Wang sifei
c05482
Establish & Conduct
Business
Relationships
Practical
Assessment
THHGCS08B
Wang sifei
c05482
Part 1
This report is a business plan for next year. It will show the
possible reasons why the rooms division id experiencing these
problems and put forward new strategies and procedures to
combat and reverse the present trends. I will develop the report
based on the following five headings:
1. High staff turnover
High staff turnover in an organization can occur for a variety of
reasons. Typically, high staff turnover gives off the perception
that employees must not be happy working at the rooms division
department, as they must be having difficulty retaining them.
That may or may not be the case.
Below is a more comprehensive list of reasons why high turnover
in the rooms division of the hotel, is high.
1) The pay rate is not competitive
Money talks, and if it does not, people may walk! Sometimes
people may need to take a job just to have a job. Because our
hotel last years did not achieve the budget, the payment has not
been increase, and pay rate is not competitive. It is probably
Wang sifei
c05482
attracting people who are in a pinch, and really need a job. Once
those people get more experience and more financially stable,
they are likely to move on as quickly as they can, if it involves
higher pay.
2) The morale is low
If the morale of the team is staying low, the team could be sharing
a down side of team environment. People could lack of passion to
work and they do not want to communicate with each other,
which lead to a worse situation of any potential problems.
These miserable people do not joke with their team members. If
an team crews are low morale, it is expecting that the staff
turnover is going high until such kind of problems are fixed. So
it is very hard to do a good job when a team is keeping come with
fresh member.
Our staff keeps coming and leaving that makes a terrible human
resource condition. When we lost a senior or long-term employee,
we have to take long time and cost to train a new staff so that we
can not provide the best service to our customers. The way to
improve these conditions, we need to do the following points:
1) Hiring Right
Wang sifei
c05482
The first step to reducing high turnover is to try and hire the
right people to start with. The following steps are essential:
 Interview thoroughly – ideally with two interviewers（When
interviewing, make sure to test the candidates' willingness to
do the job that is required）
 Take up references – this is often omitted in high turnover
industries
 Check the validity of qualifications, if they are relevant
2) Recognition of performance
More than a round of applause or a pat on the back,
compensation in terms of bonuses, rewards, peer recognition
etc. is necessary as a recognition strategy. Innovative
performance based perks such as an insurance cover and time
off are good ones too.
3) Conduct employee surveys
Give out questionnaires to the staffs filling in, measuring what
they feel about working with the hotel. They will bring up
issues that need immediate attention. Be prepared to address
them so that things don’t go out of hand.
Wang sifei
c05482
4) Make working fun
Form social groups within the organization, wherein your
staff can mingle. Arrange outings, or make a newsletter that
carries information about and for the employees that is
important to them. Find out if any of the staff members is
volunteering for a socially responsible group. If yes, plan a
donation for it, or at least make a recognition of his
contribution to society by patting him on the back.
2. Low levels of repeat business
The most important reason of low levels of repeat business in
our hotel is the high staff turnover. The high staff turnover
may cause the staff haven’t enough training before they
service the customer. They may make the customer not happy
to consume at our hotel.
Here are two statistics that will reinforce your concerns in
keeping your customers.
 It costs anywhere from 5 to 8 times more to gain a new
customer as opposed to retaining your customers. When
you consider the cost of sales people, advertising, Internet
marketing, etc. to attract new customers this becomes
obvious.
Wang sifei
c05482
 68% of customers will stop using your services or fail to
return if they feel unappreciated. This is the number one
reason businesses lose customers.
Based upon these two statistics, it is obvious your business
needs to place as strong an emphasis on keeping existing
customers as it does on gaining new ones.
As we know when we creating a strategic plan to generate
repeat business, it is crucial to focus on customer happiness.
Provide our customers with exceptional support and service,
yes, but also offer them new products to purchase. These new
items can be different but connected to their initial purchase,
in keeping with our hotel continuity. New products, innovative
offers, and inventive presentations all stimulate sales and keep
customers coming back. Customer trust is also important to
repeat business.
The following five points to get repeat business:
1) Keep in touch
Some customers of our hotel are seasonal, always stay in touch.
Never assume they will continue to do business with us or call
us when they need our services. They can always go elsewhere.
2) Continue to understand your customers’ needs
Our services must stay up to date with what customers expect
Wang sifei
c05482
from us. It is not enough to assume that our current level of
service and results is enough to keep customers satisfied.
