The evolution of the world, of business, of education and the growing interest in efficient and effective administration have changed the focus of control. Subject to this, we can affirm that at present the changes in Internal Control as of the implementation of Resolution 297 of the MFP, result in a study of each of the components that make it up.
Carrying out a study of the Internal Control Risks Management: main functions and techniques, will allow identifying and assessing the Internal Control risks, and on the other hand, it will contribute to create the methodological bases to establish a design by result area or area of responsibility, which allows knowing the main risks that the entity will have to assume in order to fulfill its objectives.
Introduction
In this work a detailed study of the evaluation of hotels as a company is carried out; its emergence and what are its fundamental characteristics. In addition, a procedure or methodology that is more feasible to apply is shown, to determine the main risk factors of Internal Control in a hotel under an All-Inclusive regime, according to existing tools on an international scale.
In this work a detailed study of the evaluation of hotels as a company is carried out; its emergence and what are its fundamental characteristics. In addition, a procedure or methodology that is more feasible to apply is shown, to determine the main risk factors of Internal Control in a hotel under an All-Inclusive regime, according to existing tools on an international scale.
1 Origins of the hotel company
Once the types of risks have been identified and their classification on an international scale, it is necessary to know the origins of the company under study, to know its main characteristics and generalities.
The historical origins of the hotel industry according to the UNWTO (Noticias, 1992), are in the business of the inns, which over time give rise to hotels and restaurants. This evolution occurs logically in close relationship with the development of trade, travel and the industrial development of growth itself, in a very different way from the current one, in which costs, income and motivation are the most important factors.
From about 500 BC until about 500 AD, a process of growth of the inns is observed in Greece and Rome. During the medieval period, from 500 to about 1300, trade and travel were drastically limited and these had a special relationship with the development of the church and pilgrimages, the pilgrims being fed and sheltered in ecclesiastical establishments.
The Crusades had the effect of favoring travel and trade. The Renaissance, from roughly the 14th to the 15th century in northern Italy, England, and northern Europe, saw the resurgence of inns and taverns. The suppression of the monasteries in England by Henry VIII in 1536 further forced the growth of the inns in this country.
Prior to 1775, the most developed societies for the time were considered pre-industrial. In the period between 1775-1875, as a result of the so-called Industrial Revolution, Northwest Europe and North America became industrialized, and in the period between 1875 and 1950 consumer societies developed.
Approximately at the beginning of that decade there was a great economic growth and of the world population, and the industrial societies made possible the sustained increase of the incomes in a good part of the population of those countries, in such a way that the possibility of traveling and frequenting hotels and restaurants will increase.
The fact that people travel more has also been a determining factor in the growth of hotels and restaurants. As the cost of travel became cheaper by the introduction of new forms of transport, and its comfort increased (steamboat, railroad, automobile), travel became possible for a part of the population that did not belong to the elite. The commercial airplane, in 1959, ushered in the era of international travel. (Bull, 1994)
Given the explosive growth of the world tourism industry in the last 30 years and the globalization of business, which will continue to increase due to the proliferation of multinational companies, with staff destined to move continuously, the world hotel market grows in tandem of those activities. According to the global forecasts of the World Travel and Tourism Council (WTCT), published in one of the reports of the International Labor Organization (ILO) in 1997. The growth rates have led the World Tourism Organization, UNWTO to foresee an average increase of 1018 million international tourist arrivals in 2010, or twice that of the 1990s, reaching the figure of 1550 billion dollars.
