Chapter 4-LODGING The Hotel Business
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Introduction to Hospitality, Fourth Edition John Walker ©2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Mr. White Econ 296 Chapter 4- LODGING The Hotel Business Trump Tower Waikiki Hotel and Condos Sunset Hula Show Sheraton Waikiki
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Chapter 4-LODGING The Hotel Business. Trump Tower Waikiki Hotel and Condos. Sunset Hula Show Sheraton Waikiki. After Reading and Studying This Chapter, You Should Be Able to:. Define the following terms: hotel franchising, partnerships, leasing, syndicates, and management contracts - PowerPoint PPT Presentation
Transcript of Chapter 4-LODGING The Hotel Business
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458Mr. White Econ 296
Chapter 4-LODGINGThe Hotel Business
Trump Tower WaikikiHotel and Condos
Sunset Hula Show Sheraton Waikiki
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Mr. White – Econ 296
After Reading and Studying This Chapter, You Should Be Able to:
Define the following terms: hotel Define the following terms: hotel franchising, partnerships, leasing, franchising, partnerships, leasing, syndicates, and management contractssyndicates, and management contracts
Classify hotels by type, location and priceClassify hotels by type, location and price Explain vertical integrationExplain vertical integration Name some prestigious and unusual hotelsName some prestigious and unusual hotels Describe the effects of a global economy Describe the effects of a global economy
on the hotel industryon the hotel industry
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Mr. White – Econ 296
Franchising Allows for a company to expand Allows for a company to expand
rapidlyrapidly Uses other people’s money Uses other people’s money
(franchisee)(franchisee) FranchisorFranchisor
The companyThe company Over 180 franchised hotel brands in Over 180 franchised hotel brands in
North America todayNorth America today
Accor HotelsSofitel – Novotel – Suitehotel- IbisEtap – Formula 1 – Red Roof Motel 6 – Studio 6 - Thalassa
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Franchised Hotels Among the Top 10 Corporate Chains
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Top 10 Management Companies
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Mr. White – Econ 296
Trends in Franchising Curb appeal (fresh looks)Curb appeal (fresh looks) Location near highways, Location near highways,
airports and suburbsairports and suburbs Expansion in smaller citiesExpansion in smaller cities New markets in proximity to New markets in proximity to
golf courses and other golf courses and other attractionsattractions
Foreign expansion to Foreign expansion to increase brand awarenessincrease brand awareness
BW ROOMS: 316,095 worldwide; 86,375 Europe; 8,426 Asia and the Middle East; 8,924 Australia, New Zealand and the South Pacific; 6,592 South and Central America; 610 Africa; 201,659 North America
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Mr. White – Econ 296
Franchiseee-Benefits Set of plans and specifications for Set of plans and specifications for
buildingbuilding National advertisingNational advertising Centralized reservation systemCentralized reservation system Participation in volume purchasing Participation in volume purchasing
discountsdiscounts Listing in the franchisor’s directoryListing in the franchisor’s directory Low fee percentage charged by credit Low fee percentage charged by credit
card companiescard companies
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Mr. White – Econ 296
Franchisee-Drawbacks Lack of operational power; must Lack of operational power; must
conformconform High fees – both to join and ongoingHigh fees – both to join and ongoing Central reservations produces 17-Central reservations produces 17-
26% of reservations26% of reservations Must meet standards as set by Must meet standards as set by
franchisorfranchisor
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Mr. White – Econ 296
Benefits andDisadvantages for Franchisor
BenefitsBenefits Increased market Increased market
share/recognitionshare/recognition Up-front feesUp-front fees
DisadvantagesDisadvantages• Need to be careful in Need to be careful in selection of franchiseesselection of franchisees• Difficulty in Difficulty in maintaining control of maintaining control of standardsstandards
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Mr. White – Econ 296
Cendant Corp Franchises
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Mr. White – Econ 296
Management Contracts ContractContract
The PlayersThe Players Owner - financial Owner - financial
responsibilityresponsibility Management company - Management company -
operational responsibilityoperational responsibility
Fee structureFee structure Trend toward Trend toward
expansion of contract expansion of contract provisionsprovisions
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Mr. White – Econ 296
Ways to Classify Hotels
Classifying Classifying Hotels Hotels LocationLocation Types of Types of
services offeredservices offered Market price Market price
levelslevels
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Mr. White – Econ 296
Hotel Rating Services
Rating ServicesRating Services AAAAAA
American AutomobileAmerican AutomobileAssociation Association
Diamond AwardDiamond Award Forbes-Mobil Travel Forbes-Mobil Travel
Guide – 5 StarsGuide – 5 Stars MichelinMichelin
Five Star AwardsFive Star Awards
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Forbes (Mobil) Travel Guide Hotel Ratings Forbes-Mobil Five-Star Hotels: Forbes-Mobil Five-Star Hotels: Distinctive luxury environment offering expanded Distinctive luxury environment offering expanded amenities and consistently superlative service amenities and consistently superlative service make these hotels and inns the best in the U.S. and make these hotels and inns the best in the U.S. and Canada. Attention to detail and anticipation of Canada. Attention to detail and anticipation of guests' every need are evident. The Mobil Five-Star guests' every need are evident. The Mobil Five-Star lodging category includes such hotels as lodging category includes such hotels as The Peninsula Beverly Hills, the , the Four Seasons Hotel Chicago andand The Ritz-Carlton San Francisco..
