Show Me the Money! Budgeting and Forecasting Revenues

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  • Lesson Identification and TEKS Addressed

    Cluster : Hospitality and Tourism

    Course : Hotel Management

  • TEKS Student Expectations

    • (1) The student gains academic knowledge and skills required to pursue the full range of career and postsecondary education opportunities within the hotel industry. The student is expected to:
      • (C) calculate correctly using numerical concepts such as percentages and reasonable estimation in practical situations
    • (2) The student uses verbal and nonverbal communication skills to create, express, and interpret information for providing a positive experience for guests and employees. The student is expected to:
      • (G) follow directions and procedures independently
    • (3) The student solves problems using critical thinking, innovation, and creativity independently and in teams. The student is expected to:
      • (C) use principles of budgeting and forecasting to maximize profit and growth
    • (12) The student understands the knowledge and skills required for careers in the hotel management industry. The student is expected to:
      • (A) develop job-specific technical vocabulary
  • Basic Direct Teach Lesson

    Instructional Objectives

    Students will:

    • understand the revenue management concept
    • describe the responsibilities of the revenue manager
    • know how to use principles of budgeting and forecasting to maximixe profit
    • understand the factors that influence revenue management
    • calculate various numerical concepts to better understand forecasting and revenue management
  • Rationale

    Script:

    Today’s world is very competitive and most hotels have to manage their business very closely in order to make it a success. Part of that management is predicting the revenue and costs for the hotel. Today we will examine the importance of maximizing profit by forecasting and managing revenue. We will prepare a simple revenue forecast for an imaginary hotel.

  • Duration of Lesson

    Three 45 minutes lessons

  • Word Wall

    ADR or Average Daily Rate: The average of all the room rates together that have been sold for one night

    Budget: A guideline for spending money

    Demand: The total amount of a good or service consumers want to purchase at a given price

    Forecasting: Predicting the number of guests who will stay at the hotel

    LOS or Length of Stay: The number of nights an individual uses their room

    Supply: The total amount of goods or services available for sale. For example, the number of rooms a hotel has available

    Occupancy rate: A ratio of guest rooms sold to guest rooms available. For example, an occupancy rate of 60% means that 60% of the hotel’s available rooms have been sold for the time period

  • Materials/Specialized Equipment Needed

    Equipment:

    • computer with projector for PowerPoint™ presentation
    • computers with Internet access (Be sure to follow district guidelines for internet access)
    • light projector (Elmo)
    • presenter remote

    Materials:

    • calculators
    • play money
    • samples of hotel: (if availble)
      • budgets
      • forecasts for number of guests
      • profit and loss statements
      • staff work schedules

    —-

    • copies of handouts (see All Lesson Attachments tab)

  • Anticipatory Set

    Before class begins:

    Display as many materials as you have available in the front of the classroom so that students see them as they enter (see Materials or Specialized Equipment Needed tab).
    —-
    Begin the lesson by asking students the following questions:

    Imagine yourself opening a 100 room hotel.

    • How would you know how many employees to hire?
    • How would you know how much food to order if there was a restaurant included?
    • Would you know how much promotion and advertising you can afford?
    • How many rooms will you be able to fill each night?

    Today we will examine the importance of maximizing profit by forecasting and managing revenue.

    Distribute the graphic organizer KWL – Show Me the Money!, (see All Lesson Attachments tab) and have students fill out the first two boxes of the chart. Ask students to write down what they already know about housekeeping and leadership from their personal experiences. The last box will be completed during lesson closure.

  • Direct Instruction with Special Education Modifications/Accommodations

    Review lesson objectives, terms, and definitions.

    Distribute Show Me the Money! Notes (see All Lesson Attachments tab). Students will be expected to take notes during the slide presentation.

    Introduce the PowerPoint™ Show Me the Money! Budgeting and Forecasting Revenues (see All Lesson Attachments tab) and begin discussion with students.

    Budgeting is an important key to hotel businesses to keep expenses at a minimum, plan for emergencies, and hopefully make a profit. By forecasting the number of guests at their hotels, they can plan accordingly.

    Announce to students that there will be a quiz at the end of the lesson.

