HMM 103, Complete

8/8/2019 HMM 103, Complete

http://slidepdf.com/reader/full/hmm-103-complete 1/11

Page 1 of 11

IBANIBO, Sean B

900-06-1703

HMM 103, Spring 2010



Page 2 of 11

Kemmons Wilson was born in Osceola, Arkansas as the only child of Kemmons and

Ruby Wilson. After the death of his father, when he was only nine months old, his

mother moved to Memphis, Tennessee with him. During a trip to Washington DC

with his family, Kemmons came up with the idea for a better motel than the ones hehad encountered on the road. The lack of consistency and quality of the road side

motels of the era were disappointing to him and served as his driving force to

establish a new standard in the hospitality industry, thereby giving birth to the Holiday

Inn. The name came by as a joke given to the first hotel by his architect, Eddie

Bluestein, in reference to the Bing Crosby show.

Kemmons Wilson wanting to provide a less-costly accommodation for families andtravelers in America opened the first Holiday Inn motel to customers in the Berclair

district in Memphis, Tennessee on August 1st, 1952. In 1957, it became a franchise

and went international in 1960. In 1958, a year after becoming a franchise company,

the newly formed chain known as Holiday Inn of America saw a growth to 50

locations across the country and in 1968; the 1000th location was opened in San

Antonio, Texas. Its growth was in part due to Wilson¶s original idea to make the

motels accessible to travelers, keep it standardized and clean, predictable and very

family oriented. Not meeting any of these requirements may result in a lost of

franchise.

The growth of the company led to many changes in the hospitality industry and set the

standard for the competition like Days Inn and Best Western. Leading the charge and

putting a huge amount of pressure on other traditional hotels at the time. Indoor pools

added to most of its chains, brought more customers flocking through its doors till the

later 1980s, when it lost dominance in the hotel industry. Holiday Inn was sold to

Bass Brewers of the United Kingdom, which would later become InterContinental

Hotels Group, in 1986. In 1988, Kemmons Wilson retired and sold his remaining

interest in the company to InterContinental Hotels Group.



Page 3 of 11

Howard Deering Johnson, the founder of the Howard Johnson¶s chain of restaurants

and hotel, was born on February 2nd, 1897 in Boston, Massachusetts. Having

completed his elementary education, he went to work at his father¶s cigar shop and

later joined the American Expentionary Force in France during World War 1.

After his father¶s death, he inherited the cigar business his father ran with a debt of

about $10,000. Liquidating the business in 1924 to pay of his debt proved effortless.

Looking for a means to pay of his debt, he bought an ice cream recipe from a local

and a small soda shop in Quincy, Massachusetts. Using hand-crank ice makers in his

basement and doubling the butterfat in the original recipe, Howard Johnson was

grossing approximately $240,000 in sales revenue by 1928 by selling his ice creamsand soda pops along the beaches of Massachusetts and in-store.

Expansion for his business came quick. Opening more locations in the general

Massachusetts area and adding other food items such as hamburger and frankfurter to

his original menu of over twenty eight ice cream flavors. In 1935, he formed his first

franchise with a local businessman, Reginald Sprague. Though new at the time, it was

a success for the Howard Johnson¶s brand. The move saw the Howard Johnson¶s

restaurants expanding rapidly and would lay the ground work for his move into the

lounging industry.

In 1954, Howard Johnson opened his first motor lounge in Savannah, Georgia. And

1975, with over 1000 restaurants and some 500 motor lounges in forty two states and

Canada, Howard Johnson¶s reached its peak. Losing revenue following the oil

embargo of 1974; up till then, eighty five percent of the company¶s revenue was

provided by travelers. With more Americans opting not to travel and fast food

companies like McDonalds becoming more appealing to children and families, the era

of Howard Johnson¶s chain of high end restaurants and motor lounges came to an end.



Page 4 of 11

The company would accept a bid of takeover from Imperial Group PLC of England in

1979 and was sold for $630 million to G, Michael Hostage.

Compared to most hotel chains of today, both hotels were centered on been cost

efficient, familiar and accessible. They were built and designed with the average

lounger and traveler in mind, providing basic amenities at a cheaper rate. Franchising

the chains, meant recognition for regular and potential customers. And a standardized

appearance created a sense of familiarity also. But with a lack of hindsight, both

chains focus entirely on their locations as a means to create wealth. While it was a

good decision in their early days, that decision became their hanging noose. Slow to

adapt to a changing environment and the fast pace in technological change left a sweetspot for their competitions such as Best Western and the Marriott hotel chain.

