Chapter 1

THE LODGING INDUSTRY

Managing Front Office Operations8th Edition

Lodging Is Part of the Travel and Tourism Industry

Segments in the Travel and Tourism Industry

Travel and Tourism Industry

Retail Stores

Transportation Services

Destination (Activity) Sites

Lodging Operations

F&BOperations

The Travel and Tourism Industry

The Travel and Tourism industry is:

The third largest retail industry

Following automotive and food stores

The nation’s largest service industry

One of the nation’s largest employers

Classifying Hotels

Hotel

Primary business is providing lodging facilities to the general public

Services may include:

Food and beverage

Room attendant

Concierge

Bell and door attendant

Laundry and dry cleaning

Other services

Classifying Hotels (continued)

Motel

Contraction of “motor hotel”

Caters primarily to those traveling by auto

Suburban or roadside

Do not offer a full range of services

Classifying Hotels (continued)

General classifications:

Hotel size

Target market or location

Level of service

Ownership and affiliation

Hotel Size

Size categories:

Under 75 rooms

75–149 rooms

150–299 rooms

300–500 rooms

Over 500 rooms

Target Markets

Distinctly defined groups of travelers

Broken down into smaller segments within target markets

Products and services developed specifically to satisfy these segments

Market segmentation

Lodging companies have created different brands

Each directed towards a type of guest, or market segment

Types of Hotels

Commercial hotels

Airport hotels

Suite hotels

Extended-stay hotels

Residential hotels

Resort hotels

Bed-and-breakfast hotels

Vacation ownership and condominium hotels

Casino hotels

Conference centers

Convention hotels

Alternative lodging properties

Target Markets

Commercial Hotels

Business travelers, tour groups, individual tourists, small conference groups, etc…

Airport Hotels

Business clientele, airline passengers, airline personnel, and meeting attendants

Suite Hotels

Frequent travelers, vacationing families, professionals

Target Markets (continued)

Extended-Stay Hotels

Travelers who intend to stay five days or longer and required reduced hotel services

Residential Hotels

Long-term or permanent accommodations for those want and can afford daily, limited hotel services

Resort Hotels

Leisure travelers and vacationing families

Relaxed atmosphere & wide range of facilities and activities

Target Markets (continued)

Bed-and-Breakfast Hotels (B&Bs)

Leisure travelers

Uniqueness, personal service, and homelike atmosphere

Vacation Ownership and Condominium Hotels

Leisure travelers and vacationing families

Individuals purchase the ownership of accommodations for a specific period of time

Target markets (continued)

Casino Hotels Leisure and vacation travelers

Conference Centers Group meetings

Convention Hotels Business travelers

Alternative Lodging Properties Backpacker, leisure / vacation travelers

Recreational vehicle parks, campgrounds, mobile home parks

Target Markets (continued)

Commercial Hotels

Airport Hotels

Conference Centers

Convention Hotels

Suite Hotels

Extended-Stay Hotels

Resort Hotels

Vacation Ownership and Condominium Hotels

Bed-and-Breakfast Hotels (B&Bs)

Casino Hotels

Alternative Lodging Properties

Business Travelers

Leisure Travelers

Typical Lodging Guests

52% travelled for business

48% travelled for pleasure

Level of Service

Measure of the benefits provided

Usually reflected in room rates charged

Luxury Hotels and Resorts

Full-Service, Upscale Hotels

Limited-Service Hotels

Mid-Scale Hotels

Range of Lodging Property Service Alternatives

Rating Services

Characteristics of ultimate luxury and sophistication.

First class accommodations. Highly personalized

service. Impeccable standard of excellence.

Upscale in all aspects. Above average level of

service. Enhanced level of quality throughout. In

house dining available with many other services

Multifaceted and comprehensive. Usually associated

with business travelers. Upgraded physical attributes,

service, and comfort.

Aimed toward traveler looking for more than just the

basics. Usually small to medium sized hotel chains.

Limited food service.