Forbes-Mobil Four-Star Hotels: Forbes-Mobil Four-Star Hotels: Outstanding establishment in a distinctive setting Outstanding establishment in a distinctive setting with expanded amenities and exceptional service to with expanded amenities and exceptional service to create a luxury experience. Services may include, create a luxury experience. Services may include, automatic turndown service, valet parking and 24-automatic turndown service, valet parking and 24-hour room service. hour room service. The Ritz-Carlton Laguna Niguel, The Ritz-Carlton Laguna Niguel, Mandarin Oriental Miami Mandarin Oriental Miami andand Four Seasons Hotel Four Seasons Hotel Las Vegas Las Vegas areare prominent names in the Mobil Four-prominent names in the Mobil Four-Star category.Star category...
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
AAA Five Diamond Classifications
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Location Center city hotelsCenter city hotels Resort hotelsResort hotels Airport hotelsAirport hotels Freeway hotelsFreeway hotels Casino hotelsCasino hotels Full serviceFull service ConventionConvention EconomyEconomy Extended stayExtended stay Bed and breakfastBed and breakfast
Business Class King Bed RoomBusiness Class King Bed RoomWaldorf Astoria Hotel – New York CityWaldorf Astoria Hotel – New York CityA Deluxe City Center HotelA Deluxe City Center Hotel
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Mr. White – Econ 296
Hotels by Price Segment
Budget - Budget - $29-$39$29-$39 Economy - Economy - $40 - $60$40 - $60 Mid-price -Mid-price - $60 - $100$60 - $100 Up scale - Up scale - $100 - $100 -
$200$200 Luxury - Luxury - $140 - $450$140 - $450 All-suites - All-suites - $95 - $175$95 - $175
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Mr. White – Econ 296
City Center Hotels Public transportation Public transportation
available for available for business or leisurebusiness or leisure
Range of Range of accommodations accommodations and servicesand services
Typically have a Typically have a signature restaurantsignature restaurant
The Brown Palace - Denver
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Resorts…
Originally began due Originally began due to rail travelto rail travel
Greenbrier in West Greenbrier in West VirginiaVirginia www.greenbrier.comwww.greenbrier.com
The Halekulani in The Halekulani in Waikiki, HawaiiWaikiki, Hawaii www.halekulani.comwww.halekulani.com
The Ritz Carlton The Ritz Carlton Kapalua in Maui, Kapalua in Maui, HawaiiHawaii www.ritzcarlton.comwww.ritzcarlton.com The Greenbrier Resort
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
More on Resorts ““Captured Clientele”Captured Clientele” Food service is uniqueFood service is unique Diversified marketing mixDiversified marketing mix
Children – Groups – Eco-tourismChildren – Groups – Eco-tourism
The Grand Hotel – Mackinac Island, MI
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Mr. White – Econ 296
Airport Hotels High occupancy due to locationHigh occupancy due to location Business, group and leisure travelersBusiness, group and leisure travelers Full service Full service 200-600 rooms200-600 rooms Convenient locationConvenient location Airport shuttle serviceAirport shuttle service Economical pricingEconomical pricing
Chicago O’Hare Airport Hilton
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Mr. White – Econ 296
Freeway Hotels
Prominent in the 1950sProminent in the 1950s Easy access to roadwaysEasy access to roadways Park outside the room entrancePark outside the room entrance ExampleExample
Motel 6 Motel 6 www.motel6.comwww.motel6.com
Motel 6 – Savannah GA
Howard Johnson’sOmaha, NB Day’s Inn – Camarillo, CA
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Mr. White – Econ 296
Casinos Heavy growth segmentHeavy growth segment Low room ratesLow room rates Subsidized food and Subsidized food and
beveragebeverage Themes are popularThemes are popular 500 plus guest rooms500 plus guest rooms Variety of food Variety of food
operationsoperations Contains a gaming Contains a gaming
roomroom
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Mr. White – Econ 296
Convention Hotels Meet the needs of large Meet the needs of large
groupsgroups 500 plus rooms500 plus rooms Larger public areas to Larger public areas to
accommodate greater accommodate greater public demandpublic demand
Banquet areas within and Banquet areas within and around the hotelaround the hotel
High percentage of double High percentage of double occupancyoccupancy
Full-service oriented Full-service oriented
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Mr. White – Econ 296
Full-ServiceHotels
Typically “Business Typically “Business Oriented”Oriented”
Multiple food and Multiple food and beverage outletsbeverage outlets
Meeting and convention Meeting and convention servicesservices
Chain representationChain representation Doubletree Doubletree
www.doubletreehotels.comwww.doubletreehotels.com SheratonSheraton
www.sheraton.comwww.sheraton.com
Doubletree Alana Waikiki
Sheraton Princess Kaiulani
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Mr. White – Econ 296
Economy/Budget Hotels Represents 12 percent of total hotel roomsRepresents 12 percent of total hotel rooms Accomplished 37 percent of industry growthAccomplished 37 percent of industry growth Average room rate of $48.68Average room rate of $48.68 However, profit revenue is slow with an annual However, profit revenue is slow with an annual