As the industry progresses, changes is bound to happen. Changes in appearance and

services, changes in amenities offered as well as location. All these are important

aspects, needed, for the growth in the industry. Hotels are viewed as a home away

from home by their customers and when there is a glitch in that perception, the

customer will look for a different place where they feel welcomed. Business travelers

and families on vacation provide the necessary monies these hotels need to still

remain in business so by providing better services and amenities that will make their

stay more enjoyable, relaxed and comfortable; they will in turn promote these hotels

to their friends, families and coworkers.

No hotel company operating today is unaware of the swift pace of global change and

its impact on the hospitality industry. A disgruntle customer before, using word of

mouth, could only reach a hand full of people but with today¶s technology; blogs and

social networks such as MySpace and Facebook, that handful can be as much as a

thousand in an single minute. Change is everywhere and with these changes come



Page 5 of 11

new business practices, which are evolving as fast as our technologies. Resistance to

change has become one of the primary causes of business failure.

The stream of constant change raises fundamental questions as to the creation of

shareholder wealth in a capital-constrained, highly competitive environment. How

will hotel organizations build shareholder wealth and what key drivers will result in

success? What future products and services will be essential in a technology-driven,

global environment marked by rising customer expectations? Also, what alternative

approaches and skills must organizations develop to ensure market success?

The future success of hotel organizations will be driven in large part by the ability to

foresee and capitalize on change. Beyond this, there is an urgent need to identify what

will be required in the competitive environment of the future with its intense focus on

serving customer needs. The hospitality industry is subject to deep currents of change

set in motion as economic and social systems shaped in the industrial era evolve to a

knowledge-based era driven by technology advances with the strongest influence

coming from the customer¶s need and expectation.

In structuring organizations for the future, companies must build management

capabilities to deal with one of the most critical challenges, diversity in the

marketplace. Employing information technology to drive business success in this

information-driven era is not only the path of least resistance, but vital to virtually

every aspect of operations.

Hotels, before now, have always been centered on location. Adopting the ideology

that ³if we build it, they will come.´ This idea will not work in the future, if thesecompanies hope to grow and create wealth for their shareholders. The trend to have a

real estate and asset orientation, rather than been customer oriented will result in loss

of revenue for most chains as others move towards a more customer base form of



Page 6 of 11

business, relying on excellent customer service and word of mouth, from their

customers, to promote their entities.

The hotel organizations will be best served by focusing less on their hotel assets as

measures of success, and more on their customers. This will involve a shift in viewing

the real estate asset as the wealth creator, to the customer as the key to building

wealth. Therefore, leading hotels to create customer focused business decisions at all

levels of developing and operating a hotel organization.

Within this context, hotel developers, owners and management companies will all

need to develop new strategies, skills and processes that look forward to the

competitive demands of the future. These ultimately must address issues related to

vision and planning, as well as organizational skill sets and processes to attract and

retain customers. To stake a claim in the future, current business practices should be

examined in light of what can be expected to be the key success factors in the coming

years.

Embracing a global change orientation as the information age produces greater

worldwide integration of business practices. A global knowledge base will become

invaluable. Success in local and regional hotel markets will be shaped decisively by a

global business environment that defines capital movement, customer expectations

and applications of new technologies.

Also as the hotel chains continue to grow and expand, the need for visionary leaders

will increase. Visionary leaders with the ability to forecast the change in the future, to

anticipate change rather than react to it, will be one of the single greatest determinantsof market dominance in the years ahead. The old command and control model of

leadership will give way to a focus on leadership in ideas, information, vision and

teamwork. Setting the trend for the future hotel, as Kemmons Wilson and Howard



Page 7 of 11

Johnson did in their time, will prove profitable for these chains and today's hotel

organizations need to recognize the need for that.

A visionary leader that applies Phillips Crosby¶s ³Principle of Zero Defect´ will see

growth. Phillips Crosby¶s ³Zero Defects´ was the principle ³doing it right the first

time.´ Using the concept of "zero defects" in amenities and services provided by a

hotel change can yield tremendous benefits, when used as a standard for quality

control.

The quality of any chain is in its staffs and that quality should be set by the leader of

the chain. The tone for moral character, vision, corporate culture and fiber of the

institution must be an idea shared by staff throughout the organization, including

those who meet the customer thereby overcoming the original status quo of over-

managed and under-led and placing an emphasis on flexibility, learning and

cooperation. Management competencies will need to be aligned in order to achieve

the desired result. For many organizations, this may mean a shift from traditional

hierarchies typical of companies in an industrial era to a flatter organization with a

more transparent interface between leadership, organizational functions and

employees.