Essential accommodations. Usually food within

walking distance. Appeal to budget minded travelers

while keeping in mind cleanliness

Sources: American Automobile Association & Mobil Travel Guide

AAA Diamonds Mobil Stars

- Luxury

- Upscale

- Comprehensive

- Modest

- Basic

- Deluxe

- Superior

- First Class

- Moderate

- Economy

2003 U.S. Property and Room Breakdown

By Location Property Rooms

Airport

Suburban

Urban

Highway

Resort

3,239

18,476

5,408

18,312

2,149

444,860

1,490,970

716,485

1,296,279

467,102

By Rate

Under $30

$30–$44.99

$45–$59.99

$60–$85

Over $85

853

7,862

16,680

14,334

7,855

50,642

499,350

1,102,845

1,393,633

1,369,196

By Size

Under 75 rooms

75–149 rooms

150–299 rooms

300–500 rooms

Over 500 rooms

27,379

14,297

4,305

1,094

509

1,144,753

1,523,999

860,983

407,038

478,923

Lodging Is a Service Business

Successful hotels greatly emphasize serving their guests to the best possible extent

The brand name a hotel uses is not the most important factor in a hotel’s success

When hotels put guests’ needs first, they will do well

Consistent delivery of quality products and services to guests must be addressed first, rather than considering tactics to maximize revenue Minimizing costs comes next!

Lodging Is a Service Business (continued)

Questions that must be addressed to deliver quality service: How will we demonstrate to our own staff members the need for

high-quality guest service?

How exactly will we evaluate the level of service quality being provided to our guests?

What exactly are our service strategies and our service procedures?

How will we train our staff about service concerns and the tactics to deliver service?

How will we reinforce our service strategies?

What can we do to emphasize service as a philosophy rather than as a program with a definite start and end time?

What can we do to excel in the guests’ moments of truth?

Ownership and Affiliation

Hotel Ownership/Management

Single-unit property not affiliated with any brand

Single-unit properties affiliated with a brand

Multiunit properties affiliated with the same brand

Multiunit properties affiliated with different brands

Multiunit properties operated by the brand or others

Multiunit properties owned by the brand

Ownership and Affiliation (continued)

Hotel Ownership/Management Alternatives

Hotel Property

Franchise Company

(Franchisor)Independent Independent

Franchise Company

(Franchisor)Independent Independent

Management Company

Management Company

Franchise Non-FranchiseAffiliation

Ownership

Operation

Franchise Hotels

Franchising is selling the right to conduct a business

Franchisor s develop standards for design, décor, equipment and operating procedures.

Independent Hotels

Independent hotels have no relationship to other hotels

Its unique advantage is autonomy and flexibility

Independent hotel can quickly adapt to changing market conditioning

Chain Hotels

Chain ownership imposes certain standards, rules, policies and procedures Some chains have strong control over the architecture,

management, and standards

Advantage: Advertising and marketing

Purchasing

A chain is classified as operating under a management contract or franchise or referral group

Management Company

Management companies are organizations that operate properties owned by others

Advantages:

Expertise in operations, financial management, staffing, marketing and reservation services

Lodging Industry Overview

World’s Largest Hotel Groups

Hotel Group Rooms Properties

1. InterContinental Hotel Group 534,202 3,540

2. Cendant Corporation 520,860 6,396

3. Marriott International 478,000 2,600

4. Accor 463,427 3,973

5. Choice Hotels International 403,806 4,977

Lodging Industry Overview (continued)

World’s Largest Hotel Brands

Brands Rooms Properties

1. Best Western 309,236 4,114

2. Holiday Inn 278,787 1,484

3. Comfort Inn & Suites 182,038 2,415

4. Marriott Hotels Resort 179,519 490

5. Days Inn of America 153,701 1,872

Lodging Industry Overview (continued)

Largest Hotel Organizations in the United States

Organization Rooms Properties

1. Cendant Corporation 439,279 5,622

2. Marriott International, Inc. 380,218 2,238

3. Hilton Hotels Corporation 357,332 2,184

4. InterContinental Hotel Group 337,643 2,523

5. Choice Hotels International, Inc. 313,982 3,891

Classifying Guests

Business Travelers Important source of business for many lodging

properties

Pleasure / Leisure Travelers Segmentation of this market often depends on

attractions, products and services offered

Group Travelers Can be business, social, or pleasure

International Travelers Bring a different set of needs and expectations

Lodging Industry Characteristics

Emphasis on safety, cleanliness, and service

Guests also consider “intangible” aspects of the purchase decision

Inseparability of manufacture and sales

A room exists and is sold at the same site

Perishability

If a guest room is not rented on a specific date, the revenue is lost forever

Lodging Industry Characteristics (continued)

Repetitiveness

Some operating procedures are routine

Labor Intensive

Much of a hotel’s daily work involves employees providing services

Buying Influences on Travelers (continued)

Buying influences include:

Satisfactory experiences with a hotel

Advertisement by hotel or a chain organization

Recommendation by others

Hotel’s location

Preconception of brand

Marketing activities

Brand loyalty and reward programs

Website design, site navigation, and availability of reviews

Buying Influences on Travelers

The most important factors for repeat business:

The quality of services

The property’s overall cleanliness and appearance

Good service is good business