Introduction to

Operations Management
Instructor: Joycie A. Kho
Lesson 1: What is Operations Management?

Operations management is defined as the supervision of the

procedures that generate or deliver goods and services.
Decisions in operations management has a direct impact in
the size, shape, quantity, quality, price, profitability, and
speed of delivery of the output of tourism and hospitality
establishments regardless of the if it is in , the luxury end of
the market or a budget product or service.
Operations management as a function has
significantly changed due to the growing use of new
technologies throughout tourism and hospitality
industry. Total Quality Management (TQM) concept
has also been taken on board as well as the
attainment of quality standards for product and
service benchmarks such as those of the
International Organization for Standardization (ISO).
O P ER AT IO N S M A N A G E ME N T IN TO U R ISM A N D H O S PITA LIT Y IN D U S TRY

Operations management is also

“concerned with the design and
control of transformation systems
to deliver the services, including
products, of an organization at
the right quality, at the right
place and at the right time. ”
(Southern, 2000)
The term right quality in the definition above is clearly intangible,
particularly in the case of tourism and hospitality industry. Services
which are intangible serves as the primary output that the industry
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offers to its consumers. Thus, defining quality in the tourism and
hospitality industry is not that simple.

The function of operations management in the industry of tourism

and hospitality includes a wide range of activities. Majority of which
are essential to the experience of guests and customers.
 Examples of Operation Functions in Tourism and
Hospitality Industry:
1. Food production under the management of a Head Chef;
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2. The dispatch function for an airline;
3. The check-in function at an airport;
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4. Fast food restaurant production and service;
5. City bus tours organization for visitors;
6. Organization of guest transport arrangements from
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7. accommodation;
8. Guest reception and queuing at the entrance to a theme park or
9. other major attraction; and
10. Handling customer complaints at a major tourist venue.
 Major Segments in the Hospitality Industry
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A. Food and Beverage
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 Considered as the largest 3segment in the hospitality industry

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 Primarily engaged in preparing meals, snacks, and beverages for
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immediate consumption on and off the premises.
Example:
1. Restaurant
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2. Food Stands
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3. Cafeteria
B. Travel and Tourism
 Offers services that are related to moving people from place to place
 Encourage people to travel

Examples:

1. Travel Agencies
2. Tour Operators
3. Tour guide
C. Lodging

Offers accommodation for a period of time, or a place to

stay for one or more nights.
Examples:
1. Hotel
2. Hostel
3. Motel
CHARACTERISTICS OF THE TOURISM AND HOSPITALITY
INDUSTRY

• Unlike any other business industry, the tourism and

hospitality industry offer a wide variety of services and
products to its consumers. Therefore, managing its
operations is unique and complex on its own.
• The tourism and hospitality industry has the following
characteristics that significantly impacts the
management of its operations. These are:
1. Intangibility

• Most likely, the products of businesses under the tourism and hospitality
industry are services. As we all know, services are intangible products,
even though it still has tangible, concrete elements.
• Intangibility has its own disadvantage. It cannot be transmitted or tested
in advance. Aside from that, consumers will not be sure of what they are
buying or what will they get, since most of the services offered are
experiences. his is why those who are planning to contract the services of
a tourism package will look for information about it in advance in order to
reduce uncertainty to the maximum.
2. Limited Lifespan
As stated previously, majority of the products in hospitality industry are intangible,
therefore cannot be stored. Thus, unless these products are used as planned, they are
considered waste.
“This affects hotel industry in such a way that we must choose between selling at the
market’s pace and selling in advance (through agents). In fact, overbooking is a
consequence of this limited life-span, an inherent feature of tourism services that we
must try to counterbalance.” (Characteristics of the Hospitality Industry, 2018)
Overbooking happens when the number of reservationsexceeds the number of available
rooms for a certain period of time.
You might ask, why does overbooking happen? It can easily be avoided by not accepting
reservations once the rooms are full. This is because we have what we call “Guaranteed
Reservations” the reservations that is already paid in advance, and “Non -guaranteed
Reservations” which aren’t paid yet. Thus, overbooking was usually done by the hotel
cover Non- toguaranteed reservations, and that is one of the decisions an operation
manager of a hotel is tasked to do.
3. Aggregability
“A tourism product can be formed by
aggregating various products, and this makes
its commercialization and quality control more
difficult. Prices can vary by eliminating or
adding services to the existing pack, creating
new, customized, products.”(Characteristics
of the Hospitality Industry, 2018)
For example, a travel agency can offer a tour
package including various services with
different pri ces.
I l l us tr a ti o n:
B a l e r Tra v e l a n d To u rs
P a c k a ge A. Ba l er Tour pa c k a g e Ph p2 , 9 9 9 . 0 0 –
I n c l u si o n s :
Good for 2 Pax
3 D2 N A cc o mmo d a t io n ( A ir Co n d it i o n e d )
B re a k f a s t f o r Two f o r 3 Da y s
Tri ke To ur a ro u nd Ba l e r
Ro u n d t rip Tr a n s po r t a t i o n (VA N)
P a c k a ge B. Ba l er Tour pa c k a g e Ph p1 , 9 9 9 . 0 0 –
I n c l u si o n s :
Good for 2 Pax
3 D2 N A cc o mmo d a t io n ( A ir Co n d it i o n e d )
Tri ke To ur a ro u nd Ba l e r
Ro u n d t rip Tr a n s po r t a t i o n (VA N)
In the scenario, there are two (2) packages offered by the same
company. These packages are considered the products of the
company. As you can observe, the tour package is an aggregate
of services that can be availed by consumer, it is composed of
various services. Aside from that, Package A is more expensive
than Package B. This is because package A covers more
services than that of Package B.
4. Heterogeneity

“As mentioned, aggregability implies a difficulty when it is about

controlling all phases so that they are at the same level of
excellence. A single mistake in any aspect affects the final product.
Nevertheless, aggregability allows preparing custom-designed
products, no matter how standardized they are initially. In this
sense, we can talk about “heterogeneous standardization”. It is not
only the product what is being customized but a given trip will be
different from any other even if they share the same
characteristics.” (Characteristics of the Hospitality Industry, 2018)
Example:
Accommodation:
Two Hotels may have the same 2
(two) star ratings. However,
Hotel B offers greater customer
experience because it has more
competent employees than that
of Hotel A. But they do offer the
same hotel standard of being a
two (2) star hotels.
Food and Beverages:
A dish may have a standard
recipe, but a Chef may have
their own twist in making the
dish more competitive than
others.
5. Simultaneity of production and consumption

“While other products are created, stored, purchased and then

used, tourism products are purchased first and then produced and
consumed simultaneously, at the same place and time. This implies
that services cannot be separated from their providers and,
therefore, consumers have to travel to the location of the product,
not vice versa. For this reason, the human component in the
provision of services is extremely important.” (Characteristics of the
Hospitality Industry, 2018)
Unlike other tangible products, where outputs are being
produced first before consuming. Hospitality products are being
produced and consumed simultaneously.
Example:
A tour package will be produced and consumed at the same
time. Client A purchased Baler Tour Package A (i previous
illustration) on n August 12, 2020. The tour will be on
August 30, 2021. Thus, once he arrived at Baler on August
30, 2021, that will be the time wherein the services such as
accommodation and trike tour be produced and consumed
simultaneously.
E S S AY: 1 0 P O I N T S E A C H , M i n . o f 5 s e n t e n c e s

1.In your own words, define operations

management.
2.What do you think is the difference between
managing operations of a manufacturing company
versus those of a company under tourism and
hospitality industry? Explain your answer in no
less than 5 Sentences.
THANK YOU