Traditional organizations that follow well-documented rules must give way to leaders

who can balance a sense of discipline with that of flexibility. Talent and resources

must be marshaled and leveraged. In an industry with high fixed costs and labor

intensity, the concept of leverage in the hotel business is an all-important one.

Improving labor productivity through technology must be a goal for today's forward-

looking hotel organization. Management must also be able to narrow the gap between

the employer and the employee, forcing a flatter organization in the process. This will

put management closer to the customer and speed the two-way communication

process up and down the organization.



Page 8 of 11

It used to be that hotel chains used information technology (IT) for book keeping and

other accounting processes, today however; information technology might be the

saving grace for most hotel chains. Information technology today influences all

aspects of business from corporate strategies to organizational structure and from thevery business processes it is designed to support to performance measurement. In

today¶s world were the customer dictates the amount of service they require and

where they want their money spent, information technology becomes the backbone of

the hotel chain and must be delivered to two very critical areas in any chain; sales and

marketing and customer service.

Technology was once viewed as a way to reduce costs by replacing people. Thatattitude has been firmly supplanted by one that seeks IT support for the creative work

that all organizations must pursue. IT must allow organizations to react more speedily

to market needs and, of course, produce the fulfillment of customer demands both

quickly and accurately. To do this IT must operate on a decentralized basis. IT

delivers, but it has to be the right information to the right people, and it needs to be

done on a timely basis.

Globalization and creating a more diverse staff and hotel culture will be important for

the hotel of the future. As more and more businesses go global, the need for a global

standard in hotel accommodation will be required by company for their traveling

managers and clients coming from different nations. So the need for a diverse staff

will be required to make these globetrotters feel at home while on the road. A friendly

staff with knowledge in different culture and possible bi-lingual will be an added plus

for hotels hoping to create wealth for their stakeholders.

In many countries where tourism has become a major export industry, the hospitality

industry will become the focal point for concepts of globalization to take root. Indeed,

tourism has become the world¹s largest export industry, involving as it does enormous



Page 9 of 11

cross-border flows of people and capital. The hospitality industry is one of the world¹s

largest employers and arguably one of the largest traders of foreign currency. It is

often also a focal point for local society, and is clearly at the center of the transfer of

ideas and the cross fertilization of cultures. At its heart, the hospitality industry playsan important part physically in bringing people together in a global community.

Hospitality is thus not only an industry it is a concept and a major force in the rapidly

evolving global marketplace.

The hospitality industry is thus at the very core of the globalization of international

business. Hospitality companies therefore need to consider the implications of the

global context in which they operate and must be prepared to address the questionsthat arise from this changing environment. What tangible trends driven by an inter-

linked global marketplace will shape the hospitality industry of the future? What does

globalization mean for the internationally oriented hospitality company, as well as

hotel operations that compete locally and regionally with these organizations?

The globalization of business and lifestyles is characterized by communicating over

vast distances in foreign languages, frequent travel to overseas countries, dealing in

many currencies, and coping with a variety of political and social systems, regulatory

environments, cultures and customs.

For those companies pursuing a global strategy and accustomed to hotel management

contracts and franchising relationships, significant adjustments will need to be made

to the growth and development model. The process that promotes these concepts is a

slow one and global-minded companies will need to respond accordingly.

A number of international hotel companies have sought the economies of scale

attendant to developing single brands and products, and providing them in a uniform

fashion to as many markets around the globe as possible. A countervailing trend is

that many people, both tourists and business travelers, seek the unique qualities and



Page 10 of 11

customs of an individual locale. In response, some international hotel companies have

tried to reflect local culture in the way their hotels are designed and operated.

This is clearly an arena in which there is no one right answer, but rather a balance of

complex factors required. For example, there is a general consensus that "global

travelers," who travel frequently whether for business or recreation, usually prefer a

uniform product, because they want the convenience and comfort of predictability,

and they demand a high level of service. Those who travel less frequently, but have a

fairly high level of sophistication may avoid such dominant global brand and product

concepts. A third group is looking for what they are accustomed to, and are attracted

by brands they are familiar with; in essence, they prefer to stay in environments thatreflect their home-based experience.

Staffs for the future hotel will have to be diverse, possibly bilingual and quick to adapt

to changes in the world economy.



Page 11 of 11

Sources:

http://www.hotel-online.com/Trends/Andersen/global.html

http://en.wikipedia.org/wiki/Howard_Johnson's http://en.wikipedia.org/wiki/Howard_Deering_Johnson

http://en.wikipedia.org/wiki/Holiday_Inn

http://en.wikipedia.org/wiki/Kemmons_Wilson

Leadership: the inner side of greatness: a philosophy for leaders By Peter Koestenbaum

Documents

HMM 103, Complete