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Effects of physical environment/evidence in

the selection of a Hotel

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University of Information Technology & Sciences

Topic: Effects of physical environment in the selection of an organization. (Hotel)

Course title: Research Methodology of Business

Course Code: MGT 441

Department: Bachelor of Business Administration

Prepared for-

Mrs. Nazia Nabi

Lecturer of Marketing

School of Business

Prepared by-

Rawnak Razzak (ID: 08310026)

Sadi Mohammad Naved (ID: 08410056)

Israt Jahan (ID: 0841006)

Afsana Khanom (ID: 0841001)

Date of Submission: April 17, 2010

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17th April, 2010

Mrs, Nazia NobiBBA, MBA (DU)Lecturer

Faculty, School of BusinessUNIVERSITY OF INFORMATION TECHONOLOGY & SCIENCES

Subject: Submission of the report on The Hotel Analysis

Dear Madam,

With humble submission we want to thank you for assigning us the pragmatic report onThe Hotel Analysis. We have really enjoyed the various stapes preparing the report.We have made a strong group works and have also collected different data fromdifferent Hotel. We think this report enriches our practical knowledge on finance.

There may be some mistakes. We think the mistakes in the report will be kindlyexcused.

With thanks and best regards.

Sincerely yours,

Rawnak Razzak 08310026

Sadi Muhammed Naved 08410056

Israt Jahan 08410006

Afsana Khanom 08410001

BBAFaculty, School of BusinessUniversity of Information Technology and Sciences.

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Table of Content:

Letter of transmittal 01

Acknowledgment 03Executive summary 04

Introduction 05

Objective 05

Methodology 06

History of Hotel industry 06

Current Scenario of Hotel Industry 08

Classification 09

Market Segment 12

Property Type 12

Size 12

Level of Service 13

Ownership and Affiliation 13

Awarding of Class 13

SWOT analysis 14

Findings 16

Frequency Distribution 17

Conclusion 18

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Acknowledgment-

Our project was to effects of physical environment/evidence in the selection of a

Hotel. We chose deferent type of hotels as our project.

It was really a nice experience to do the project. While were passing through all the

steps that is, collecting and analyzing the relevant information and trying to make valid

and reliable inferences about the different problems and opportunities in exporting and

their solutions, we found us to be grateful to them who helped us a lot to make it

happen.

So, first of all, our gratitude along with thanks goes to The Almighty Allah for keeping

everything on the right track. Then, we would like to thank our honorable faculty Mrs.

Nazia Nobi for her loyal support. Wed thank all of our fellow classmates and last of all,

we should appreciate our team dedication and the spirit for making us able to finish the

project just by the time. At last, special thanks, gratefully and lovingly offered to our

parents, for their overall steadfast and loyal support during the preparation of this

project.

Thank you

________________________

________________________

________________________

________________________

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Executive Summary-

Hotel operators and observers often employ industry-wide averages as key points ofcomparison and analysis for room rates, occupancy, and revenues. The use of simpleaverages, however, can be misleading if one does not take into account the possibility

that a mean will be pulled in one direction or another by extreme values. This analysisof three industry averages shows that those averages are, indeed, subject to distortion,or skew. The analysis, which examines figures for virtually all brand-name hotels in theUnited States, determined that the means for average daily rate (ADR) and revenue peravailable room (RevPAR) are skewed in a positive direction by hotels with extremelyhigh rates. On the other hand, occupancy is skewed in a negative direction by a groupof hotels with inordinately low occupancy levels.

Many of the extreme values are found in the top-25 markets, which have hotels withinordinately high ADRs. Analysis of those markets shows that, once again, the overallstatistics are distorted by a relatively small set of hotels with exceptional ADRs and

occupancies. However, each of the top markets shows a distinctive rate and occupancypattern.

The pattern of skewed operating statistics carries over into individual lodging segments.The greatest distortions arise in the luxury and upscale segments, while economy andbudget hotels record more consistent (normally distributed) statistics.

