chapter 1 the hotel industry overview and professional career opportunities

Chapter 1The Hotel Industry

Overview and Professional Career Opportunities

Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.Hayes/Ninemeier Pearson Prentice Hall

Upper Saddle River, NJ 07458

The third largest retail industry, following automotive and food storesThe nation’s largest service industryOne of the nation’s largest employers

Tourism Industry

Hospitality Retail (Shopping) Stores

Transportation Services

Destination (Activity) Sites

Lodging Is Part of the Tourism Industry:The Tourism Industry

Lodging Operations

F&B Operations

Tourism industry is:

Segments in the Tourism Industry



Lodging Is Part of the Tourism Industry:Lodging (Hotel) Sector

Lodging properties are a segment within the tourism industry.

Range of Lodging Property Alternatives

Destination Resorts

Full-Service Hotels

Limited-Service Hotels

Sleeping Rooms



Lodging Is Part of the Tourism Industry:A Brief History of Hotels

Highlights in the Modern History of the U.S. Hotel Industry

1900Fewer than 10,000 hotels

750,000 to 850,000 rooms

1910

10,000 U.S. hotels

1 million rooms

300,000 employees

Average size: 60–75 rooms

1920

Occupancy: 85%

Hotel construction reaches an all-time peak as thousands of rooms are added along the new state and federal highways



1930Occupancy: 65%

AHA’s Hotel Red Book lists 20,000 hotels

1940Occupancy: 64%

Average room rate: $3.21

1950Occupancy: 80%

Typical hotel: 17 rooms


1960

Occupancy: 67%

$3 billion in sales

Total hotel rooms: 2,400,450

Typical hotel: 39 rooms, independent and locally owned


Lodging Is Part of the Tourism Industry:A Brief History of Hotels (cont.)

Highlights in the Modern History of the U.S. Hotel Industry (cont.)

1930



1970

Occupancy: 65%

$8 billion in sales



1980

Occupancy: 70%

$25.9 billion in sales







2000Occupancy: 63%

$97 billion in sales

1990

Occupancy: 64%

$60.7 billion in sales


45,020 properties






Close Look at Lodging Organizations

2003 U.S. Property/Room BreakdownBy Location Property Rooms

Airport Suburban Urban Highway Resort

3,23918,4765,408

18,3122,149

444,8601,490,970716,485

1,296,279467,102

By Rate Under $30 $30–$44.99 $45–$59.99 $60–$85 Over $85

8537,862

16,68014,3347,855

50,642499,350

1,102,8451,393,6331,369,196

By Size Under 75 rooms 75–149 rooms 150–299 rooms 300–500 rooms Over 500 rooms

27,37914,2974,3051,094509

1,144,7531,523,999860,983407,038478,923



Close Look at Lodging Organizations: Typical Lodging Guests

Typical Lodging Guests in 2003:

52% traveled for business

48% traveled for pleasure



Emphasis on Safety, Cleanliness, and Service– Guests also consider “intangible” aspects of the purchase decision.

Close Look at Lodging Organizations: Lodging Industry Characteristics

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.

Repetitiveness– Some operating procedures are routine.

Labor Intensive– Much of a hotel’s daily work involves employees providing services.



Close Look at Lodging Organizations: 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



Close Look at Lodging Organizations: Lodging Industry Overview (cont.)

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



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




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

Hotel Ownership/Management




Hotel Ownership/Management Alternatives

Hotel Property

Franchise Company

(Franchisor)IndependentOwnership Independent

Franchise Company

(Franchisor)IndependentOperation IndependentManagement

CompanyManagement

Company

Franchise Non-FranchiseAffiliation




GM / Rooms Division M. / Front Office M. / Controller / Executive Housekeeper / Catering M. / Executive Steward / F&B M. / Banquet M. / Chef / Executive Chef / Food Production M. / Pastry Chef / Sous Chef / Room Service M. / F&B Controller / Restaurant M. / Beverage M. / Purchasing Director / Human Resources M. / Credit M. / Executive Assistant M. / Convention M. / Sales and Marketing M. / Auditor / Director of Security / Convention Services Director / Resident M. / Chief Engineer

