Chapter 1 The Hotel Industry Overview and Professional Career Opportunities
Dec 23, 2015
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
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
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
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
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
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
1930Occupancy: 65%
AHA’s Hotel Red Book lists 20,000 hotels
1940Occupancy: 64%
Average room rate: $3.21
1950Occupancy: 80%
Typical hotel: 17 rooms
Average room rate: $5.91
1960
Occupancy: 67%
$3 billion in sales
Total hotel rooms: 2,400,450
Typical hotel: 39 rooms, independent and locally owned
Average room rate: $9.99
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
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
1970
Occupancy: 65%
$8 billion in sales
Total hotel rooms: 1,627,473
Average room rate: $19.83
1980
Occupancy: 70%
$25.9 billion in sales
Total hotel rooms: 2,068,377
Average room rate: $45.44
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.)
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
2000Occupancy: 63%
$97 billion in sales
1990
Occupancy: 64%
$60.7 billion in sales
Total hotel rooms: 3,065,685
45,020 properties
Average room rate: $58.70
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.)
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
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
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Close Look at Lodging Organizations: Typical Lodging Guests
Typical Lodging Guests in 2003:
52% traveled for business
48% traveled for pleasure
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
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.
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
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
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
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
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
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
Close Look at Lodging Organizations: Lodging Industry Overview (cont.)
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
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
Close Look at Lodging Organizations: Lodging Industry Overview (cont.)
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Hotel Ownership/Management Alternatives
Hotel Property
Franchise Company
(Franchisor)IndependentOwnership Independent
Franchise Company
(Franchisor)IndependentOperation IndependentManagement
CompanyManagement
Company
Franchise Non-FranchiseAffiliation
Close Look at Lodging Organizations: Lodging Industry Overview (cont.)
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
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: Lodging Industry Overview (cont.)
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
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
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
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.)
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
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
Close Look at Lodging Organizations: Hotel Organizational Structures (cont.)
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
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
Close Look at Lodging Organizations: Hotel Organizational Structures (cont.)
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
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!
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
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.)
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
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
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
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
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
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
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
“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
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
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