Video Case: Sales and Operations Planning at Starwood Business travel often means staying overnight in a hotel. Upon arrival, you may be greeted by a doorman or valet to assist you with your luggage. Front desk staff awaits your check-in. Behind the scenes, housekeeping, maintenance, and culinary staff prepare for your stay. Making a reservation gives the hotel notice of your plan to stay, but even before your trip is ever conceived, the hotel is staffed and ready. How? Through a process called sales and operations planning. Sales and operations planning is a process every organization performs to some degree. Called a staffing plan (or service resource plan if more detailed) in service organizations, the plan must strike the right level of customer service while maintaining workforce stability and cost control so as to achieve the organization's profit expectations. So where do companies begin? Let us take a look at Starwood Hotels and Resorts to see how it is done. Starwood operates in more than 750 locations around the globe. At the highest levels, Starwood engages in sales and operations planning on an annual basis, with adjustments made as needed each month by region and by property. Budgeted revenues and other projections come from headquarters; the regions and individual properties then break down the forecasts to meet their expected occupancies. Typically, the director of human resources determines the staffing mix needed across divisions such as food and beverage service, rooms (including housekeeping, spa, and guest services), engineering, Six Sigma (see Chapter 3, "Quality and Performance"), revenue management, and accounting. At the property level, general managers and their staff must provide input into next year's plan while implementing and monitoring activity in the current year. For most properties, payroll is close to 40 percent of budgeted revenues and represents the largest single expense the hotel incurs. It is also the most controllable expense. Many of Starwood's hotels and most resorts experience patterns of seasonality that affect demand for rooms and services. This seasonality, in turn, significantly affects the organization's staffing plan. To determine the staffing levels, the company uses a proprietary software program that models occupancy demand based on historical data. The key drivers of staffing are occupied rooms and restaurant meals, called "covers." Starwood knows on a per room and per cover basis how many staff are required to function properly. When occupancy and covers are entered into the software program, the output models a recommended staffing level for each division. This recommendation is then reviewed by division managers and adjusted as needed to be sure staffing is in line with budgeted financial plans. Job fairs to recruit nonmanagement staff are held several times a year so a qualified candidate pool of both part-time and full-time staff is ready when needed. Most hotels maintain a pool of part-time workers who can contract or expand the hours worked if required by property guest levels. Vacations for management are scheduled for the low season. Overtime will be worked as needed, but is less desirable than scheduling the appropriate level of staff in each division. A software program that forecasts occupancy based on historical data helps Starwood maintain proper staffing levels at its hotels. Managers know on a per-room, and "per- cover," basis how many hotel employees should be scheduled so that customers get good service. The program also takes into account both the complexity and positioning of the property within Starwood. For example, a 400-room city hotel that is essentially a high- rise building is not as complex as a 400-room sprawling resort with golf, spa, convention, and other services not offered by the city hotel. Positioning also is important. A five-star resort hotel's customer service expectations are much greater than a three-star airport hotel location and requires much higher ratios of staff to guests. Finally, if the hotel is a new property, historical data from similar properties is used to model staffing for the first year or two of operation. Starwood attempts to modify demand and smooth out the peaks and valleys of its demand patterns. Many of the company's hotels experience three seasons: high, mid (called "shoulder"), and low season. Starwood, like its competitors, offers special rates, family packages, and weekend specials to attract different segments of the market during slower business periods. Staff is cross-trained to work in multiple areas, such as front reception and the concierge desk, so additional staff does not have to be added across seasons. Employees may also be temporarily redeployed among Starwood's properties to help out during peak periods. For example, when occupancy is forecast to be high in one region of the country, staff from areas entering their low season will be assigned to cover the demand.