Who says tourism, says hotels, which means that the incessant tourist activity requires a wide range of accommodation ranging from full-service hotels, guesthouses with breakfast, time-share properties, furnished apartments, to the »bed and breakfast» (bed and breakfast). and breakfast), although due to the new demands made by travelers of our time, small hotels are disappearing, as a result of large hotel chains equipped with modern technology, highly trained personnel and fast services (OMT, Noticias 1992)
1.1 The hotel company as a system: The hotel as a service company
According to the International Labor Organization (ILO), the company "is any organization of public or private property whose primary objective is to manufacture and distribute goods or provide services to the community, or a part of it, by paying for them" and system "set of elements interrelated and related to the external environment or environment". (Ramírez, 1995)
If the company is considered as a set of elements, and these are in direct or indirect relationship with the environment, then the company is a system and that is graphically exposed in the following figure taken from the book Hotels, management, security and maintenance by César Ramírez Cavassa. (1995)
According to César Ramírez in; Hotels, management, security and maintenance there are two classes or types of systems:
Closed system: It is one that does not have feedback from the environment, for example: the lighting system (switch).
Open system: It is one that exchanges relationships with the environment, for example: the company.
César Ramírez, in Administrative Management for tourism companies affirms that several followers of the Open Systems Approach school (Ferrester, Churchman, Ackoff and Heyvaert) consider that the company should be analyzed as an open system, that is, capable of exchanging energy with its environment. Just as the company is a group surrounded by an environment where it finds its production factors (capital, labor, technology and raw materials).
As a system, the choice of its structure must solve two fundamental problems: The differentiation of the elements that compose it and their integration in everything. (Ramírez, 1995)
The author Jesús M. Beltrán Jaramillo (1992) defines the client, the product, the process and the resources as constitutive elements of the system. Graphically it represents it as follows:
It establishes that the aforementioned elements interact and are interdependent, fulfill different and particular functions, but their conjunction leads the organization to achieve its objectives as a system that it is.
It is evident and in that sense we take sides with the author, that the relationship and interaction is regulated by feedback systems that provide constant monitoring of the vital signs of the management of the system and its parts. These vital signs, or key factors for success, are effectiveness, efficiency, efficiency, and productivity.
1.1.1 The hotel as a service company
Within the framework of the business economic organization, the hotel industry fulfills a mission, that is, it adopts a role that determines its functionality and contribution to the operational process of the organization.
In this sense, according to Ramírez Cavassa (1995), from a simple hospital activity in past centuries, the hotel industry became an organized activity that obeys technical, economic and commercial aspects; This forces him to consider his entire socioeconomic function with a strictly service role.
Both the traveler enjoying free time, as well as the business traveler, need, at their point of arrival or transit, a place of residence and certain comforts and means of work, such as telephone, fax, recreation rooms, translators, secretaries, reading environments, etc. This in itself expands the concept of hotel residence as an organized whole, with diverse options aimed at fulfilling its service role.
The hotel, as a business-like organization for profit and with diverse administrative functions, requires a great deepening of its essence and its objectives. The administration of services is, first of all, a multiple activity of technical and human knowledge regarding systems, administration, finances, planning, security, maintenance and budget; as well as knowledge of personality, individual and group behavior, needs, motivations, and social experiences.
The manager or general director of a hotel, and the other managers, must be prepared in both types of disciplines, if one wants to manage a hotel establishment in the most professional and non-empirical way. The atypical characteristics of the hotel company are presented differently depending on the typology of the companies themselves. The typology of hotel companies derives in the first place from the consideration of the market sectors, that is, the quality of the service and the diversity of services available to the client; secondly, from the consideration of the prevailing destination of the hotel, that is to say, of the expectations that the tourist wishes to meet and satisfy.
According to Juan López García (2004), there are various classifications in the world of hotels, depending on the services and diversity of benefits, such as:
City or transit hotel.
Vacation hotel.
Hotel residence.
Motel.
Cure hotel.
Tourist trip.
1.2 The Typology and description of the hotel company
The Magazine Supplement Apuntes No.6, Havana, 2002, states that there are several ways to define the types of hotels, and the main ones are:
- By size (Large, medium and small)
This classification was used initially under the criteria of the number of rooms available; however, this form is not very objective, since for some cities a hotel with 100 rooms may be large, but in others it may be medium. Apuntes Supplement Magazine, Havana, 2002.