Finally, the analysis shows that although the events of created much turmoil for theindustry, the hotel business had already cooled substantially from its record pace of ayear earlier. In conclusion, managers must be careful in applying overall industrystatistics to their own situation and should take into account the factors that distort

operating statistics.

Scope of the report

At the backdrop of such a conducive business atmosphere 'Pre-feasibility Report onFive-star Hotel Industry' attempts to examine such critical factors which will provide vitalinputs in general to the potential investors and estimation of commercial viability of suchan investment.

- It presents the market analysis of Indian hotel industry in terms of structure&

segmentation, market size, major hotels etc.

- It analyses the steps involved in setting up a hotel describing the technical aspects interms of location details and land requirement.

- It assess the manpower planning and financial estimate involved in setting up a hotel.

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- Brings an insight into the procedure for setting up a hotel, type of machinery & floorsspace required, requirement of regulatory permissions & clearances.

-Analysis of porters five forces and SWOT of the industry.

Introduction-

A hotel is an establishment that provides paid lodging on a short-term basis. Theprovision of basic accommodation, in times past, consisting only of a room with a bed, acupboard, a small table and a washstand has largely been replaced by rooms withmodern facilities, including en-suite bathrooms and air conditioning orclimate control.Additional common features found in hotel rooms are a telephone, an alarm clock, atelevision, and Internet connectivity; snack foods and drinks may be supplied in a mini-bar, and facilities for making hot drinks. Larger hotels may provide a number ofadditional guest facilities such as a restaurant, a swimming pool or childcare, and have

conference and social function services. Hotel rooms are usually numbered (or namedin some smaller hotels and B&Bs) to allow guests to identify their room.

Some hotels offer meals as part of a room and board arrangement. In the UnitedKingdom, a hotel is required by law to serve food and drinks to all guests within certainstated hours; to avoid this requirement it is not uncommon to come across privatehotels which are not subject to this requirement. In Japan, capsule hotels provide aminimized amount of room space and shared facilities.

In the United Kingdom, Australia, Canada and Ireland (and rarely in some parts of theUnited States), the word may also refer to a pub or bar and might not offer

accommodation. In India and Bangladesh, the word may also refer to a restaurant.

Objective-

Themain papas of this research are to find out which hotel is better than each other.How they perform & their service is good or bad. Followings were the objectives of the

study:

Broad objective: To develop profile of Hotels in Bangladesh.

Specific objectives: To attain the broad objective following specific objectives were

pursued:

To know briefly about the Hotel industry. To find out the group influence on Hotel industry. To identify the motivational factors that influences the Hotels in Bangladesh. To find the situational influences that affects the Hotels.

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Methodology-

Data Collection

This work is based on both secondary and primary sources. The secondary sources of

data include internet articles, some foreign and local websites on beverages. Most of

the data required for the study were collected from primary source through structured

questionnaire. The data are in the questionnaire is based upon the hotels in

Bangladesh.

Area Surveyed

The study was confined to Dhaka. This area has been selected because many hotels

are in Dhaka city. Time and cost were other important considerations for such decision.

Selection of Sample

Because of the lack of sampling frame convenient method of sample were used.

Because our group members were only six and all of them are from different location.

So random sampling was not possible for us to use. We collect our data initially from 60

respondents. After that we find out the consumers of beverage product and continue our

research by focusing on their opinion.

Analyze of Data

The hotel info is collected on basis of the hotel in Bangladesh. All the data were edited,

coded and classified by our group members before making the final analysis. Average,

percentage and ranking were used for analyzing the data. Different graphs, charts and

table were used for presenting the data.

History of Hotel Industry-

The hotel industry is a mature industry marked by intense competition. Market shareincreases typically comes at a competitors expense. Industry-wide, most growth occursin the international, rather than the domestic, arena. Common American hotelclassifications are as follows:

Commercial Hotels cater mainly to business clients and usually offer room service,coffee-shop, dining room, cocktail lounge, laundry and valet service as well as access tocomputers and fax services.

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Airport Hotels are located near airports and are a conveniently located to provide anylevel of service from just a clean room to room service and they may provide bus orlimousine service to the air lines.

