THE LODGING INDUSTRY

Chapter 1

Managing Front Office Operations

8th Edition
Lodging Is Part of the Travel and Tourism
Industry
 Segments in the Travel and Tourism Industry

Travel and Tourism

Industry

Lodging Transportation Destination

Operations Services (Activity) Sites

F&B
Retail Stores
Operations
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  Vacation ownership
 Airport hotels and condominium
hotels
 Suite hotels
 Extended-stay hotels
 Casino hotels
 Conference centers
 Residential hotels
 Convention hotels
 Resort hotels
 Bed-and-breakfast
 Alternative lodging
hotels 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 Business Travelers

 Suite Hotels
 Extended-Stay Hotels
Leisure Travelers
 Resort Hotels
 Vacation Ownership and Condominium Hotels
 Bed-and-Breakfast Hotels (B&Bs)
 Casino Hotels
 Alternative Lodging Properties
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

Range of Lodging Property Service Alternatives

Luxury Hotels Full-Service, Mid-Scale Limited-Service

and Resorts Upscale Hotels Hotels Hotels
 Rating Services
AAA Diamonds Mobil Stars
Characteristics of ultimate luxury and sophistication.
    - Luxury First class accommodations. Highly personalized     - Deluxe
service. Impeccable standard of excellence.

   - Upscale Upscale in all aspects. Above average level of

service. Enhanced level of quality throughout. In     - Superior
house dining available with many other services

  - Comprehensive
Multifaceted and comprehensive. Usually associated
with business travelers. Upgraded physical attributes,    - First Class
service, and comfort.

Aimed toward traveler looking for more than just the

 - Modest basics. Usually small to medium sized hotel chains.
Limited food service.   - Moderate

 - Basic Essential accommodations. Usually food within

walking distance. Appeal to budget minded travelers
while keeping in mind cleanliness
 - Economy
Sources: American Automobile Association & Mobil Travel Guide
2003 U.S. Property and Room Breakdown
By Location Property Rooms
Airport 3,239 444,860
Suburban 18,476 1,490,970
Urban 5,408 716,485
Highway 18,312 1,296,279
Resort 2,149 467,102
By Rate
Under $30 853 50,642
$30–$44.99 7,862 499,350
$45–$59.99 16,680 1,102,845
$60–$85 14,334 1,393,633
Over $85 7,855 1,369,196
By Size
Under 75 rooms 27,379 1,144,753
75–149 rooms 14,297 1,523,999
150–299 rooms 4,305 860,983
300–500 rooms 1,094 407,038
Over 500 rooms 509 478,923
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

Affiliation Franchise Non-Franchise

Franchise
Ownership Independent Company
(Franchisor)
Independent

Franchise Management Management

Operation Independent Company
(Franchisor) Company
Independent
Company
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