According to the Location:
- Metropolitan Hotel (City) Road Hotel (Motels) Beach Hotel Mountain Hotel
According to its Operation Time:
- Permanent Hotel: It works all year round. Station Hotel: It operates at certain times of the year, generally due to weather conditions.
For example, Hotels for skiers operate only in winter when weather conditions allow sports in the snow.
According to the motivation of the clientele:
This criterion is based on the reasons why clients stay in one or another hotel, depending on their needs, so it classifies them as:
- Commercial Hotel: preferred by people who travel for business reasons, due to the facilities and location it offers. Vacation Hotel: it has facilities, its own location for travelers in search of leisure and recreation. Residential Hotel: suitable for long stays, its Rooms have facilities that facilitate a long stay, such as rooms with a living room, a kitchenette with the equipment and utensils necessary for cooking.
According to Quality:
There are several systems to rate the quality of hotel services; those most taken into account are:
1) System of descriptive words: Considering the luxury hotel as the best category hotel, they are followed in descending order, superior first, ordinary first, superior tourist and ordinary tourist
2) Letter code system: The optimal category it is AA following in descending order, A, B, C, and D.
3) Diamond System: Used by AAA.
4) Star system: The optimal category is five stars down to one star, this system is the best known and is the one used in Cuba.
1.2.1 Forms of Administration of the hotel company
This criterion refers to the relationship between owner and manager. Many lodging establishments, especially lodgings, small hotels and bed and breakfasts, are managed by their own owners; But it is also common for a hotel to be owned by one person or persons and managed by others, so the owner-manager relationship can be mainly of three types, as described in the Tourism Industry Magazine. NC 87, Spain 2005:
- Managed by the same owner Franchise Administration Contract
Managed by the same owner
It is the direct possession of one or more properties by a person or company. Hostels and small hotels owned and operated by a married couple or family are common examples of this type of ownership. Larger properties that belong to one of the major hotel companies such as Marriott or Hilton also fall into this category as they own the property.
A chain is a group of hotels that are owned or managed by a company. Generally, three or more units make up a chain, but the major hotel chains have 300 to 5,000 properties.
Franchise
A franchise is the authorization given by a company, or franchisor, to use the ideas, methods (KNOW HOW) and trademarks of the company of a business such as Hotel or Restaurant by paying an initial fee, the franchisee obtains a registered trademark license architectural plans, blueprints, designs, training and methods of operation. The franchisee is responsible for financing the construction of the property.
The franchisee can be an individual, a partnership, a small corporation, or a group of investors and must be guided by the quality standards and product specifications set by the franchisor, but the franchisee is the legal owner of the business.
The franchise contract is a contract between the franchisor and the franchisee, it describes the obligations of both, as well as the reasons for the termination of the contract.
Operation manuals cover such topics as accounting practices, maintenance procedures, sales and advertising marketing, staffing, training, and inventory control.
Operating standards are important in a franchise organization.
The franchisee who fails in quality standards may lose the franchise and all the rights and privileges that it entails.
Administration contract
Through a management contract, a property owner hires a hotel management company to operate the establishment. The management company must present periodic financial reports to the owners and comply with the policies regarding the operation, administration, maintenance, hiring of personnel and appearance of the hotel.
Management contracts free the extended chain from the difficulties of managing hundreds of properties in various locations. The local management company generally knows the market best, economic conditions, best locations, property prices, and the salary scale in the area.
All hotels, regardless of their characteristics, perform the same basic functions in one way or another: (Arteaga Prado, Yairin. Cruz Bravo, Martha, 2005)
- Administrative functions Strategic planning Control of income and expenses Hiring of human resources Operational functions Customer service Cleaning and Maintenance Food and Beverages.
Administrative functions are carried out by the following departments:
- General Management, Human Resources, Accounting, Marketing and Sales.
The Operations functions are carried out in the departments of:
In the Food and Beverage Division that includes:
- Kitchen, Restaurant, Room Service, Bar, Events and Banquets.
In the quarter division that includes:
- Reception, Reservations, Telephony, Housekeeper, Security, Maintenance.
