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“The people who get on in this world are the people who get up and look for the circumstances they want, and, if they can’t find them, make them.” - George Bernard Shaw- Each year about this time, the staff at Scottsdale Camelback Resort (SCR) are faced with the un-daunting task of developingan operating budget for the forthcoming year. That budget will evolve over several weeks as each of many facts or presumptions are considered. Many will presume that such budgets are all about dollars, lots and lots of dollars. Not so! It’s all about the merging of conditions that will effect untold thousands of individuals as they or their circumstances surrounding the resort are played out over the next 18 months. The first task of this process could be the simple identification of those individuals or at least the groups into which they fall.
The first of these groups will be more directly effected as they are the recipients of the “allocable share” of the budget, which is commonly known as the annual assessment or maintenance fee. [The Declaration of Dedication at SCR defines “allocable share” as “that portion of the cost of preserving, maintaining and operating the Scottsdale Camelback Resort which is payable by the owner of an interval interest.”] The second of these groups are charged with the responsibility of approving the annual budget and the determination of the “allocable share” for each interval interest. [The by-laws of SCR indicate, “The Board of Directors shall annually fix, determine, give notice of and collect all General Assessments, provide for the Tax Assessment, Special Assessments and Individual Assessments pursuant to the Declaration and Rules.”] The third of these groups are and will be impacted by the first two in that the quality of the product and service that is SCR are dependent upon the budgetary decision made. So long as the standards are high (Gold Crown and/or 5 Star) the exchange power and/or desirability will remain high. If for budgetary reasons, the standards are allowed to deteriorate, then the owners at SCR will not be able to achieve the same level of exchanges to which they have grown accustom and the inbound exchange guest will experience a product and/or service which is well below their expectations. The fourth, fifth and sixth of these groups, are equally important as their usage of SCR facilities and services bring added revenue which offsets a sizable portion of the annual costs to operate SCR. If standards are allowed to deteriorate these groups will find other locations to frequent. Clearly the seventh of these groups, those whose livelihood is currently subject to the successful operation of SCR, will be effected by the budgetary decisions that effect their pay and benefits. While monetary considerations are not always the major thing that motivates associates at SCR, the ability to meet the basic needs is greatly dependent upon pay adjustments that keep up with the rate of inflation. Employee benefits such as health insurance are approaching the category of basic needs as the costs of health care continue to outpace the rate of inflation. In order to solidify this concept let’s take a look at one budgetary decision which potentially could impact each of these groups and the circumstances of their involvement with SCR. SCR currently maintains a position titled foot patrol. The duties of this position include scheduled patrol of the total facilities, checking for issues such as unlit areas, parking violations, unauthorized vehicles, persons or activities, unsecured doors and gates, and unattended property. This individual is trained in the completion of incident reports and to provide assistance to guests whenever necessary. Such assistance could be in the form of CPR or defibrillation as well as the delivery of a missing item to a guest villa. The typical work schedule for this position is Monday, Tuesday, Wednesday & Thursday - 10:00 PM to 6:00 AM and Saturday & Sunday - 8:00 PM to 6:00 AM and the hours are typically split between two individuals. Standard pay for this position is $10.00 per hour. What would some of the upside potential and the downside risk be if the foot patrol position were reduced to only Saturday & Sunday? 8:00 PM to 6:00 AM for fiscal 2003? w The upside would be a payroll reduction of 24 hours per week or almost
$14,000 per year including payroll and related expenses. A reduction of
this magnitude would equate to almost $2.50 net per week in the assessment per
interval interest at SCR. Or such a reduction would facilitate an increase
of a similar amount in some other area without a net increase in current
(2002) assessments.
The downside risk would be an actual reduction in the services provided,
and a possible increase in property risk for both the resort and its guests.
Such a reduction in staff for the period indicated would require a change
in policy with respect to employee safety as currently policy requires that
no employee be left alone on the property during high-risk periods. If foot
patrol were to be eliminated and current staff policy were to be maintained,
a second position (such as an additional desk clerk)would have to be
established so that the night auditor would not be alone. Such a new position
would have the potential of costing less than the current wage for foot
patrol, however the net savings in payroll and related costs would be
reduced to about 70 cents per owner week.
Other areas of impact which would have to be considered in this decision making process could be: w Both gentlemen who currently fill the position of foot patrol are
semi retired and are supplementing their retirement income with their
earnings at SCR. Each has been a part of the SCR family for over three
years and are well known by many of our owners. Both have been recognized
in the past as our Associate of the Month. One for spoiling a break-in
of a guest car and the other for assistance rendered during a medical
emergency. Both epitomize the kind of associates that SCR is renowned for
having on staff.
w The incident on 9/11 has heightened the need for a sense of security
on the part of almost everyone who travels. They want that feeling during
both their trips and at the destination of choice. While our foot patrol
position is not held up to be a security officer, their mere presence on
and about the property acts to fill a part of that guest expectation. The
staff position created to maintain the employee policy alone would (for the
most part) be assigned make-do work, consequently the productivity decrease
by the associate exchange would be significant.
