. This approach led to higher productivity, lower food
costs, and affordable fine dining for the middle class. The Stouffers also
introduced a modern management structure and offered benefits like paid
vacations and group insurance before they became common. Their focus on
task control, organized management, and employee well-being shaped their
successful restaurant model.
Rimberio Hotel
THE BUILDING OF
COMPLEX HOSPITALITY
SYSTEMS
RAY KROC:
MCDONALD’S
HARLAND SANDERS:
KENTUCKY FRIED
CHICKEN
KEMMONS WILSON:
HOLIDAY INNS
When discussing management, it's important to understand how systems are
organized. One key development in hospitality systems was franchising, with
Howard Johnson being the pioneer in the 1920s. He created a restaurant chain
with a standardized format to solve the problem of finding reliable, safe places for
travelers to eat. As car ownership increased, people needed a trustworthy place to
stop. Johnson didn’t have the money to expand, so he decided to franchise his
system. This allowed others to operate his restaurants while following the same
menu and standards. His success inspired other entrepreneurs, like Harland
Sanders and Ray Kroc, who developed fast food franchises. Franchising allowed
these businesses to grow by sharing knowledge, marketing power, and a
consistent operating system, creating long-lasting success even after the founders
moved on.
HARLAND SANDERS:
KENTUCKY FRIED CHICKEN
Harland Sanders ran a successful restaurant, but
when a new highway bypassed it, he needed a new
idea to attract customers. He developed a method for
frying chicken quickly under pressure, ensuring
freshness and flavor. He also created a secret recipe of
herbs and spices and used the catchy slogan "finger
lickin' good" to describe his chicken. This attracted
customers back to his restaurant, but he couldn't
expand in just one town. Instead of owning more
restaurants, he decided to franchise his business,
allowing other restaurateurs to use his system for a
royalty. Many of them became very successful,
creating a chain based on shared interests and
agreements rather than ownership.
RAY KROC: MCDONALD’S
Ray Kroc, a milkshake machine salesman, noticed that a
McDonald’s restaurant was buying many of his
machines, so he visited and was impressed by their
success. He eventually acquired the rights to expand
the McDonald’s system and bought out the McDonald
brothers. The McDonald’s system solved two problems:
it provided affordable meals for families, especially for
parents of baby boomers who needed inexpensive
options for feeding large families, and it offered a
simple, efficient way to deliver food. By limiting the
menu and using detailed procedures, McDonald's could
ensure quality and uniformity with low-cost workers.
Kroc helped grow McDonald's by focusing on product
development and creating a strong franchise
organization. McDonald's became well-known not just
for its food, but also for its advertising. Kroc built a
powerful company, with impressive headquarters and a
training school called Hamburger University to ensure
consistency and commitment across franchises.
KEMMONS WILSON: HOLIDAY
INNS
In the early 1950s, Kemmons Wilson and Wallace
Johnson applied the concept of franchising to the
lodging industry by creating Holiday Inn, a motor hotel
that met the needs of both business travelers and
families. Wilson's success in offering a reservation
system, a strong brand, and standardized services made
Holiday Inns a favorite and helped it quickly expand.
The expansion was made possible through local
investors who funded each new hotel. The success of
Holiday Inn showed how solving consumer problems
through a franchise system could benefit both the
business owner and the franchisees. The key to their
success was the voluntary nature of franchising, where
local owners used their own capital and credit, while
benefiting from a large network that provided
economies of scale in areas like research, development,
and marketing. Today, many hospitality chains use this
franchising model to expand globally.
THANK YOU!