1. Chapter 1: Hotel Industry Overview & Professional Career Opportunities

2. Hotel Operations Management, 1/e©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458 third largest retail industry following automotive & food stores nation’s largest service industry one of the nation’s largest employers Tourism Industry Hospitality Retail (Shopping) Stores Transportation Services Destination (Activity) Sites Lodging is Part of Tourism Industry: Tourism Industry Lodging Operation F&B Operations Tourism industry is Figure 1.1: Segments in the Tourism Industry

3. Hotel Operations Management, 1/e©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458 Lodging is Part of Tourism Industry: Lodging (Hotel) Sector Lodging properties are a segment within tourism industry Figure 1.2: Range of lodging property alternatives Destination resorts Full-service hotels Limited- service hotels Sleeping rooms

4. Hotel Operations Management, 1/e©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458 1900 Lodging is Part of Tourism Industry: A Brief History of Hotels Figure 1.3 : Highlights in the modern history of the US hotel industry 1910 Fewer than 10,000 hotels 750,000 to 850,000 rooms 10,000 U.S. hotels One 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

5. Hotel Operations Management, 1/e©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458 1930 Occupancy: 65% AHA’s Hotel Red Booklists 20,000 hotels Lodging is Part of Tourism Industry: A Brief History of Hotels (continued….) 1940 Occupancy: 64% Average room rate: $3.21 1950 Occupancy: 80% Typical hotel: 17 rooms Average room rate: $5.91 1960 Occupancy: 67% $3 billion in sales Typical hotel rooms: 2,400,450 Typical hotel: 39 rooms, independent and locally owned Average room rate: $5.91 Figure 1.3 : Highlights in the modern history of the US hotel industry

6. Hotel Operations Management, 1/e©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458 Lodging is Part of Tourism Industry: A Brief History of Hotels (continued….) 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 Figure 1.3 : Highlights in the modern history of the US hotel industry

7. Hotel Operations Management, 1/e©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458 Lodging is Part of Tourism Industry: A Brief History of Hotels (continued…) 1990 2000 Occupancy: 63% $97 billion in sales Occupancy: 64% $60.7 billion in sales Total hotel rooms: 3,065,685 45,020 properties Average room rate: $58.70 Figure 1.3 : Highlights in the modern history of the US hotel industry

8. Hotel Operations Management, 1/e©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458 Close Look at Lodging Organizations Figure 1.4: 2000 Property / Room Breakdown By locationPropertyRooms Urban Suburban Highway Airport Resort 10.2% 33.6% 42.2% 7.7% 6.3% 16.0% 30.4% 31.0% 10.2% 12.4% By rate Under $30 $30 - $44.99 $45 - $59.99 $60 - $85 Over $85 13.8% 26.9% 34.1% 16.2% 9.0% 3.3% 18.1% 27.3% 25.3% 26.0% By size Under 75 rooms 75 – 149 rooms 150 – 299 rooms 300 – 500 rooms Over 500 rooms 51.5% 33.5% 10.9% 2.8% 1.3% 22.5% 35.1% 21.3% 9.9% 11.2%

9. Hotel Operations Management, 1/e©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458 Close Look at Lodging Organizations: Typical Lodging Guests Figure 1.5: Typical lodging guests 28.8% are transient business travelers 25.3% are attending a conference/group meeting 24.6% are on vacation 21.8% are traveling for other reasons (for example, personal, family, or special event)

10. Hotel Operations Management, 1/e©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458 Emphasis on safety, cleanliness & service - Guests also consider “intangible” aspects of the purchase decision Close Look at Lodging Organizations: Lodging Industry Characteristics Inseparability of manufacture & sales - A room exists & is sold at the same site Perishability - If a room is not rented on a specific date, the revenue is lost forever Repetitiveness - Some operating procedures are routines Labor Intensive - Much of a hotel’s daily work involves employees providing services

11. Hotel Operations Management, 1/e©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458 Close Look at Lodging Organizations: Lodging Industry Overview Largest hotel affiliations BrandsRoomsProperties 1. CENDANT CORPOPRATION554,8346,540 2. BASS HOTELS&RESORTS, INC.481,4823,030 3. MARRIOTT INTERNATIONAL374,0101,846 4. CHOICE HOTELS INTERNATIONAL337,2264,219 5.HILTON HOTELS CORPORATION333,1101,910 These five represent some 28 % (14,884 / 53,500 properties) of all domestic properties, & 42 % (1,708,617 / 4,100,000 rooms) of all rooms. The majority of these brands do not “own” their hotels, but hotel owners elect to affiliate with the brand, for a fee. Figure 1.6: Top 5 lodging brands

12. Hotel Operations Management, 1/e©2004 Pearson Education 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 Multi-unit properties affiliated with the same brand Multi-unit properties affiliated with different brands Multi-unit properties operated by the brand or others Multi-unit properties owned by the brand Hotel ownership / management Close Look at Lodging Organizations: Lodging Industry Overview (continued….)