Conference Centers are designed to specifically provide meeting space from groups;

they provide all services and equipment necessary to handle conventions.

Economy Hotels provide a limited service and are known for clean rooms at low pricesmeeting just the basic needs of travelers.

Suite or All-Suite Hotels are hotels whichoffer spacious layout and design. Businesspeople like the setting which provides spaceto work and entertain separate from thebedroom.

Residential Hotels used to be very popular.The typical residential hotel offers long termaccommodations.

Casino Hotels are often quite luxurious.Their main purpose is in support of the gambling operation. Casino hotels often offertop name entertainment and excellent restaurants.

Resort Hotels are the planned destination of guests, usually vacationers. This isbecause resorts are located at the ocean or in the mountains away from inner cities.Resort hotels may offer any form of entertainment to keep their guests happy and busy.

A summary of key events in the history of the industry would include the following:

While the practice of renting space to travelers stretches back to antiquity, what couldbe considered the modern concept of a hotel derives from 1794, when the City Hotelopened in New York City? While the practice of renting space was not new, the CityHotel was purported to be the first building devoted exclusively to hotel operations. Forits time, the building was quite large and possessed 73 rooms. Similar operations soonappeared in such nearby cities as Baltimore, Boston and Philadelphia.

Interestingly, New York Citys first skyscraper was a hotel - the six stories AdelphiHotel.

Hotels took a distinct step up in style and class when the Tremont House opened inBoston in 1829. This hotel was considered by many to be the beginning of what wasregarded as first class service. With 170 rooms, the Tremont House was a largefacility. In addition, the hotel offered features which, for the time, were amazing.

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Private single and double rooms were available, which offered not only privacy, but alsosecurity. In addition to water pitchers and a washing bowl, free soap was provided ineach room. The Tremont House offered French cuisine and, reportedly, was the firsthotel to have a Bellboy.

In 1908, the Buffalo Sattler opened, marking the beginning of the modern commercialhotel era. Many services now considered standard were introduced by the Statler,including such amenities as a light switch next to the door, private bathe, ice water anda morning newspaper. The Sattler set the standard of the day by being clean,comfortable and affordable. The Sattler served as the pattern for hotel design andoperation for many years.

In the 1920s, hotel building entered a boom phase and many famous hotels wereopened, including the Waldorf Astoria, New Yorks Hotel Pennsylvania, and the ChicagoHilton and Towers, which was originally named the Stevens.

Motels began to replace roadside cabins as use of the automobile spread throughoutsociety. Offering clean rooms with adjacent parking, motels enjoyed great popularitywith the traveling public.

In the 1950s and 1960s, the practice of franchising appeared within the industry.Franchising enabled entrepreneurs to expand their operations without the use ofsubstantial capital.

For much of their history, hotels were owned and operated by individuals. However, asfranchises and chains began to appear, individually owned hotels found themselves

increasingly at a competitive disadvantage. By the 1960s, independent prospectsbegan to improve as the result referral organizations such as Quality Courts, BestWestern, Master Host and Best Eastern.

From the 1980s forward, mergers and acquisitions became common within theindustry, and brands become hotly traded commodities.

Recently, use of management companies has entered the mainstream. As a result,many chains are more involved in management than in ownership. These chainsrealize a much more predictable and steady income stream than had normally beenyielded by ownership.

Current Scenario of Hotel industry-

Over the last decade and half the mad rush to India for business opportunities hasintensified and elevated room rates and occupancy levels in India. Even budget hotels

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are charging USD 250 per day. The successful growth story of 'Hotel Industry inBangladesh' seconds only to China in Asia Pacific.

'Hotels in Bangladesh' have supply of 110,000 rooms. According to the tourism ministry,4.4 million tourists visited India last year and at current trend, demand will soar to 10

million in 2015 to accommodate 350 million domestic travelers. 'Hotels in Bangladesh'has a shortage of 150,000 rooms fueling hotel room rates across India. Withtremendous pull of opportunity, Bangladesh is a destination for hotel chains looking forgrowth.