rate of 1 percentrate of 1 percent Also considered budget hotelsAlso considered budget hotels Clean roomsClean rooms Reasonably sized and furnishedReasonably sized and furnished Continental breakfastContinental breakfast
Thriftlodge-Kissimmee, FL
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Mr. White – Econ 296
All-Suite Cater to guests for an Cater to guests for an
extended periodextended period Reduction in rate Reduction in rate
based on length of based on length of staystay
More space than More space than typical hotel typical hotel
ExamplesExamples Embassy SuitesEmbassy Suites
www.embassy-suites.comwww.embassy-suites.com
Embassy Suites Beachwalk Waikiki
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Mr. White – Econ 296
Bed and Breakfasts A home away from A home away from
homehome Accommodation with Accommodation with
an owner who lives on an owner who lives on premisespremises
Maintains a few roomsMaintains a few rooms Offers breakfastOffers breakfast Personable and quick Personable and quick
serviceservice
Manoa Valley InnManoa Valley Inn
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Mr. White – Econ 296
Vertical Integration Lodging companies meeting the needs Lodging companies meeting the needs
of several types of guests based on of several types of guests based on price, facilities and amenitiesprice, facilities and amenities
Choice hotels which have several Choice hotels which have several chains that meet its diverse clientelechains that meet its diverse clientele
Luxury Luxury -- ClarionClarion Mid-scale Mid-scale -- Quality Inn/SuitesQuality Inn/Suites BudgetBudget -- Comfort InnComfort Inn EconomyEconomy -- Sleep InnSleep Inn
www.hotelchoice.comwww.hotelchoice.com
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Mr. White – Econ 296
Marketing Consortiums Also called referral Also called referral
organizationsorganizations Numerous independent Numerous independent
properties unite to compete properties unite to compete with the marketing power of with the marketing power of chain operations chain operations
Similar benefits as Similar benefits as franchises, at a lower costfranchises, at a lower cost
Provides incentives for clientsProvides incentives for clients
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Mr. White – Econ 296
Vacation Ownership Fastest growing segment Fastest growing segment
of travel industryof travel industry Time share Time share
A condo that is ownedA condo that is owned Purchaser uses for a Purchaser uses for a
specific period of time specific period of time each yeareach year
Vacation club Vacation club Purchase points that Purchase points that
entitle purchaser to entitle purchaser to use of facility use of facility
Not real estate basedNot real estate based
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Mr. White – Econ 296
Vacation Ownership
A person purchases the use of a unit similar to a condominium for blocks of times, usually in weeks.
Began in the French Alps during the late 1960s. The politically correct way of saying time-share. Fastest growing segment of U.S. travel and
tourism industry.
Ala Moana Hotel and Condos
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Mr. White – Econ 296
Vacation Ownership
Estimated that 2 million households own Estimated that 2 million households own vacation intervals at 3500 resorts in almost 90 vacation intervals at 3500 resorts in almost 90 countriescountries
Hlps ensure purchaser today’s prices for Hlps ensure purchaser today’s prices for tomorrowtomorrow
Yearly maintenance feesYearly maintenance fees Fixed or floating timesFixed or floating times ExampleExample
www.rci.comwww.rci.com
Ala Moana Hotel and Condos
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Mr. White – Econ 296
Vacation Ownership
12,500 average cost to consumer.Offers high-quality accommodations.Purchasers:
Gather points to use as currency for vacation getaways.Are locked into time constraints.
Many in Hawaii – Marriott - Hltons – Disney Aulani
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Mr. White – Econ 296
The Best Hotels Some previous Some previous
winners:winners: Oriental Hotel in Oriental Hotel in
Bangkok, ThailandBangkok, Thailand Regent of Hong Regent of Hong
KongKong Bel-Air of Los Bel-Air of Los
AngelesAngeles Bel-Air, Los Angeles
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Unusual Hotels Ice Hotel in Swedish Ice Hotel in Swedish
LaplandLapland The Treetops Hotel in The Treetops Hotel in
KenyaKenya Underwater Hotel in Underwater Hotel in
AustraliaAustralia Capsule Hotel in Capsule Hotel in
JapanJapan The Burj Al Arab in The Burj Al Arab in
DubaiDubai
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
International Perspective We are all part of a huge global economy that is
splintered into trading blocks (i.e., The European Union and the North American Free Trade Agreement). This comprises a total population of 350 million
consumers.
In developing countries, once political stability has been sustained, hotel development quickly follows as part of an overall economic and social progression.
Introduction to Hospitality, Fourth EditionJohn Walker
©2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458
Mr. White – Econ 296
Trends
Capacity controlCapacity control Safety and securitySafety and security Assets and capitalAssets and capital TechnologyTechnology New managementNew management GlobalizationGlobalization Andrew Cosslett – CEO
InterContinental Hotels Group