13. Hotel Operations Management, 1/e©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458 Close Look at Lodging Organizations: Lodging Industry Overview (continued….) Figure 1.7: Hotel Ownership / Management Alternatives Hotel property Franchise company (Franchisor) Independent Ownership Independent Franchise company (Franchisor) Independent Operation Independent Management company FranchiseNon-FranchiseAffiliation

14. Hotel Operations Management, 1/e©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458 Close Look at Lodging Organizations: Hotel Organizational Structures Figure 1.8: Organizational Chart for Small (75 Rooms), limited-service hotel Small Hotel (75 rooms) Manager Custodial personnel Housekeeping personnel Bookkeeper /Accountant

15. Hotel Operations Management, 1/e©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458 Close Look at Lodging Organizations: Hotel Organizational Structures (continued….) Large Hotel (350 rooms) Figure 1.9: Organizational Chart for Large (350 rooms), full-service hotel G.M. Administrative assistant Assistant G.M. Controller F&B director H.R. Manager Director of sales & marketing Front office manager Executive housekeeper Chief engineer

16. Hotel Operations Management, 1/e©2004 Pearson Education 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 & Food / Beverage Also responsible for property operations - Housekeeping, Maintenance, & Engineering Staff department Providing technical, supportive assistance to support line decision-makers Making recommendations to (but not decisions for) line decision-makers - Purchasing, human relations, and accounting Close Look at Lodging Organizations: Hotel Departments Line & staff departments

17. Hotel Operations Management, 1/e©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458 Revenue center A hotel department that generates revenue - Front office & 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 which incurs costs in support of a revenue center - Marketing, maintenance, accounting, human resources, & security departments Revenue and cost centers Close Look at Lodging Organizations: Hotel Departments (continued….)

18. Hotel Operations Management, 1/e©2004 Pearson Education 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, those hotels will do well. Facility Engineering & Maintenance Consistent delivery of quality of products and services to guests must be addressed first, rather than considering tactics to maximize revenue; minimizing costs comes next!

19. Hotel Operations Management, 1/e©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458 How will we show our staff and tell them about 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 & 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 (continued….)

20. Hotel Operations Management, 1/e©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458 Overbuilt problemHoteliers 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, c) recruit from non-traditional employee labor markets. Labor shortages Current Issues confronting Hoteliers: Operating Issues Cost containment Increased competition

21. Hotel Operations Management, 1/e©2004 Pearson Education 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 between them. Efforts to focus on a highly defined, smaller group of travelers. Market segmentation is increasing Current Issues confronting Hoteliers: Marketing Issues Brands overlap Increased sophistication of consumers Increased number of amenities

22. Hotel Operations Management, 1/e©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458 Interactive reservation system - Allows potential guests to make reservations at preferred room rates in reduced time Guestroom innovations - Two (or more) telephone lines enabling Internet access / interactive menu ordering for room service / electronic games and guestroom checkout Data mining technology - Analyzing guest- (and other) related data to make better marketing decisions Yield management - Matching guest demand with room rates Recent technological innovations include: Current Issues confronting Hoteliers: Technological Issues

23. Hotel Operations Management, 1/e©2004 Pearson Education 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 play on the financial success of a lodging organization & the individual properties which comprise it. Current Issues confronting Hoteliers: Economic Issues

24. Hotel Operations Management, 1/e©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458 G.M / 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 Resource M. / Credit M. / Executive assistant M. / Convention M. / Marketing & sales M. / Auditor / Director of security / Convention services director / Resident M / Chief engineer Typical Multi-Unit Positions: Area G.M. / Regional G.M. / Director of Training / Vice president, finance / Vice president, real estate / Director of franchising Close Look at Lodging Organizations: Lodging Industry Overview (continued….)

25. Hotel Operations Management, 1/e©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458 Enrolling in and graduating from hospitality-related programs of study Working in a variety of lodging positions (including educational internships) Developing a career ladder for professional development within the lodging industry - Working with a mentor Obtaining suggestions by talking with G.M.s at hotels nearby industry leaders and educators How does one start to plan for a career in the lodging industry? Professional Career Opportunities in Lodging: Get Started With Career Planning