This topic entails the planning, organizing and running of facilities. This involves some costs. Capital expenditure are the costs incurred in repairing some component of a fixed asset with an aim of increasing its economic life, while Operating expenses are costs regularly incurred in the running of an asset. Hence, the former are the costs for the fixed asset while the latter are ongoing costs used to run an asset. The purpose of the Reserve for replacement is to create a fund that would be used to cater for expenses of doing repairs and replacements where they would be needed due to wear and tear occasioned by the use of the asset. The Capital Expense Budget is used to plan on how resources or funds would be obtained and used for some repairs or improvements in the life of a fixed asset so as to sustain the productivity of the asset.
A portion of every hospitality property’s utilities consumption is fixed. This is because it entails some expenses, which must be incurred regardless of the state of the operations of the facility. They include costs of insurance and rent or rates paid to the Landlord or Authorities. Therefore, these are fixed whether the facility is economically sound or not.
|Activity||Type of expense||Reason|
|Replace carpet in a guestroom where a guest burned a large hole in it||Operating expense||A small cost that does not improve the structure’s lifetime.|
|Purchase repair kits for 5 in-room safes||Capital expense||Improves the form of the facility and lifetime|
|Purchase a new electronic locking system for the hotel’s 1,000 guest rooms||Capital expense||Expenses improves the form of the asset, enhancing its life|
|Purchase a replacement valve ($60) for the hot water system||Operating expense||Valves not part of the asset, structure|
|Purchase 200 new banquet chairs ($125 each) for the Banquets Department||Capital expenditure||Chairs are to enhance operations of the structure, for running a facility|
|Restripe the parking lot pavement ($12,000)||Capital expense||Improves the form of the main structure, asset|
|Replace our old mattresses with new Sealy “ iComfort” mattresses in our 500-room property||Operating expense||Expense on items other than the fixed asset|
|Replace the air conditioning system for our aging 100-seat restaurant||Capital expense||The fixed asset is being improved|
|Purchase a new fan ($40) for our cocktail lounges’ air filtration system||Operating expense||An expense on an item other than on the fixed asset|
Adopting the integrated pest management offers a combination of all methods to fight the pests. It promises efficiency, long-term results and cost savings. The reason is that the combining of the methods, adaptable and appropriate measures, or practices - serves to produce the desired results. By outsourcing the above services, the management is left to concentrate on the main issues and therefore ample time allowed for other important matters. It also provides operational control, as such areas are given to third parties to execute. It also provides staff flexibility, using employees only when they are required, therefore saving on the need of retaining workers even when they do not have work to do.
Deferred maintenance is attractive to the owners because it postpones expenditure of funds on repairs and improvement. It, however, is a recipe for disaster because it may lead to disastrous loss in the future, leading to huge losses due to failure to maintain. There are higher energy costs in Dallas than in Seattle. This could be that in Dallas there are more equipment that requires energy, like air conditioning equipment and cookers; unlike in Seattle, where they could be using other alternative energy sources. The POM expenses are higher in Seattle. The explanation could be that due to the old facilities that require regular repair, many employees are catered for to avoid failure of saving wastage like water and food. Facilities management therefore encompasses the maintenance of all those components required for the effective running of the property or fixed assets.