The only way to understand our customers’ needs is to keep in
touch and ask for feedback.
3) Appreciate our customers
You can never thank someone enough if it is sincere. A "thank
you" can go a long way. Tell someone by in person, on the
phone, or by mail, "Thank you for your business. I appreciate
the opportunity to have you as my customer."
4) Stay competitive
The best hotel in the world can still lose its customers if it does
not stay competitive in the market place. We would better to
make sure our services are the best value of the money. We do
not necessarily have to lower our prices when our competitors
do, but make sure our customers know that we are worth the
extra money.
3. Inability to establish business relationship for increase in room
sales
The marketing department is frustrated because they do not
seem to be able to achieve the budgeted occupancy levels and
the room rates are very heavily discounted. One of the reasons
is the staffs in our hotel may not service property with
Wang sifei
c05482
customers. And also some old staff can steal our customers to
their new company. The high staff turnover can make the
customer do not trust us. Such as, one of our staffs always
touches with a customer, and follow his case. Once the staff
leaves our hotel, we need to use another one to instead of him.
This new one do not know the customer’s personal taste. It can
be make the customer unhappy. If the new one also leave our
hotel in a short time, the customer won’t be trust us any more.
This situation will make we lose many business relationships,
and it’s bad for increase in room sales. The low level of repeat
business will make the room sales not good too.
To establish long term relationships in business, we need to do
points:
1) When you make promises, always keep them - Businesses
which haven't yet made their mark in their industry can't
afford to make suppliers wait for the money nor can they
make customers wait for the products. The key is to not
allow such situations to occur and affect your business,
therefore "Make promises and keep them". This will build
trust among partners and customers, ensuring long term
relationships with everyone involved.
2) Hard work has always been necessary, but if you're really
Wang sifei
c05482
looking for an edge to get ahead, "work smarter, not
harder".
4. Increased marketing costs
To develop market of our hotel, we need to training, hire staffs,
also the high payment for short-term staff. It makes the
principal of our hotel increase. It makes the profit of our hotel
decreased. The only way for us to earn more money is to sale
more rooms.
Management has to source the supplier who delivers the brand
and range of products, also a regular basis and at the most
economical price to the business. If the business has a good
working relationship with the verge suppliers, they will benefit
from supplier information related to special offers, bulk
purchasing promotions, possible price increases, new line
coming on to the market and tasting, changes to delivery rimes
and dates, up and coming events associated with any
particular product or manufacturer.
Establishing
conducting
business
relationships
with
emergency services is vital in the hospitality industry because
of the need for a continual access to services and information
related to operating within published legislation and
guidelines. Generally, good business relationships with
Wang sifei
c05482
services such as the fire department will most likely result in
them being of more assistance and help to the business,
possibly providing free training opportunities.
5. Low average net achieved room rates(ARR)
If we want to prove the average net achieved room rates, the
first we can do is to control the cost. We can conduct
negotiation
with
overseas
or domestic
travel
agents,
wholesalers and inbound operators. All of them will be valued
recourse of room allocations / allotment. Room allocations are
given to any of the above as part of establishing a long-term
business relationship with one or more overseas or domestic
agents/wholesalers. Suppose one these organizations ask for
ten rooms to be allocated to them for a whole year, we have less
room for free-sale in the whole year which means we can
ensure our revenue from the room rates. The more room
allocations/allotment we get, the more aptotic profit we can
achieved.
First of all, we can reduce the cost in our day-to-day business
that means we pay fewer expenses and achieved more profit
from the room revenue. Furthermore, the cost of marketing
department should be reduced as well. After all, we should
save money wherever we can to control the basic cost.
Wang sifei
c05482
Part 2
The following points of view are my opinions and suggestions in
preparation for business negotiations and appropriate business
contracts.
1. Why with whom we would conduct negotiations in a
business－like and professional manner
Professional managers who can successfully negotiate their
way to the top of their profession have similar traits and
negotiation styles. They commonly conduct negotiations in a
business like and professional manner, by gathering and
recording all relevant facts about the negotiations before hand
and being totally prepared for the negotiation.
The negotiation common in the hospitality industry related to
dealings about service contracts. These involve negotiations
with private contractors and service providers for various
services required by the business. An example of a service
Wang sifei
c05482
contract that management would negotiate is the supply and
laundering of guestroom and restaurant linen (contract linen).