The World Travel and Tourism Council, Bangladesh, data says, India ranks 18th inbusiness travel and will be among the top 5 in this decade. Sources estimate, demandis going to exceed supply by at least 100% over the next 2 years. Five-star hotels inmetro cities allot same room, more than once a day to different guests, receiving almost24-hour rates from both guests against 6-8 hours usage. With demand-supply disparity,'Hotel Bangladesh' room rates are most likely to rise 25% annually and occupancy to

rise by 80%, over the next two years.

'Hotel Industry in Bangladesh' is eroding its competitiveness as a cost effectivedestination. However, the rating on the 'Indian Hotels' is bullish. 'India Hotel Industry' isadding about 60,000 quality rooms, currently in different stages of planning anddevelopment and should be ready by 2012.

MNC Hotel Industry giants are flocking India and forging Joint Ventures to earn theirshare of pie in the race. Government has approved 300 hotel projects, nearly half ofwhich are in the luxury range. Sources said, the manpower requirements of the hotelindustry will increase from 7 million in 2002 to 15 million by 2010.

With the USD 23 billion software services sector pushing the Bangladeshi economyskywards, more and more IT professionals are flocking to Bangladeshi metro cities.'Hotel Industry in Bangladesh' is set to grow at 15% a year. This figure will skyrocket in2010, when Dhaka hosts the Commonwealth Games. Already, more than 50international budget hotel chains are moving into Bangladesh to stake their turf.Therefore, with opportunities galore the future 'Scenario of Bangladeshi Hotel Industry'looks rosy. It is expected that the budget and mid-market hotel segment will witnesshuge growth and expansion while the luxury segment will continue to perform extremelywell over the next few years.

The roles of the multinational companies are significant with their increasing contributionto the Economy. Basically Services are intangible deeds, processes and performancesthat cannot be touched, seen or felt but can be experienced. The Service sector ischaracterized by its diversity. Global opportunities are growing due to acceleratedgrowth of the service economy.

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Classification-

The cost and quality of hotels are usually indicative of the range and type of servicesavailable. Due to the enormous increase in tourism worldwide during the last decades ofthe 20th century, standards, especially those of smaller establishments, have improved

considerably. For the sake of greater comparability, rating systems have beenintroduced, with the one to five stars classification being most common and with higherstar ratings indicating more luxury. Hotels are independently assessed in traditionalsystems and these rely heavily on the facilities provided. Some consider thisdisadvantageous to smaller hotels whose quality of accommodation could fall into oneclass but the lack of an item such as an elevatorwould prevent it from reaching a highercategorization. In some countries, there is an official body with standard criteria forclassifying hotels, but in many others there is none. There have been attempts atunifying the classification system so that it becomes an internationally recognized andreliable standardbut large differences exist in the quality of the accommodation and thefood within one category of hotel, sometimes even in the same country. The American

Automobile Association (AAA) and their affiliated bodies use diamonds instead of starsto express hotel and restaurant ratings levels.

Hotels are also classified by service type ranging for all-inclusive full-service resorts thatcater to vacationers to small limited service hotels that cater to transient businesstravelers. The main categories of hotels are as follows;

Full Service Upscaleo Examples include Conrad Hotels, Ritz Carlton, Four Seasons Hotels, and

JW Marriott Full Service

o Examples include Hilton, Marriott, Doubletree, andHyatt

Select Serviceo Examples include Courtyard by MarriottandHilton Garden Inn

Limited Serviceo Examples include Hampton Inn, Fairfield Inn, Days Inn, andLa Quinta Inn

Extended Stayo Examples include Homewood Suites by Hilton,Residence Inn by Marriott,

andExtended Stay Hotels Timeshare

o Examples include Marriott Vacation Club, Westgate Resorts, andDisneyVacation Club

Destination Club

Hotels today are basically classified into the following categories:

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1 Market segment:

Economy / limited services hotel Mid market hotel All suite hotels

Time-share hotels Condotel / Condiminium Executive hotels Luxury / Deluxe hotels

2 Property type: Traditional hotel Motels Bread and break fast inns Commercial hotel Chain hotel

Casino hotel Boutique hotels Resortso Spaso Conference resorts

3 According to size: Small hotels [150 rooms] Medium hotels [up to 299rooms] Large hotels [up to 600rooms]

Other classification can be based on:

a) Market segmentb) Property typec) Sized) Level of servicese) Owner ship and applicationf) Plansg) Type of patronageh) Length of guest stayi) Location etc

Market Segment-

Economy hotel:It provides efficient sanity private rooms with bath. The furnishing and decor areacceptable to majority of travelers. Food and beverage service may or may not beavailable.

