Transcript The Hotel Business Development and Classification

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The Hotel Business Development
and Classification
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©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
History of Hotels in the
United States
• Hotels…
– City Hotel
• 1st hotel
• Opened in 1794
– Tremont House
• Opened in Boston in 1829
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
History of Hotels in the
United States
• Hotels (cont.)…
– Transportation changed course
• Rail travel
– Development of resort properties
• Highway travel
– Development of motels
• Air travel
– Airport hotel locations
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Franchising
• Franchising…
– Allows for a company to expand rapidly
– Uses other people’s money (franchisee)
– Franchisor
• The company
– Over 180 franchised hotel brands in North
America today
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Franchising
• Franchising (cont.)…
– Examples
• HFS - Hospitality Franchise Systems
– Choice Hotels International
• http://www.hotelchoice.com
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Benefits for Franchisee
• Benefits…
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Set of plans and specifications for building
National advertising
Centralized reservation system
Participation in volume purchasing discounts
Listing in the franchisor’s directory
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Disadvantage for the Franchisee
• Disadvantages…
– Lack of operational power; must conform
– Large fees
– Central reservations produces 17-26% of
reservations
– Must meet standards as set by franchisor
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Benefits and
Disadvantages for Franchisor
• Benefits…
– Increased market share/recognition
– Up-front fees
• Disadvantages…
– Need to be careful in selection of franchisees
– Difficulty in maintaining control of standards
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Franchising Trends
• Trends…
– Factors propelling franchise growth
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Fresh looks (curb appeal)
Location - off highways, airports, and suburbs
Expansion in smaller cities
New markets - openings in proximity with golf
courses and other attractions
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Other Forms of
Development
• Development…
– Partnership
– Leasing
– Syndicates
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Management Contract
• Contract…
– The Players
• Owner - financial responsibility
• Management company - operational responsibility
– Fee structure
– Trend toward expansion of contract provisions
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Financial Management
and Profits
• Management and Profits…
– High degree of risk
• Cyclical nature of demand
• High degree of capital investment
– Portfolio financing
• Use of more than one location/market
• Cross collateralized/cross defaulted
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Real Estate Investment
Trust (REIT)
• REIT…
– Existed since early 1960s
– Publicly traded
– Investors like REIT’s
• Do not pay corporate income tax
• REIT’s must distribute 95% of net income to
shareholders
• Traded as stocks
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
REIT’s
• REIT (cont.)…
– Examples
• Patriot American Hospitality
– http://www.patriotamerican.com
• Starwood Lodging Trust
– http://www.starwoodlodging.com
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Favorable Financing
• Financing…
– Affiliation with a quality franchisor
– Identification with a national chain through a
management contract
– A lease arrangement with a hotel operator
– Conventional first mortgage loans
– Lenders
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Hotel Rating Services
• Rating Services…
– AAA
• American Automobile Association
• Diamond Award
– Mobil Travel Guide
• Five Star Award
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Ways to Classify Hotels
• Classifying Hotels …
– Location
– Types of services offered
– Market price levels
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Location
• Location…
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Center city hotels
Resort hotels
Airport hotels
Freeway hotels
Casino hotels
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Center City Hotels
• City Center…
– Public transportation available for business or
leisure
– Range of accommodations and services
– Typically have a signature restaurant
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Resort Hotels
• Resorts…
– Originally began due to rail travel
– Famous resorts
• Greenbrier in West Virginia
– http://www.greenbrier.com
• Hotel del Coronado in California
– http://www.sddt.com/~coronado
• Homestead in Virginia
– http://www.thehomestead.com
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Resort Hotels
• Resorts (cont.)…
– “Captured Clientele”
– Food service is unique
– Diversified marketing mix
• Children
• Groups
• Eco-tourism
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Vacation Ownership
• Ownership…
– Fastest growing segment of travel industry
– Time share
• A condo that is owned
• Purchaser uses for a specific period of time each year
– Vacation club
• Purchase points that entitle purchaser to use of facility
• Not real estate based
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Vacation Ownership
• Ownership (cont.)…
– Estimated that 2 million households own
vacation intervals at 3500 resorts in
almost 90 countries
– Helps ensure purchaser today’s prices for
tomorrow
– Yearly maintenance fees
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Vacation Ownership