This situation is common to the city environment where the
manager may secure quotes from three separate service
providers. In a remote situation the circumstances would be
different because of a lack of providers therefore making the
negotiation process more difficult.
In the hospitality in dusty rate agreements are usually
negotiated with domestic and oversea travel agents, regular
corporate clients, meetings, incentive, conference and
exhibition organizers, special event organizers, coach tour
companies, wedding organizers and others. Each party would
likely have different room rate requirements with inclusions,
exclusions and various rate packages.
The global markets within the hospitality industry dictate that
hospitality and tourism businesses have an overseas presence.
By appointing an overseas representative the business can
benefit in more ways than one for example, the following
benefit
could
be
achieved
if
an
effective
overseas
representative agrees to the terms and conditions that he/she
is offered by the Australian based business.
 Lower cost if overseas travel - by appointing an overseas
Wang sifei
c05482
representative. The cost of visiting travel agents overseas
is greatly reduced by having someone in the country or in
relatively close proximity to the country in question,
where the targeted agents are.
 The overseas representative usually speaks the language
which eliminates any language barriers that may exist.
 The agreement/ contract is usually negotiated in
Australian dollars, which enables management to budget
costs more effectively and not having to worry about the
possibility of currency rate rises.
 The overseas representative will have established contacts
and by living in the country in question will have a more
accurate assessment of that country’s economic climate
and disposable income analysis.
 The representative will not be charging for as many hotel
bills since that person lives in relatively close proximity
and may be able to commute to many of the
appointments.
All of the above benefits have to be considered when
negotiating with an overseas marketing company/ person/
representative.
When management are planning for the annual or ad hoc
Wang sifei
c05482
negotiations with overseas or domestic travel agents,
wholesalers and inbound operators, one of the issues that will
need careful negotiation is room allocations/allotments. Room
allocations are given to any of the above as part of establishing
a long-term business relationship with one or more overseas
or domestic agents/wholesalers.
2. The need to source specialist advice in the development of
contracts where appropriate.
A written contract should contain the entire agreement
between the parties. All contract amendments must be put in
writing and resigned by all parties. Failure to include a term
in writing will result in that provision being unenforceable.
The specialist can help us to review all contracts carefully
before signing them to ensure they are complete.
The specialist can help us in understanding the meaning of the
contract terms. When contract terms are unclear and a
dispute results, their meaning may be determined by
reference to trade usage. The application of trade usage may
or may no result in terms the parties intend when they entered
the contract. It is best to use clear language. If the contracts
contain a cancellation, attrition or no-cause cancellation
clause, be sure the wording is intelligible so as to achieve your
Wang sifei
c05482
objective. If the contract is unclear, the provisions may not be
enforceable.
The specialist also can help you to collect damages for breach
of contract what you must mitigate its loss. Failing to attempt
to reduce the loss may negate the right to obtain damages for a
breach. Whenever someone breaches a contract with you, you
have the responsibility to avoid or reduce the loss.
A specialist can help you to develop a legal contract. Contracts
that are illegal are unenforceable. Suppose you enter an illegal
contract, you will not be able to sue for damages or enforce the
contract. Assume your business generates toxic wastes. The
law requires specific procedures be allowed for their disposal.
To save money, you contract with a company to dispose of
those wastes illegally. You pay the company but it fails to
discard the wastes. You will not be to regain you money
because you were a party to an illegal contract.
That is very important to source specialist advice into the
development of contracts. If you enter an illegal contract,
damages will occur on you business.
The specialist also can make sure the contract clearly states
the correct details agreed on. Furthermore he knows the
changes in law, so he can give you some information about it.
Wang sifei
c05482
To recover damages for breach of contract, the specialist can
help you prove the amount of the loss to reasonable certainty.
Maintaining good records of such matters as sales figures,
occupancy rates and cost of supplies can enhance your
chances of proving a loss.
3. The possible advantages and disadvantages of entering into a
business relationship on a formal or informal basis.
In the hospitality industry much of the day – to – day
purchasing and payments for products and services are
committed to on an informal basis. However, in certain
circumstances managers and owners may require to formalize
particular business agreements that they make by signing a
formal agreement or contract. For example, credit payment
terms and conditions with suppliers or customers, pr loan
agreements with a bank or other financial institution. The
biggest difference between formal and informal business
agreement is which one has force adeffect. Thus a formal one
can be easily controlled in the case of coming across risks. It
reduces the damage implementation and the risk in evaluation.