Typical Multiunit Positions: Area GM / Regional GM / Director of Training / Vice President, Finance / Vice President, Real Estate / Director of Franchising




Close Look at Lodging Organizations: Hotel Organizational Structures

Organizational Chart for Small (75-Room), Limited-Service Hotel

Small Hotel (75 Rooms)

Executive Housekeeper

and Staff

Front Office Manager and Staff

ManagerBookkeeper/Accountant

Maintenance Chief

and Staff



Large Hotel (350 Rooms)

Organizational Chart for Large (350-Room), Full-Service Hotel

GMAdministrative Assistant

Assistant to the GM

Controller F&B Director

HR Manager

Director of Sales &

Marketing

Front Office

Manager

Executive Housekeeper

Chief Engineer

Close Look at Lodging Organizations: Hotel Organizational Structures (cont.)



Line Department

Those directly involved in the “chain of command”Directly responsible for revenues – Front office and food/beverageAlso responsible for property operations– Housekeeping, maintenance, and engineering

Staff Department

Providing technical, supportive assistance to support line decision makersMaking recommendations to (but not decisions for) line decision makers– Purchasing, human relations, and accounting

Line and Staff Departments




Revenue Center

A hotel department that generates revenue– Front office and food/beverage departments– Also revenues from telephone services, space rental, and fees from parking garages, vending machines, and golf courses

Cost Center

A hotel department that incurs costs in support of a revenue center– Marketing, maintenance, accounting, human resources, and security departments

Revenue and Cost Centers




Successful hotels greatly emphasize serving their guests to the best possible extent.

Lodging Is a Service Business

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.

Facility Engineering & Maintenance

Consistent delivery of quality products and services to guests must be addressed first, rather than considering tactics to maximize revenue; minimizing costs comes next!



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?

Questions that must be addressed to deliver quality service:

Lodging Is a Service Business (cont.)



Problem of hotel community being overbuilt.

Hoteliers should examine ways to reduce costs without impacting quality.An excessive emphasis on cutting service or product quality will ultimately result in reduced hotel revenue.

Managers should implement procedures to a) reduce turnover levels, b) increase productivity levels, and c) recruit from nontraditional employee labor markets.

Labor Shortages

Current Issues Confronting Hoteliers: Operating Issues

Cost Containment

Increased Competition



Various amenities (e.g., business centers) increase costs for hotel owners yet sometimes appeal to only a small segment of the hotel’s market.

Results in a more competitive selling environment for hoteliers (e.g., online room booking).

The more the number of brands increase, the harder consumers find it to differentiate among them.

Efforts to focus on a highly defined, smaller group of travelers.

Increased Market Segmentation

Brands Overlap

Increased Sophistication of Consumers

Increased Number of Amenities

Current Issues Confronting Hoteliers: Marketing Issues



Interactive Reservation Systems– Allow potential guests to make reservations at preferred room rates in reduced timeGuest Room Innovations– Two (or more) telephone lines enabling Internet access, interactive menu ordering for room service, electronic games, and guest room checkoutData Mining Technology– Analyzing guest- (and other) related data to make better marketing decisionsYield Management– Matching guest demand with room rates

Recent technological innovations include:

Current Issues Confronting Hoteliers: Technological Issues



“As goes the economy, so goes the lodging industry”

Impact of globalization on the lodging industry

Lodging industry is an integral part of the tourism industry.

– It is affected by the extent to which travelers, both within the country and worldwide, travel.

Facility Engineering & Maintenance

Economies of the world, the country, the state, and the community have a significant influence on the financial success of a lodging organization and the individual properties that comprise it.

Current Issues Confronting Hoteliers: Economic Issues



Enrolling in and graduating from hospitality-related programs of studyWorking in a variety of lodging positions (including educational internships)Developing a career ladder for professional development within the lodging industry– Working with a mentorTalking with GMs at nearby hotels, industry leaders, and educators to obtain suggestions

How does one start to plan for a career in the lodging industry?

Professional Career Opportunities in Lodging: Get Started with Career Planning

chapter 1 the hotel industry overview and professional career opportunities

Documents

hotel industry overview

hotel operations management

tourism industry slide

typical hotel

hotel construction

sales total hotel rooms

largest retail industry

rooms average room rate