• Ownership (cont.)…
– Fixed or floating times
– Example
• http://www.rci.com/home.html
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Airport Hotels
• Airport Hotels…
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High occupancy due to location
Business, group, and leisure travelers
Full service
200-600 rooms
Convenient location
Airport shuttle service
Economical pricing
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Freeway Hotels and Motels
• Freeway…
– Prominent in the 1950s
– Easy access to roadways
– Park outside the room entrance
– Example
• Motel 6
• http://www.motel6.com
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Characteristics of Casino’s
• Casinos…
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Heavy growth segment
Low room rates
Subsidized food and beverage
Themes are popular
500 plus guest rooms
Variety of food operations
Contains a gaming room
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Major Trends in Casino Hotels
• Casino Trends…
– Casino hotels are now marketing themselves as
business hotels
• Amenities include business centers, travel bureaus,
and room service
– Move towards “family/friendly” hotels
• This increases the average stay and money spent by
families
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Levels of Service
Luxury
• Luxury…
– Finest of accommodations
– Concierge
– 24 hour room service
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Levels of Service
Luxury
• Luxury (cont.)…
– Examples
• Four Seasons
– http://www.fshr.com
• Ritz Carlton
– http://www.ritzcarlton.com
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Convention Hotels
• Convention Hotels …
– Meet the needs of large groups
– 500 plus rooms
– Larger public areas to accommodate greater
public demand
– Banquet areas within and around the hotel
– High percentage of double occupancy
– Full Service oriented
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Level of Service
Full Service
• Full Service…
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Typically “Business Oriented”
Multiple food and beverage outlets
Meeting and convention services
Chain representation
• Doubletree
– http://www.doubletreehotels.com
• Sheraton
– http://www.sheraton.com
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Economy/Budget Hotels
• Economy/Budget …
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Represents 12 percent of total hotel rooms
Accomplished 37 percent of industry growth
Average room rate of $48.68
However, profit revenue is slow with an annual
rate of 1 percent
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Level of Service
Economy
• Economy/Budget (cont.)…
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Also considered budget hotels
Clean rooms
Reasonably sized and furnished
Continental breakfast
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Level of Service
All Suite
• All Suite…
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Cater to guests for an extended period
Reduction in rate based on length of stay
More space than typical hotel
Examples
• Embassy Suites
– http://www.embassy-suites.com
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Levels of Service
Others
• Bed and Breakfasts…
– A home away from home
– Accommodation with an owner who lives on
premises
– Maintains a few rooms
– Offers breakfast
– Personable and quick service
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Hotel Integration
Vertical
• Vertical…
– Lodging companies meeting the needs of
several types of guests based on price, facilities,
and amenities
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Hotel Integration
Vertical
• Vertical (cont.)…
– Choice hotels which has several chains that
meet its diverse clientele
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Luxury
Mid-scale
Budget
Economy
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Clarion
Quality Inn/Suites
Comfort Inn
Sleep Inn
– http://www.hotelchoice.com
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Marketing Consortium
• Consortium…
– Also called referral organizations
– Numerous independent properties unite to
compete with the marketing power of chain
operations
– Similar benefits as franchises at a lower cost
– Provides incentives for clients
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Best and Biggest Hotels
• Hotels…
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Some previous winners
Oriental Hotel in Bangkok, Thailand
Regent of Hong Kong
Bell-Air of Los Angeles
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Most Unusual Hotels
• Unusual Hotels…
– Ice Hotel in Swedish Lapland
– The Treetops Hotel in Kenya
– Underwater Hotel in Australia
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Most Unusual Hotels
• Unusual Hotels (cont.)…
– Capsule Hotel in Japan
– The Burj Al Arab in Dubai
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
International Perspective
• Perspective…
– Continued international development
• Due to increase in tourism
• Due to increase in trade and commerce
– Globalization is the key to continued growth
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Trends in Hotel Development
• Trends…
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Capacity control
Safety and security
Assets and capital
Technology
New management
Globalization
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker
Trends in Hotel Development
• Trends (cont.)…
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Consolidation
Diversification within segments
Rapid growth in vacation ownership
Increase in spas
Gaming
©2004 Pearson Education, Inc.
Upper Saddle River, New Jersey 07458
Introduction to Hospitality Management, First Edition
John Walker