Each clause in the agreement is the final decision which has
more persuasion for two parties who will fulfill the contract. It
Wang sifei
c05482
reduces the damage implementation and the risk in evaluation.
Moreover, a formal document of an agreement can obligate
businesses.
It
leads
the
efficient
and
efficiency
on
parliamentary procedures. To judge the process, a formal
contract is more likely to consider whether the meeting is
flowing smoothly. Also the discussion could keep to the point
and the leadership could determine the outcome of the
discussion.
However, the conflict on making a formal business agreement
is also an essential problem to be considered. To judge the end
decision results, a formal one decision-making process is often
time-consuming and difficult. Instead, an informal agreement
through discussion and allowance in negotiation would be
executed not as narrow as the formal one. Result from the
differences in culture, the formal agreement as a term of
document could not make a clear sense to every participators.
Therefore, although the informal one has a weak law effect
and high risk, it is effective on progress of negotiation.
4. The legal issues that affect negotiations and contracts in the
relevant industry sector.
A contract is a legally binding agreement between two or
more parties that is enforceable in court. A contract can be in
Wang sifei
c05482
writing and signed or ti can be oral. It can even be implied,
which means it can come into existence without a word ever
being written or spoken.
Regardless whether the contract is written, oral or implied,
certain essential elements must exist for the contract to be
valid, meaning enforceable in court. These elements are:
contractual capacity,
mutuality, legality, consideration,
proper form, genuine assent.
For a valid, the parties must have legal capacity to contract.
This means that all parties have the ability to understand the
terms of the contract and appreciate that failure to perform
its terms can lead to legal liability, including a lawsuit.
According to law, the following groups of people lack
contractual capacity:
 Minors – people under the age of 18
 Very intoxicated – too drunk to know what is occurring
 Mentally incompetent – not aware of his/her actions
Mutuality means all parties to the contract are interested in
the terms and intend to enter an agreement to which they will
be legally bound. Mutuality is sometimes called a meeting of
minds. Mutuality is established by, one party making an offer
and the other party accepting that offer. An offer is a proposal
Wang sifei
c05482
to do or give something of value in exchange for something
else.
The term of an offer must be definite. If the terms are vague a
contract may not result, either because the lack of clarity
results in a lack of commitment to enter an contract or
because the term are too indefinite to oblige the parties to do
anything sufficiently significant.
To be enforceable, a contract must have a legal objective. If
what the parties obligate themselves to do is legal, the contract
is not just voidable but rather void. A void contract is one that
is unenforceable in a court of law.
For an agreement to be binding and enforceable in court there
must be consideration. The word consideration as used in the
legal sense，means something quite different from the
definition of consideration in normal parlance. In connection
with contracts, consideration means something of value
exchanged for something else of value. With a contract, each
person gives something and each person receives something.
That which is received is the consideration, which can take
three forms:
 A tangible item or a primise to give such an item (such as
food, accommodation or money)
Wang sifei
c05482
 Performance or a promise to perform (such as cleaning a
swimming pool, working as a front – desk clerk or waiting
on tables)
 Forbearance – agreeing to refrain from doing semething
you have a legal right to do, or a promise to forbear.
Proper form is an enforceable oral contract. The general rule
is yes, oral contracts are enforceable, however they are
difficult to prove. A good practice is to put al contracts in
writing and thereby avoid he proof problem. But an oral
contract is enforceable if it can be proven.
Another requirement for a valid contract is genuine assent,
means that the parties must genuinely agree to the contract
terms. A person who enters a contract due to fraud or
innocent misrepresentation can avoid the contract. Fraud is
an intentionally untruthful statement made for the purpose of
misleading someone.
5. Contracts as appropriate to different suppliers and industry
sectors.
All hospitality businesses are reliant on their food and
beverage suppliers and the relationship between them is very
important. Businesses generate revenues from customers by
satisfying their needs and expectations and more importantly
Wang sifei
c05482
these revenues result in a profit for the business.
The food and beverage products purchased by a business vary
in quality, price and availability and the supplier controls all
three criteria. To establish a good working relationship with a
supplier of food and beverage, management first has to source
the supplier. As in most industries, some items readily
available from a large variety of suppliers.