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Mid market hotels:They offer comfortable accommodation with private on premises bath. Food andbeverage services and uniformed bell staff. They offer above average luxury.

All Suite hotels:

It offers separate sleeping and living areas along with a kitchenette and a stockedbar, and offer class service.

First class hotels:They are luxury hotels with exceptional decor better than average food and beverageservice, uniformed bell services. They often have 2 or 3 dining rooms, swimming pool,spas etc.Deluxe hotels:They are better and offer more specialized services than first class hotels. Theyalso provide limousine services.

Property Type-

Traditional hotels:They have the basic concept of rooms with breakfast, bell desk services and the otherusual services.

Motels:They are located on highways. Guest is given parking right outside their rooms. Theusually have a gas station / workshop attached to them.

Resorts:They are usually situated in tourist locations like on rivers, mountains, jungles, or thesea. They give more privilege to sports activities leisure and re-creation activities likemanages, sightseeing, adventure sports, etc.

Resident hotels:Where guest stay for longer duration, stay like weeks, months even years.

Casino hotels:They are hotels usually in tourist spots and mainly cater to people who are on holidays.Casino hotels like the name suggest offer gambling facilities along with

accommodations.

Size-Small hotel up to 150 roomsMedium hotels 150 to 299 roomsLarge hotels 299 to 600 roomsExtra large hotels above 600 rooms

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Level of service-

World-class services:They target top business executives and provide service s that cater to needs of suchpeople like lap tops in the rooms, business center, sectarian services.

Mid range services:They appeal to the larger segment of traveling public [tourist]. The services provided bythe hotel are moderate and sufficient to budgeted travelers.

Economy / Limited services hotel:They provide comfortable and inexpensive rooms and meet the basic requirement of theguest. These hotels may be large of small in size depending on the kind of businessthey get. The key factor behind the survival of these hotels is that they are priced verylow and are in the budget of most of the travelers.

Ownership and Affiliation-

Independent hotels:They have no application with other properties. They have their own management andare single properties with one owner.

Chain hotels:They impose certain minimum standards, levels of service, policies and procedures tobe followed by their entire establishment. Chain hotels usually have corporate officesthat monitor all their properties and one management runs these properties. That is all

the hotels under the chain are completely owned and run by the chain itself.

Franchisee hotels:The franchisee grants the entities, the right to conduct business provided they follow theestablished pattern of the franchisee, maintains their standards, levels of service,practice their policies and procedures.

Awarding of Class-

These are a few things listed down that are taken into consideration while awarding starcategory to any hotels.

Number and types of rooms the hotel has Elegant and comfortable surroundings Rooms efficiency Cleanness and sanitation Staff size and specialization

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Range and level of services Number of Restaurants Bars and Beverage services Concierge services Accessibility to entertainment

Availability of transportation Spa and swimming pool facility Reservation and referral services.

Star category of hotels

One star [*]Two star [**]Three star [***]Four star [****]

Five star [*****]Five star deluxe [***** deluxe]

THREE STAR CATEGORIES:For a hotel to be recognized as a three star property the architectural features andgeneral features of the building should be very good there should be adequate parkingfacilities. At least 50% of the rooms must be air-conditioned. Also the ambience anddecor of the place must be ecstatic.

They should provide reservation and information facility apart from reception,information, bell service at least two gourmet dining facility should be available. The

establishment may or may not have banqueting facility.

They should provide high levels of personalized services. The staff must be well trainedand proper standards for hygiene and sanitation must be followed. Also all propertieshave to keep in mind that proper waste management is done.

