1. Chapter 1 The Hotel Industry Overview and Professional Career Opportunities

2. Lodging Is Part of the Tourism Industry: The Tourism Industry
Segments in the Tourism Industry
Tourism Industry
Hospitality
Retail (Shopping) Stores
Transportation Services
Destination (Activity) Sites
Lodging Operations
F&B Operations
Tourism industry is:
The third largest retail industry, following automotive and food stores
The nation’s largest service industry
One of the nation’s largest employers
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.
Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458

3. 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

4. Lodging Is Part of the Tourism Industry: A Brief History of Hotels
Highlights in the Modern History of the U.S. Hotel Industry
1900
Fewer 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

5. 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
Occupancy: 65%
AHA’s Hotel Red Book lists 20,000 hotels
1930
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
Total hotel rooms: 2,400,450
Typical hotel: 39 rooms, independent and locally owned
Average room rate: $9.99
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.
Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458

6. 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.)
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
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.
Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458

7. 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.)
1990
Occupancy: 64%
$60.7 billion in sales
Total hotel rooms: 3,065,685
45,020 properties
Average room rate: $58.70
2000
Occupancy: 63%
$97 billion in sales
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.
Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458

8. Close Look at Lodging Organizations
2003 U.S. Property/Room Breakdown
By Location
Property
Rooms
Airport
Suburban
Urban
Highway
Resort
3,239
18,476
5,408
18,312
2,149
444,860
1,490,970
716,485
1,296,279
467,102
By Rate
Under $30
$30–$44.99
$45–$59.99
$60–$85
Over $85
853
7,862
16,680
14,334
7,855
50,642
499,350
1,102,845
1,393,633
1,369,196
By Size
Under 75 rooms
75–149 rooms
150–299 rooms
300–500 rooms
Over 500 rooms
27,379
14,297
4,305
1,094
509
1,144,753
1,523,999
860,983
407,038
478,923
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.
Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458

9. 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

10. Close Look at Lodging Organizations: Lodging Industry Characteristics
Emphasis on Safety, Cleanliness, and Service
– Guests also consider “intangible” aspects of the purchase
decision.
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

11. 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

12. 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

13. Close Look at Lodging Organizations: Lodging Industry Overview (cont.)
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
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.
Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458

14. Close Look at Lodging Organizations: Lodging Industry Overview (cont.)
Hotel Ownership/Management
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 Operations Management, 2nd ed. ©2007 Pearson Education, Inc.
Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458

15. Close Look at Lodging Organizations: Lodging Industry Overview (cont.)
Hotel Ownership/Management Alternatives
Hotel Property
Franchise
Non-Franchise
Affiliation
Franchise Company (Franchisor)
Independent
Ownership
Franchise Company (Franchisor)
Independent
Operation
Management Company
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.
Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458

16. Close Look at Lodging Organizations: Lodging Industry Overview (cont.)
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
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.
Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458

17. Close Look at Lodging Organizations: Hotel Organizational Structures
Small Hotel (75 Rooms)
Organizational Chart for Small (75-Room), Limited-Service Hotel
Manager
Bookkeeper/Accountant
Executive Housekeeper and Staff
Front Office Manager and Staff
Maintenance Chief and Staff
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.
Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458

18. Organizational Chart for Large (350-Room), Full-Service Hotel
Close Look at Lodging Organizations: Hotel Organizational Structures (cont.)
Large Hotel (350 Rooms)
Organizational Chart for Large (350-Room), Full-Service Hotel
Administrative Assistant
Assistant to the GM GM
Director of Sales & Marketing
Front Office Manager
F&B Director
HR Manager
Executive Housekeeper
Chief Engineer
Controller
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.
Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458

19. Close Look at Lodging Organizations: Hotel Organizational Structures (cont.)
Line and Staff Departments
Line Department
Those directly involved in the “chain of command”
Directly responsible for revenues
– Front office and food/beverage
Also responsible for property operations
– Housekeeping, maintenance, and 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
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.
Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458

20. Close Look at Lodging Organizations: Hotel Organizational Structures (cont.)
Revenue and Cost Centers
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
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.
Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458

21. Lodging Is a Service Business
Successful hotels greatly emphasize serving their guests to the best possible extent.
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

22. Lodging Is a Service Business (cont.)
Questions that must be addressed to deliver quality service:
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?
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.
Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458

23. Current Issues Confronting Hoteliers: Operating Issues
Labor Shortages
Managers should implement procedures to a) reduce turnover levels, b) increase productivity levels, and c) recruit from nontraditional employee labor markets.
Cost Containment
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.
Increased Competition
Problem of hotel community being overbuilt.
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.
Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458

24. Current Issues Confronting Hoteliers: Marketing Issues
Increased Market Segmentation
Efforts to focus on a highly defined, smaller group of travelers.
Brands Overlap
The more the number of brands increase, the harder consumers find it to differentiate among them.
Increased Sophistication of Consumers
Results in a more competitive selling environment for hoteliers (e.g., online room booking).
Increased Number of Amenities
Various amenities (e.g., business centers) increase costs for hotel owners yet sometimes appeal to only a small segment of the hotel’s market.
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.
Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458

25. Current Issues Confronting Hoteliers: Technological Issues
Recent technological innovations include:
Interactive Reservation Systems
– Allow potential guests to make reservations at preferred
room rates in reduced time
Guest Room Innovations
– Two (or more) telephone lines enabling Internet access,
interactive menu ordering for room service, electronic games,
and guest room checkout
Data Mining Technology
– Analyzing guest- (and other) related data to make better
marketing decisions
Yield Management
– Matching guest demand with room rates
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.
Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458

26. Current Issues Confronting Hoteliers: Economic 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.
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.
Facility Engineering & Maintenance
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.
Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458

27. How does one start to plan for a career in the lodging industry?
Professional Career Opportunities in Lodging: Get Started with Career Planning
How does one start to plan for a career in the lodging industry?
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
Talking with GMs at nearby hotels, industry leaders, and educators to obtain suggestions
Hotel Operations Management, 2nd ed. ©2007 Pearson Education, Inc.
Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458