    Individualized Education Plan (IEP) for all special education students must be followed. Examples of accommodations may include, but are not limited to:

    • highlight materials for emphasis
    • provide students with vocabulary list with definitions prior to lesson
    • work with a peer tutor
    • use study guides
    • provide printed PowerPoint™ Show Me the Money! Presentation Notes (see All Lesson Attachments tab) for assistance with note-taking

  • Guided Practice with Special Education Modifications/Accommodations

    Distribute handout Quarter Revenue Forecast (see All Lesson Attachments tab).

    Using a light projector, explain how to forecast revenue for the Stratton Hotel. Use the handout Quarter Revenue Forecast Instructions (see All Lesson Attachments tab) to explain how to figure the calculations.

    Individualized Education Plan (IEP) for all special education students must be followed. Examples of accommodations may include, but are not limited to:

    • check for understanding
    • extended time for assignment
    • work with a peer tutor

  • Independent Practice/Laboratory Experience with Special Education Modifications/Accommodations

    Distribute Room Revenue Daily Forecast handout (see All Lesson Attachments tab). Students will work independently to complete the worksheet and answer the questions.

    Individualized Education Plan (IEP) for all special education students must be followed. Examples of accommodations may include, but are not limited to:

    • reduce assignment
    • extended time for assignment
    • work with a peer tutor

  • Lesson Closure

    Review lesson objectives, terms and definitions.

    Students complete the last column on their KWL – Show Me the Money organizer (see All Lesson Attachments tab). Review answers with your students.

    Remind students of the quiz at the end of the lesson.

  • Summative/End of Lesson Assessment with Special Education Modifications/Accommodations

    Student worksheets will be assessed with the Room Revenue Daily Forecast (Key) (see All Lesson Attachments tab).
    Administer and assess Show Me the Money! Quiz (see All Lesson Attachments tab).

    Individualized Education Plan (IEP) for all special education students must be followed. Examples of accommodations may include, but are not limited to:

    • reduce assignment
    • extended time for assignment
    • work with a peer tutor

  • References/Resources

    Textbooks:

    • Reynolds, J. S. (2010). Hospitality services: Food & lodging. Tinley Park, IL: Goodheart-Willcox Company.
    • Hayes, D. K. and Ninemeier, J. D. (2007). Hotel Operations Management, Second Edition. Upper Saddle River, New Jersey: Pearson Education, Inc.
  • Additional Required Components

    English Language Proficiency Standards (ELPS) Strategies

    • use “word wall” for vocabulary words
    • work with a peer tutor
    • peer to read materials
    • highlighted materials for emphasis
    • shortened simplified instructions
  • College and Career Readiness Connection

    AchieveTexas Career Cluster Crosswalks

    The Career Cluster Crosswalks housed on the AchieveTexas website http://www.achievetexas.org/index.html provide Texas teachers with a direct connection between their CTE course TEKS and the College and Career Readiness Standards (CCRS). Language Arts, Mathematics, Science, Social Studies, and Cross-Disciplinary integration are the focus of the CCRS. These college and career readiness standards are essential in the planning and delivery of CTE lessons. The extent to which the integration occurs is determined by the methods and strategies utilized by each teacher.

    Career Cluster Crosswalks for Education and Training, Hospitality and Tourism, and Human Services Career Clusters can be found at:
    http://www.achievetexas.org/Career%20Cluster%20Crosswalks.htm

  • Recommended Strategies

    Reading Strategies

    Encourage students to read more about forecasting, budgeting, and managing revenue and costs.

    • Hotel Business Trade Magazine
      Allow students to research and identify examples of various technology. Use the pre-reading strategy prediction.
      http://subscribe.hotelbusiness.com (free subscription)
    • Hotel Business
      The vertical portal bringing you late breaking news and analysis in a real time format – personalized by you to guarantee you get only the news and information you want when you want it.
      http://hotelbusiness.com/hb/main.asp

    Encourage students to connect reading and their life experiences or prior knowledge.

