ITH Chapter04

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Introduction to Hospitality, Fourth EditionJohn Walker

2006 Pearson Education, Inc.Pearson Prentice HallUpper Saddle River, NJ 07458

Chapter 4The Hotel Business


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After Reading and Studying This

Chapter, You Should Be Able to: Define the following terms: hotel franchising,

partnerships, leasing, syndicates, and

management contracts Classify hotels by type, location and price Explain vertical integration Name some prestigious and unusual hotels Describe the effects of a global economy on

the hotel industry


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Franchising Allows for a company to expand

rapidly

Uses other peoples money(franchisee)

Franchisor

The company Over 180 franchised hotel brands

in North America today


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Figure 4-1Franchised Hotels Among the Top 10 Corporate

Chains


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Figure 4-2

Top 10 Management Companies


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2006 Pearson Education, Inc.

Pearson Prentice HallUpper Saddle River, NJ 07458

Trends in Franchising Curb appeal (fresh looks) Location near highways, airports and

suburbs Expansion in smaller cities New markets in proximity to golf

courses and other attractions Foreign expansion to increase brand

awareness


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Benefits Set of plans and specifications for

building

National advertising Centralized reservation system Participation in volume purchasing

discounts Listing in the franchisors directory Low fee percentage charged by credit

card companies


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Drawbacks Lack of operational power; mustconform

High fees both to join andongoing

Central reservations produces 17-26% of reservations

Must meet standards as set by

franchisor


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Benefits and

Disadvantages for Franchisor Benefits

Increased market share/recognition Up-front fees

Disadvantages

Need to be careful in selection offranchisees Difficulty in maintaining control of

standards


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Management Contracts Contract

The Players Owner - financial responsibility

Management company - operationalresponsibility

Fee structure Trend toward expansion of contract

provisions


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Hotel Rating Services Rating Services

AAA American Automobile Association

Diamond Award

Mobil Travel Guide Five Star Award


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Ways to Classify Hotels Classifying Hotels

LocationTypes of services offered

Market price levels


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Figure 4-5

Hotel Rating Guide


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Location Center city hotels Resort hotels

Airport hotels Freeway hotels Casino hotels Full service Convention Economy Extended stay Bed and breakfast


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Hotels by Price Segment Budget - $29-$39

Economy - $40 - $60

Mid-price - $60 - $100

Up scale - $100 - $200

Luxury - $140 - $450 All-suites - $95 - $175


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City Center Hotels Public transportation available

for business or leisure

Range of accommodations andservices

Typically have a signaturerestaurant


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Resorts Originally began due to

rail travel

Greenbrier in WestVirginia www.greenbrier.com

The Halekulani in Wikki,

Hawaii www.halekulani.com The Ritz Carlton Kapalua

in Maui, Hawaii

www.ritzcarlton.com
http://www.greenbrier.com/http://www.halekulani.com/http://www.ritzcarlton.com/http://www.ritzcarlton.com/http://www.halekulani.com/http://www.greenbrier.com/


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More on Resorts Captured Clientele

Food service isunique

Diversifiedmarketing mix Children Groups

Eco-tourism


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Vacation 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


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Vacation Ownership Estimated that 2 million households

own vacation intervals at 3500 resorts

in almost 90 countries Helps ensure purchaser todays prices

for tomorrow

Yearly maintenance fees Fixed or floating times Example

www.rci.com
http://www.rci.com/http://www.rci.com/


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Airport Hotels High occupancy due to location Business, group and leisure travelers Full service 200-600 rooms Convenient location Airport shuttle service Economical pricing


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Freeway Hotels Prominent in the 1950s Easy access to roadways Park outside the room entrance Example

Motel 6 www.motel6.com
http://www.motel6.com/http://www.motel6.com/


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Casinos 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


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Convention Hotels Meet the needs of large groups

500 plus rooms

Larger public areas to accommodategreater public demand

Banquet areas within and around thehotel

High percentage of double occupancy

Full-service oriented


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Full-Service Hotels Typically Business Oriented Multiple food and beverage

outlets Meeting and convention services

Chain representation Doubletree www.doubletreehotels.com

Sheraton www.sheraton.com
http://www.doubletreehotels.com/http://www.sheraton.com/http://www.sheraton.com/http://www.doubletreehotels.com/


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Economy/Budget Hotels 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 Also considered budget hotels Clean rooms Reasonably sized and furnished Continental breakfast


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All-Suite Cater to guests for an

extended period

Reduction in rate based onlength of stay

More space than typical hotel Examples

Embassy Suites

www.embassy-suites.com
http://www.embassy-suites.com/http://www.embassy-suites.com/http://www.embassy-suites.com/http://www.embassy-suites.com/http://www.embassy-suites.com/


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Bed and Breakfasts

A home away from home

Accommodation with an ownerwho lives on premises

Maintains a few rooms

Offers breakfast Personable and quick service


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Vertical Integration Lodging companies meeting the

needs of several types of guestsbased on price, facilities and

amenities Choice hotels which have several

chains that meet its diverseclientele

Luxury - Clarion Mid-scale - Quality Inn/Suites Budget - Comfort Inn Economy - Sleep Inn

www.hotelchoice.com
http://www.hotelchoice.com/http://www.hotelchoice.com/


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Marketing Consortiums

Also called referral organizations Numerous independent properties

unite to compete with themarketing power of chainoperations

Similar benefits as franchises, ata lower cost

Provides incentives for clients


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The Best Hotels

Some previous winners:

Oriental Hotel in Bangkok,Thailand

Regent of Hong Kong

Bell-Air of Los Angeles


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Unusual Hotels

Ice Hotel in SwedishLapland

The Treetops Hotel in Kenya Underwater Hotel in

Australia Capsule Hotel in Japan The Burj Al Arab in Dubai


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Introduction to Hospitality, Fourth Edition


Pearson Prentice Hall

Trends

Capacity control

Safety and security Assets and capital

Technology

New management Globalization

Documents

ITH Chapter04