In the instance of the position foot patrol we have highlighted only two of the 62 associates typically on staff at SCR. During the budgetary process each of the associate positions must be similarly reviewed as payroll and related costs continue to be the single largest expense category contained in the annual budget. If we stand still in respect to the number of staff positions, the number of associates and the hours of endeavor, costs will rise significantly just due to standard cost-of-living increases. Assuming that the cost-of-living increase is about 3.5% and the overall wage cost approaches $750,000.00 annually, that increase in costs would be almost $27,000. A reduction in the number of staff positions, the number of associates and/or the hours of endeavor as a knee-jerk reaction to increase in costs would eventually eliminate all of the service personnel at SCR. If that were the kind of decision-making was demonstrated during the budget consideration period at SCR, what kind of circumstances would guest encounter upon arrival at our front door? Does not the same circumstances hold true with regard to purchasing a cheaper replacement pillow, reduction of the number of hours in service at the Grill, eliminating the midweek clean in the villas, cutting the grass every other week, reducing the amount of chemicals used to maintain the pools, delay in replacement of the nets on the tennis courts, and the thousands upon thousands of individuals parts and pieces of the budgetary puzzle which is confronted each July by those held responsible for the process? In order to be effective in this process several key individuals must be intimately familiar with several factors and understand that all will effect each of them in some way are:
In truth, these examples only scratch the surface of those areas of expertise that are necessary to achieve a budget proposal for Board consideration that they (the board) can rely upon as having some semblance of credibility. Final Thought Each of you are familiar with the old adage that every journey begins with the first step. That first step on the path to the development of an effective budget for SCR has traditionally began with a gathering of a few individuals at some location where they could immerse themselves in the process. This gathering has historically been called a retreat because every attempt has been to find a location where minimum outside distractions were present and where bonding could occur. Why bonding you ask? Those individuals who have the necessary expertise to insure effective consideration of all the issues are necessarily also those individuals who are expected to lead. If those individuals are of one mind with respect to the vision and have gone to the trenches with each other over and over again, like, enjoy and respect each other, they are more likely to be able to identify the options and reach the necessary compromises. Over this past weekend I was privileged to be involved in such a retreat with four class individuals from SCR. Respectively they were Lori Entwistle the General Manager, Clark Rowley the Director of Marketing and Public Relations, Eric Downey the Director of Operations and Reyes Salinas, the Director of Property Services. Both Clark and Eric have been associated with SCR for over 14 years, Lori over 8 years and Reyes almost 6 years. This year’s destination was the Carefree Resort and Conference Center in Carefree, Arizona. We each arrived about 3:00 PM on the designated day and settled in. Around 4 PM, Eric was making frozen cocktails for the others and we began our warm-up session. This warm-up entailed each selecting a book (which had been wrapped in plain brown paper) from a pile in the center of the table and retreating to separate places to quickly scan its contents for 5 to 6 minutes, then return and give a book report. This year each of the books just happened to be joke books and it wasn’t long until you could hear giggling coming from the various locations. After reassembling, each had chosen two or three excerpts from their book and proceeded to share them with the others. It wasn’t long until each were finding others they wanted to share and the evening got off to a fun start. About at 6:00 PM we all crowded into Reyes’s truck and went to a local “joint” for dinner. Upon our return to the resort, we each attended to personal matters and then reassembled for a rip-roaring game of “Catch Phrase”. [For those of you who do not know the game, you don’t know what you are missing.] Because we had an early call and a full day ahead of us the next day, we were all in bed by about 10:15 PM. At this point you must be thinking what does any of this have to do with the budgeting process? The first evening is all about bonding, establishing a commonality of mind, and a comfort level with each other that will enhance the existing mutually beneficial relationship of trust, respect and interdependence. The next morning began with a quick breakfast then we gathered around our worktable and began the process of getting our minds set on the opportunity ahead. Over the next couple of hours we went through a workbook which provided us with the current tag line or slogans of a dozen major firms and asked us to develop one for the retreat, helped us re-established our basic philosophy of horizontal management, reviewed the building blocks for a winning workplace, asked that we prioritize 36 different issues which we will be confronted with at SCR in the next 18 months, that we each establish the 6 issues which would become our own personal objectives and allowed us to review the current staff and evaluate them in a ranking from (5) excellent, to (1) needs to go. By lunchtime we had begun to go through the goals which were to be the corner stones of the effort in 2003 and over a working lunch we, each in turn, being presenting the specific goals which had been presented by the managers of the resort departments and the division directors and some of the strategies we intended to employ to achieve them. This process continued until the early afternoon. Each of us then committed to perform some follow-up task and to report on their achievement at the next directors meeting 10 days later. Check out time came all too quickly and by 3:30 PM we were each on the road toward home. I believe that each of us came to work the next day with renewed enthusiasm and appreciation for the opportunity to attend and participate in this year’s retreat. A gathering, which set the stage for us, and our associates, meet the scheduled time for the presentation of a proposed budget to the Board of Directors. However, it is much more important that we believe the budget will meet and exceed the expectations of those various groups whose circumstances (such as ownership) involve them with Scottsdale Camelback Resort during 2003. We hope that you also go through a process that facilitates a sense of camaraderie and allows for some fun during the development of your annual budget. |
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Jerry Sikes, RRP / CHA, is President of Professional Resort Operators, Inc., Scottsdale, Arizona. He has over 35 years in the Hospitality Industry / 25 years in Timesharing, and is the current Co-Chairman of ARDA Arizona as well as Chairman of the Arizona Timeshare Management Association. Jerry is a frequent guest speaker regionally and nationally on all aspects of Timeshare Management and a frequent contributor of articles for industry publications. Email: boyjerry@cox.net Phone 480-947-3300 Fax 480-947-6853 Web site: http://www.protimeshare.com |
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