1. Accomodation

2. Segmentation hospitality hospitality (Primary company goal) Profit-orientated, main source of income, open to everybody, for longer period Pub (Schankwirtschaft)Restaurant (Speisewirtschaft) Accomodation company (Hotel, Pension, B&B etc.) Drinks are offered and are consumed on the premises Food is offered and consumed on the premises Guests are accomodated hospitality (Secondary company goal) Hospitality part of a non-hospitality company, or non-profit hospitality company, offering services for social, political or religios purposes, not necessarily open for everybody Railroad workers holiday home Union home„Müttergenesungswerk“ 2

3. Segmentation Accomodation companies Hotellerie = Traditional Accomodation companies Parahotellerie = Additional Accomodation companies –Hotel (Individual, Chain) –Hotel Garni –Hotel pension –Pension –Road side hotel (Rasthof) –Rural hotel (Gasthof) –Motel –Motorway hotel –Wellness hotel –Aparthotel / Boardinghouse –Hospiz –Appartement –Holiday resorts –Holiday flats / houses –Youth Hostels –Farm –Camping, Caravaning –Holiday camp –Homes of Associations (Vereinsheime) –Guest houses –Recuperation institutions (Sanatorien) –Bed & Breakfast –Private rooms –Collective forms of accomodation like hay hotels –Ski and hiking huts 3

4. Definition Accomodation companies In Germany: „Ein Hotel ist ein Beherbergungsbetrieb mit angeschlossenem Verpflegungsbetrieb für Hausgäste und Passanten. Er zeichnet sich durch einen angemessenen Standard seines Angebotes und durch entsprechende Dienstleistungen aus.“ (DeHoGA und DTV) Necessary conditions: – At least nine guest beds – Majority of rooms with en suite bath and toilet – Reception existing Parahotellerie – Others form of accomodation (can be commercial or non-commercial) Commercial accomodation companies have to be – Profit-orientated, main source of income, open to everybody, for longer period 4

5. Actors in the accomodation market Structural forms in accomodation market – Individual hotels – Chain hotels – Franchise hotels – Management hotels – Leased hotels – Cooperation hotels Cooperations – For instance Best Western, Ringhotel, Romantic-Hotel Reservation service companies – For instance Utell, HRS, hotel.com Marketing rings – For instance Summit Int., Preferred Hotels, Relais & Châteaux, Four Seasons, Leading Hotels of the World 5

6. Systematic view on company forms Hotelunternehmungen Individual hotels Branded hotels Hotel Cooperation Chain hotels Branch system Franchise system Conglomerate One unitSeveral units Legally and commercially independent hotel company Horizontal cooperation of legally and commercially independent hotel companies Unified company with several non- independent branch hotels Vertical association of legally and commercially independent hotel companies Legally independent hotel companies under unified leadership 6

7. Forms of segmentation of hotels Completeness of services offered – Hotel, Hotel Garni, Full hotel Location – City, Resort etc. Connection to transport infrastructure – Motel, Airport hotel Quality – Star rated, other categories Duration of stay – Hours, days, weeks, seasons Legal form of company – Single company, Limited, etc. Size of company – Individual hotel, family hotel, chain hotel, major hotel Profit orientation – Profit-orientated, non-profit-orientated, communal, social institution, learning hotel, minor part of company 7

8. Different types of accomodation Class L – Luxury hotels – Hotel, Congress hotel, All-Suite-Hotel – Accomodation, breakfast, food and beverages offered – International Standard, luxurious, modern – Greetings of guests in front of the house – High level of technical and personal services – Meeting point, modern communication equipment – Outside Germany often big shopping center included – Price high Class 1 – First Class Hotel – Convention hotel – Accomodation, breakfast, food and beverages offered – High Standard of comfort – Good level of technical and personal services – Price medium to high – Mostly large number of beds, chain hotels 8