  • Quotes

    I never dreamed about success. I worked for it.
    -Estee Lauder

    Success is neither magical nor mysterious. Success is the natural consequence of consistently applying the basic fundamentals.
    -Jim Rohn

    There is no such thing as high returns without risk.
    -Gerry Schwartz

    It is better to aim at perfection and miss it than to aim at imperfection and hit it.
    -Thomas Watson

  • Multimedia/Visual Strategies

    PowerPoint™:

    • Show Me the Money! Budgeting and Forecasting Revenues
    • Presentation Notes – Show Me the Money! Budgeting and Forecasting Revenues

    Technology:

    • TEDed Talk:
      • The Infinite Hotel Paradox – Jeff Dekofsky
        The Infinite Hotel, a thought experiment created by German mathematician David Hilbert, is a hotel with an infinite number of rooms. Easy to comprehend, right? Wrong. What if it’s completely booked but one person wants to check in? What about 40? Or an infinitely full bus of people? Jeff Dekofsky solves these heady lodging issues using Hilbert’s paradox.
        http://ed.ted.com/lessons/the-infinite-hotel-paradox-jeff-dekofsky

    Files for downloading:

  • Graphic Organizers/Handout

    Graphic Organizers:

    • KWL Chart – Show Me the Money!
    • Show Me the Money! Notes
    • Show Me the Money! Notes (Key)

    Handouts:

    • Quarter Revenue Forecast
    • Quarter Revenue Forecast (Key)
    • Quarter Revenue Forecast Instructions
    • Room Revenue Forecast
    • Room Revenue Forecast (Key)
    • Show Me the Money! Quiz
    • Show Me the Money! Quiz (Key)
  • Writing Strategies

    Journal Entries:

    • When someone says “revenue” I immediately think …
    • The 5 best ways to increase occupancy rate would be …
    • I like (or dislike) working with numbers because …

    Writing Strategy:

    RAFT (Role/Audience/Format/Topic) writing strategy:

    • Role: student
    • Audience: revenue manager or general manager in a local hotel
    • Format: letter asking the revenue manager about their responsibilities in the hotel, how difficult it is to increase the ADR, and how they manage to increase the ADR
    • Topic: career investigation

  • Communication 90 Second Speech Topics

    • I think being a revenue manager is exciting because …
    • I think budgets are important because …
    • Items that should be included on a budget are …
  • Other Essential Lesson Components

    Enrichment activity

    Allow student to make a six month budget for themselves. They will have to forecast how much money they will need for:

    • cell phone
    • clothing
    • emergencies
    • entertainment
    • necessities
    • prom

    Then students should list their revenue for six months from part-time employment, gifts, and allowances.

    Ask students if they had enough money to cover their expenses. If they did not, how did they plan to cover their costs?

    TED Talk:

    TED-Ed’s commitment to creating lessons worth sharing is an extension of TED’s mission of spreading great ideas. This allows users to take any useful educational video, not just TED’s, and easily create a customized lesson around the video.

    The video below is related to this lesson. Allow students to view the video and lead a discussion concerning the TED Talk.

    • The Infinite Hotel Paradox – Jeff Dekofsky
      The Infinite Hotel, a thought experiment created by German mathematician David Hilbert, is a hotel with an infinite number of rooms. Easy to comprehend, right? Wrong. What if it’s completely booked but one person wants to check in? What about 40? Or an infinitely full bus of people? Jeff Dekofsky solves these heady lodging issues using Hilbert’s paradox.
      http://ed.ted.com/lessons/the-infinite-hotel-paradox-jeff-dekofsky
  • Family/Community Connection

    Ask a revenue manager or general manager from a local hotel to speak to the class on how they manage the revenue for their hotel.
    Arrange a field trip to a local hotel and ask for a demonstration of their revenue management software.

  • CTSO connection

    Family, Career, Community Leaders of America (FCCLA)

    http://www.texasfccla.org

    • Star Event:
      • Hospitality, Tourism and Recreation is an individual or team event that recognizes participants who demonstrate their knowledge of the hospitality, tourism, and recreation industries and ability to translate their knowledge into a hypothetical or real business.

    This lesson is preparation for the Hospitality Leadership Enhancement Opportunity (LEO) test.

  • Service Learning Projects

    True service learning is developed with student voice about concerns and needs. As the students are learning and researching this topic, ask them to think about ways they can maximize their learning to benefit others.
    Ask students how they will use what they have learned about revenue management, forecasting and budgeting.
    Use the LEADERS Model from http://www.servicelearning.org. Brainstorm with your students for a service project pertaining to this lesson.

    Example:
    Students can research best practices for personal budgeting and put together a seminar for other students on how to live on a small budget.

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