1.2.2 Organization of a Large Hotel
The various facilities of the resort form a very complete set of modern life. To manage and operate this complex residential system requires a large staff organized in many departments. It has the same eight basic apartments as a mid-range hotel, but the number of units and the number of its staff are greater.
The resort is managed by an executive director who is assisted by a director or general manager and a group of assistant directors or assistant managers.
The human relations department.
It is part of an administration, responsible for recruiting and hiring employees, implementing in-service training programs, and enforcing personnel policies and procedures.
Quarter division department.
It has a large reception staff, housekeeper and uniformed staff. The reception is subdivided into smaller, separate departments, such as reservations, room control, and communication with guests. The housekeeping department is divided into two sub-departments, the room cleaning department and the laundry department. The uniformed personnel department is headed by a supervisor or captain.
Food and beverage department.
In addition to everything a midsize hotel owns, it operates a specialty restaurant, an informal cafeteria, and a bar, to offer guests optional food and beverage services; It also operates an employee dining room.
Guest services department.
In addition to everything a midsize hotel owns, it has several stores operated by independent concessionaires (business owners who rent hotel space).
Marketing and sales department. (marketing)
The marketing and sales department of a large hotel may consist of five units. In addition to the advertising, sales, and banquet sales departments, a full-time convention sales manager and a convention manager may be hired to respectively sell and coordinate these services. The convention sales manager is responsible for planning meetings and determining rates. The convention manager coordinates the services of the various divisions or departments, such as food and beverage service, uniformed personnel service, and maintenance, while the convention is in progress.
Accounting department.
The accounting or comptroller department has personnel capable of controlling all processes, administrative resources and hotel services, also ensuring their organization and recording the results obtained.
Security Department.
The resort has a chief of security who supervises a group of full-time guards, house detectives, and security systems specialists.
Maintenance department.
The extensive maintenance department of a large property is overseen by the maintenance director who hires a group of mechanics, plumbers, carpenters, and carpet and upholstery specialists.
Employment outlook.
A look at the organization charts for the properties in the examples above reveals the great diversity of staff that is required to keep the hospitality industry running. Many positions are highly specialized — particularly food and beverage, accounting, and maintenance — but many others — such as reception, sales, and supervisory positions — require more general skills with an emphasis on communication and contact with the public.
Opportunities for advancement exist in all departments. Perhaps in no other field are there such vast opportunities for every employee, at every level, not just within the hotel but throughout the global hospitality industry.
1.3 Proposal for a Diagram for Risk Management for Hotels under the All-Inclusive regime
The hotel is a newly opened entity, therefore there is no historical data that allows the entity to work on reducing and managing risks to Internal Control. In this sense, work on the bases of Resolution 297 of the MFP, which has implicit a series of important components and where the Identification of Risks constitutes one of the most important elements, in our opinion, to encourage the entity to reach the category according to the audits with control.
The proposal of a Risk Management Diagram for an All-Inclusive Hotel, based on a detailed study of the existing bibliography and knowing the organizational structure of the entity under study, which has a "proactive" nature, since the management is willing to work on the existing risks to achieve the expected results, that is, create the appropriate opportunities and capable of achieving the desired objectives.
This proactive process is in constant motion, and identifies each existing risk, investigating in detail the information necessary for each result area to be measured, this is done from the bottom to the top of the organization chart, interrelating ideas to know what the most risk factors are. important influencing the entity's results and objectives.
The same account of three stages that we describe below and is observed in figure No. 8, Risk Management Diagram for a hotel under the All-Inclusive regime.
The 1st stage consists of identifying and knowing in detail each risk factor, both internal and external and for each area of material responsibility. For this, different techniques can be used in order to obtain information, either by historical data from different audits, by internal information, by the history of similar entities, surveys and by consulting experts.
We must emphasize, as we have explained previously, that the hotel is newly opened, so there are no historical data that allow an effective diagnosis to be made, in addition that the hotel is not working with the expected occupancy and therefore they exist but not A set of hotel risks come to light, which is why applying the technique "consultation with both internal and external experts but with vast knowledge of Control".