In the hospitality industry, it is easy to source dry goods
however can be more difficult to obtain high quality fresh
produce consistently.
It is a simple fact of life that virtually no one succeeds in a
modern business setting without the assistance and backing of
a wide range of other businesses that can see benefits for
themselves.
Managers and head of department negotiate with suppliers on
a regular basis, perhaps daily. For example, the executive chef
will contact the butcher, fish merchant and fruit and vegetable
supplier each day to replenish the fresh food (perishable)
stock for the next day. This is done only after they have
negotiated and confirmed availability, price, quality, quantity
and delivery of the various products that they have agreed to
purchase.
Wang sifei
c05482
The art of negotiation is critical for managers and heads of
department who wish to maintain expenses within the
operational budgets therefore eliminating the need to pass on
costs to customers and remaining competitive in the
marketplace.
In a small to medium type establishment, the purchasing
manager would possibly conduct most of the everyday
negotiations on behalf of the establishment. Perishable food
items are purchased on a daily basis, e.g. bread, milk, cream,
fruit and vegetables, due their limited shelf life and the
ever-increasing customer need for fresh produce on the
menus.
With the range of supplier would negotiation would consist of
some or all of the following terms:
 Price. It is important for management to obtain the best price
at all times to enable the operational departments to stay
within their cost budget.
 Quality. All restaurants, hotels and resorts require quality
products for their customers because their better the quality,
the happier the customer. The benefits are therefore less
wastage which results in lower usable protion costs and higher
profits.
Wang sifei
c05482
 Credit terms and conditions. All businesses negotiate some
form of credit terms with their supplier. These range from 14
days to 30 days or possibly 60 days terms for payment of
accounts.
 Manager attempt to negotiate terms of credit that improve
their business cash flow because the business gives you credit
to customers and therefore needs to off-set the credit it is
giving by arranging credit terms with their suppliers. It is
interesting to note that some suppliers however not offer
credit for their products and services due to the low profit
margins that they work therefore negotiations in these cases
may be ineffective. An example of such a supplier is the ‘cash
and carry’ merchant.
 Service / delivery schedule the service aspect is a very
important negotiation point especially if the business is in a
remote location and delivery occurs infrequently. Days and
times of delivery should be negotiated wherever possible so
they fit in with the operational requirements of the business.
 Discount structure. Discount generally relates to volume and
regularity of orders. For example, if a business buys all their
coffee or toiletries from the one supplier, the volume of that
order is going to be greater resulting in a higher discount and
Wang sifei
c05482
lower net price. Normal industry discount in 10% but in some
situation negotiations on the discount rate can increase it up to
25%.
 Bulk purchasing. Some products used in the hospitality
industry are ‘bulk’ purchased. For example, toiletries,
brochures, stationary and possibly spirits and other non
perishables. In these types of negotiations, the benefits of
lower prices should be considered against the disadvantages of
investing larger amounts into stock holding.
6. Contracts agreements at risk at contract renewal time how
these arrangements can be salvaged.
Failure to perform as required by a contract constitutes
breaching of contract. If we branch the contract agreements
with the other contracting party (the non-breaching party).
We should cover the compensatory damages refer to the sum
of money necessary to cover loss incurred the contracting
party as a result of the breach. Furthermore, we have the duty
to mitigate the damage which means reduce or lessen the
damage we resulted.
If our related travel agent has had complaints from his
customers about our services at the contract renewal time, we
should salvage the contractual agreement step by step. First
Wang sifei
c05482
we should do is to solve the problem. Suppose our rooms are
over booking in cancellation of reservations constitutes breach
of contract with the agent, we should provide another hotel
which is available for their guests to stay in as soon as possible.
And we should take responsibility to pay the transportations
fee or provide a free dinner the customers. In that way we
mitigate the damage that the agent has suffered. If the
customer’s complaints cause some damage for the agent, we
should take the responsibility to solve it. If the case is not an
individual but rather a tour operator, it may suffer
cancellations and loss of future business as a result of a hotel
not honoring reservations. The tour operator may suffer
substantial damages from loss of goodwill. Goodwill is a
favorable reputation producing an expectation of future
business. In this case, we should promise to provide
guaranteed reservation in the future. I think that will salvage
the contract and make it renewed.