FIVE STAR CATEGORIES:Five star categories is only allotted to properties, which have all the qualities of a threestar property and a few additional. Like the entire property must be centrally airconditioned.

The building of the property must be an attractive one. All the rooms must be spacious.The property must have proper banqueting facility, business center. Proper and well-maintained pool and health club a spa is optional.

The property must have 24 hour coffee shop, round the clock room service, a bar, and aminimum of 1 gourmet restaurant. The staff must be highly trained and a degree ofspecialization must be shown. State of art Equipments must be used and the facilityprovided in the rooms must be sophisticated.

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FIVE STAR DELUXE CATEGORIES:They are more or less like five star properties with the only difference is that they are ona larger scale. Five star deluxe properties maintain a very high staff to guest ratio andvery high levels of service is maintained. They in addition to five star properties have 5to 7 dining rooms, a bar, 24-hour coffee shop, banqueting facility. Spas, fitness centers,

business centers etc.

SWOT Analysis-

STRENGTHS

A very wide variety of hotels is present in the country. A manpower cost in the Bangladeshi hotel industry is one of the lowest in the

world. Bangladeshi offers a readymade tourist destination with the resources

Natural and cultural diversity

Demand-supply gap

Government support

Increase in the market share

WEAKNESSES The cost of land in Bangladesh is high at 50% of total project cost as against

15% abroad. The hotel industry in Hotel is heavily staffed.

High tax structure in the industry makes the industry worse off than itsinternational..

Only limited value added services

Poor support infrastructure

Slow implementation

Susceptible to political events.

OPPORTUNITIES

Demand between the national and the inbound tourists can be easily manageddue to

Difference in the period of holidays.

The long-term the hotel industry in India has latent potential for growth. Unique experience in heritage hotels.

Rising income.

Open sky benefits.

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THREATS

Guest houses replace the hotels.

Political turbulence in the area reduces tourist traffic and thus the business of thehotels

Changing trends in the west demand similar changes in Bangladesh

The economic conditions of a country have a direct impact on the earnings inhotel industry.

Lack of training man power in the hotel industry.

Fluctuations in international tourist arrivals.

Increasing competition

Findings-

Maximum respondents age group is between- 20 to 29.

There are 4 five star hotel in Bangladesh.

Westin Hotel.

Radisson Hotel. Pan Pacific Sonargaon Hotel.

Sheraton Hotel.

Most of the respondents are go to the Hotel for party, vacation or other reason.

Maximum respondents stay in the hotels for 10-15 days.

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Frequency distribution-

For selecting a Hotel:

Not Important Very Important

1 2 3 4 5

Location 1 2 3 4 17

Site 1 2 3 4 5

Hospitality 1 2 3 4 5

Maintenance 1 2 3 4 5

Service 1 2 3 4 5

Cost 1 2 3 4 5

Transportation facility 1 2 3 4 5

Guide 1 2 3 4 5

Security 1 2 3 4 5

After staying in a hotel:

Not Important Very Important

1 2 3 4 5

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Employees uniform 1 2 3 4 5

Swimming pool 1 2 3 4 5

Cash/Card process 1 2 3 4 5

Restaurant Signs 1 2 3 4 5

(Entrance, exit)

Waiting area 1 2 3 4 5

Bar/Casino 1 2 3 4 5

Waiter station 1 2 3 4 5

Decoration 1 2 3 4 5

Parking 1 2 3 4 5

Guest waiting room 1 2 3 4 5

Package- Pick/Off pick 1 2 3 4 5

Feedback 1 2 3 4 5

Conclusion:

This hotel industry analysis report helps to know the full information of hotel Industry.

The government support towards the hotel industry and its development is appreciable.It creates interest of the competitors to grow drastically. The hotel industry comprises amajor part of the tourism industry. The hotel industry contributes employment andeconomical growth of the country.

The report shows that the present and future skyrocket scenario of the industry. VariousClasses and categories of hotels and their services of the industry are very effective.The market share and expansion of industry in Bangladeshi economy is rosy day byday. At present the government is very liberal in regulating and licensing to the hotelsbecause to increase foreign tourist average daily rate.