This technique allows obtaining a broader and more precise information on each risk factor, with its characteristics and associated level, as well as the causes and conditions that originated them.
The 2nd stage will be to analyze in detail each one of the risks detected in the 1st stage to define their impact and probability, to be placed in the prioritization matrix and to know the determining risk level at the time of taking a decision. right decision. At this stage, it is analyzed, through statistical analysis, which are the most common risks by departments that must be worked on to avoid or reduce them.
The 3rd and final stage that we define is planning for each of the specific actions by risk factor, as well as the schedule that follows up on the actions taken and those responsible for compliance with it.
It should be noted that the three stages are in constant communication and feedback, since each risk factor can be eliminated by taking the necessary actions, but always complying with the established objectives; on the other hand, new factors may arise, and you must also be anticipating the current characteristics and conditions of the environment.
1.4 Diagnosis of hotel risks applying the Risk Mapping technique
After conceiving the Risk Management Diagram, as explained in point 2.4, there are three stages to identify the risks and subsequently evaluate them, in this sense the 1st Stage is developed from obtaining the main risk factors by each Result Area, identifying the risks for each area of responsibility. (See Table No.4)
Once each of the fundamental risk factors for each area of responsibility or key results is known, we have the fundamental bases for the preparation of Risk Mapping as an effective technique for identifying, analyzing and evaluating risks and complying with the stages 2 and 3 of the Diagram.
In this sense, the Risk Assessment, in the hotel sector and as a vital component of resolution 297 of the Ministry of Finance and Prices, is defined in Table No.5.
We must highlight that according to the bibliography consulted, there is the use of this technique by various national and international authors and where the preparation of the Risk Map is similarly transmitted by the authors Juan López García (2004) and Juan Pablo Zorrilla (2004), in his thesis.
We also believe that the Risk Map is a technique that makes it possible to create the starting point for each department that the hotel has, to constantly monitor risks from the area of action, so that each one of them can be prevented.
The description of each of the elements in Tables 4 and 5 is as follows:
Risk Factors: possibility of the occurrence of any action that may affect or hinder the normal development of the entity's functions and that prevent the achievement of the objectives.
Impact: consequences that the materialization of the risk may cause the organization.
Probability: the possibility of the risk occurring; This can be measured with frequency criteria or taking into account the presence of internal and external factors that can lead to risk, even if it has never occurred.
Risk Levels: The result of applying the chosen scale to determine the level of risk according to the possibility of occurrence, taking into account the existing controls.
Existing control: specify what control the entity has in place to combat, minimize or prevent risk.
Causes and Conditions: are the means, circumstances, factors, people, conditions and agents that generate the risks.
Control Actions: is the concrete application of risk management options that will prevent or reduce risk and will be part of the risk management plan.
Considerations: are the options and alternatives to consider after knowing the risk levels.
Schedule: are the dates established to implement the actions by the commission or working group.
Responsible parties: they are the people in charge of carrying out the proposed actions.
Monitoring must be in charge of those responsible for the area and the Internal Control Committee or Group and its main purpose will be to apply the necessary corrections and adjustments to ensure effective risk management.
Conclusions
Throughout this work, the study of the Hotel as a company, its characteristics and the design of the departments, as well as the forms of administration, was carried out, deriving the following partial conclusions:
It corresponds to the hotel company like no other, to operate not only efficiently, but effectively in all spheres and in particular in the field of control of resources; being imperative of the time to develop this function in the midst of innumerable internal and external risks that at a given moment can manifest themselves in management, so strategies and actions aimed at prevention are essential.
The main characteristics and classifications of the hotels are described, whether by size, location, category, type of administration.
A procedure was designed based on the preparation of the Risk Identification Diagram for hotels under the All-Inclusive regime. It was carried out from the analysis of different identification criteria, but through the study of tools such as the so-called Risk Mapping.
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