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

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

3. 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
Note that the range of lodging options presented in Figure 1.2 is not inclusive; For example, private clubs, casinos, cruise ships, time-share condominiums and campground lodges are also offering sleeping accommodations; also discuss suites, extended-stay hotels, and bed and breakfast hotels.
Hotel Operations Management, 1/e ©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458

4. Lodging is Part of Tourism Industry: A Brief History of Hotels
Figure 1.3 : Highlights in the modern history of the US hotel industry
1900
Fewer than 10,000 hotels
750,000 to 850,000 rooms
1910
10,000 U.S. hotels
One million rooms
300,000 employees
Average size: 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, 1/e ©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458

5. Figure 1.3 : Highlights in the modern history of the US hotel industry
Lodging is Part of Tourism Industry: A Brief History of Hotels (continued….)
Figure 1.3 : Highlights in the modern history of the US hotel industry
1930
Occupancy: 65%
AHA’s Hotel Red Booklists 20,000 hotels
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
Hotel Operations Management, 1/e ©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458

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

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

8. Close Look at Lodging Organizations
Figure 1.4: 2000 Property / Room Breakdown
By location
Property
Rooms
Urban
Suburban
Highway
Airport
Resort
10.2%
33.6%
42.2%
7.7%
6.3%
16.0%
30.4%
31.0%
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%
Figure 1.4 classifies US lodging properties by location, by the room rate (the amount charged for a guest room), and by size (the number of rooms they contain).
The vast majority of all lodging properties (approximately 76 % of properties representing about 61 % or rooms) are located in suburban and highway areas.
The majority of guest rooms (approximately 77 % of the properties with 71 % of rooms) are sold at a per night rate ranging from $ 30 to $ 85 per room .
In terms of size, 85 % of all properties (which contain approximately 58 % of all rooms) are relatively small (less than 150 rooms).
Hotel Operations Management, 1/e ©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458

9. 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
The text describes the characteristics of “typical” business guests and leisure guests.
21.8%
are traveling for other reasons (for example, personal, family, or special event)
Hotel Operations Management, 1/e ©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458

10. Close Look at Lodging Organizations: Lodging Industry Characteristics
Emphasis on safety, cleanliness & service
Guests also consider “intangible” aspects of the purchase
decision
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
* The text provides an example of each characteristic applied to lodging industry.
Labor Intensive
- Much of a hotel’s daily work involves employees
providing services
Hotel Operations Management, 1/e ©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458

11. Close Look at Lodging Organizations: Lodging Industry Overview
Largest hotel affiliations
Figure 1.6: Top 5 lodging brands
Brands
Rooms
Properties
1. CENDANT CORPOPRATION
554,834
6,540
2. BASS HOTELS&RESORTS, INC.
481,482
3,030
3. MARRIOTT INTERNATIONAL
374,010
1,846
4. CHOICE HOTELS INTERNATIONAL
337,226
4,219
5.HILTON HOTELS CORPORATION
333,110
1,910
The students may not be familiar with names of Pendant Corporation, Bass Hotels & Resort, Inc. and/or Choice Hotels International. Figure 1.6 (Top 5 lodging brands) shows the exclusive lists of hotel names belonging to these parent companies.
The ranking is based upon the total number of domestic & non-domestic (international) hotel rooms in each organization.
Note that the average room size (115 rooms: 1,708,617 rooms / 14,884 properties) for these five largest companies is appreciably larger than the average domestic hotel ( 76 rooms: 4.1 million rooms / 53,500 properties).
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.
Hotel Operations Management, 1/e ©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458

12. Close Look at Lodging Organizations: Lodging Industry Overview (continued….)
Hotel ownership / management
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 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 Operations Management, 1/e ©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458

13. Close Look at Lodging Organizations: Lodging Industry Overview (continued….)
Figure 1.7: 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, 1/e ©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458

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

15. 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.
Figure 1.9’s organizational chart for large hotel with 350 rooms only includes top-level officials (department heads).
Controller
F&B director
H.R. Manager
Director of sales & marketing
Front office manager
Executive housekeeper
Chief engineer
Hotel Operations Management, 1/e ©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458

16. Close Look at Lodging Organizations: Hotel Departments
Line & staff departments
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
Hotel Operations Management, 1/e ©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458

17. Close Look at Lodging Organizations: Hotel Departments (continued….)
Revenue and cost centers
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
Hotel Operations Management, 1/e ©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458

18. 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, those hotels will do well.
* Delivering consistent guest service to all guests can be a challenging task, depending on differing situations. The second case study in “Managers at Work” provides a scenario of difficulty in delivering guest service in some problematic situations.
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!
Hotel Operations Management, 1/e ©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458

19. Lodging is a Service Business (continued….)
Questions that must be addressed to deliver quality service:
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?
Question 2 in “ Issues at Work” (Chapter 1) reinforces the importance of delivering consistent guest service. Ask students what kind of guest relations training and tactics they would provide to their employees, were they G.M.s.
Hotel Operations Management, 1/e ©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458

20. Current Issues confronting Hoteliers: Operating Issues
Labor shortages
Managers should implement procedures to: a) reduce turnover levels, b) increase productivity levels, c) recruit from non-traditional 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.
Question 4 in “Issues at Work” (Chapter 1) asks students to plan / develop tactics to retain current employees as well as recruit new employees; also discuss the concept of “employer of choice.”
Overbuilt is the condition that exists when there are too many hotel guest rooms available for the number of travelers wanting to rent them.
Increased competition
Overbuilt problem
Hotel Operations Management, 1/e ©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458

21. Current Issues confronting Hoteliers: Marketing Issues
Market segmentation is increasing
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 between 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, 1/e ©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458

22. Current Issues confronting Hoteliers: Technological Issues
Recent technological innovations include:
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
Yield Management is demand forecasting systems designed to maximize revenue by holding rates high during times of high guestroom demand and by decreasing room rates during times of lower guestroom demand; Chapter 6: Front Office will discuss in detail the concept of Yield Management.
Hotel Operations Management, 1/e ©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458

23. 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 *
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.
Hotel Operations Management, 1/e ©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458

24. Close Look at Lodging Organizations: Lodging Industry Overview (continued….)
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
Being listed under multi-unit is when a hotel company owns or manage multiple (multi) properties.
Question 3 in “Issues at Work” (Chapter 1) addresses advantages and disadvantages of management careers, depending on location / areas.
Hotel Operations Management, 1/e ©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458

25. 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
Obtaining suggestions by talking with G.M.s at hotels nearby industry leaders and educators
A career ladder is a graphic “roadmap” which indicates possible career progression through a lodging organization. It is a plan that projects successively more responsible professional positions within an organization / industry. A career ladder also allows one to plan / schedule the developmental activities judged necessary to assume more responsible positions.
Instructors may assign students to develop a career ladder for their professional development within the hospitality industry; discuss with students their designed career advancement strategies to reach professional career goals (refer to Question 5 in “Issues at Work”)
Question 1 in “Issues at Work” (Chapter 1) asks students about the type of hotel they would like to work in as they begin their career and as they gain more experience within it; further discuss specific management concerns in a property with 50 rooms and one with 5,000 rooms.
Hotel Operations Management, 1/e ©2004 Pearson Education Hayes/Ninemeier Pearson Prentice Hall Upper Saddle River, NJ 07458