9. Class 2 – Middle class hotel, Aparthotel – Accomodation, breakfast, food and beverages offered – Practical, solid level of basic services – Price medium Class 3 – Hotel Garni – Accomodation and breakfast, only some food and beverages only for guests – Little city hotels, not much staff, often family run – Price lower medium 9

10. Class 4 – Pensions, Hotel pensions – Accomodation and breakfast for longer stay guests, fixed menu food at specific times – Simple, no special comfort, often close to spa institutions – Without special services – Prices dependent on length of stay Class 5 – Rural hotel „Gasthof“ – Mainly restaurant, few beds mainly for restaurant guests – Simple, rural, no special comfort – Often family run with own butcher or fish farm – Price low, except Star-restaurant places Others – Motels, Resorts, Highway hotels, holiday homes etc. 10

11. DeHoGa German Hotel Association DeHoGa Association = Deutscher Hotel- und Gaststättenverband 17 Provincial associations (HoGa‘s) 3 special associations – IHA-Hotelverband Deutschland – UNIPAS-Union der Pächter von Autobahn-Service-Betrieben – VIC-Verband der Internationalen Caterer in Deutschland 4 special departments – Systemgastronomie – Gemeinschaftsgastronomie – Bahnhofsgastronomie – Diskotheken 80.000 members in Germany 11

12. System of German hotel classification Why Classification? – Better sales, better product positioning – Reliable quantitative indicator for potential guests – Better categorization of services offered (not: quality of services) German hotel classification of DeHoGa – Since 1996 unified German system – Evaluation of objective, not subjective criteria – Enjoys legal brand protection Development of criteria – By sub-group hotels of DeHoGa 12

13. Categories – Five star categories Tourist * (Garni) Standard * * (Garni) Komfort * * * (Garni) First Class * * * * (Garni) Luxus * * * * * (Superior) Evaluation process – HoGa‘s on provincial level themselves or by other organisations like CoCs) – Regular random controls – Classification by document and representative sign 13

14. The ten biggest hotel groups in the world (rooms, 2005) RoomsHotels InterContinental Hotels Group534.2023.540 Cendant520.8606.396 Marriott International478.0002.600 Accor463.4273.973 Choice403.8064.977 Hilton Corporation358.4082.259 Best Western309.2364.114 Starwood230.667733 Carlson Hospitality Worldwide147.093890 Global Hyatt111.474356 14

15. Hotel groups and their brands (examples) CompanyEconomyMidscale Upscale / Luxury No. of brands Marken Accor Ibis Formule 1 Etap Red Roof Inn Motel 6 Novotel Mercure Suite Hotel Sofitel9 Marriott Courtyard by Marriott Ramada Ritz Carlton Renaissance Marriott 5 Sol Melia Sol Inn Hotels Sol Hotels Melia Comfort Sol Elite Gran Melia Melia Hoteles 6 Maritim 1 Best Western 1 15

16. Contract forms Rent – User pays monthly or yearly rent to investor – Based on RoI of investor – Different levels of risk and profit sharing: -Fixed rent: Fixed amount (plus inflation index) regardless of results, long-term contract -Fixed rent with reduction in first years, or main part fixed rent, minor part tied to economic result -Turnover based rent with minimum guarantee -Risk and profit sharing rent, balance sheets accessible for investor 16

17. Contract forms Management Long term contract Management companies operates by order and for account of investor but using own brand Financial and image risk stays with the investor Management company gets turnover-based management fee (2-4%) and marketing fee (1,5 %) plus incentive fee (8–12 % of gross operating revenue) Most common form of hotel contract, almost all hotels not run by the owners are based on management contracts Trends: more management companies, saturation of hotel market in many regions, therefore growing - financial engagement of management companies - involvement of investors in company policy with regard to expansion plans, budgets, human resource decisions 17

18. Contract forms Franchise Franchise grantor provides for a fee brand and know-how to franchisee Franchisee is independent company acting in own name but has to keep the agreed standards of grantor Grantor gets RoI of brand and know-how development Franchisee gets material and immaterial support of grantor, however is dependent on policy of grantor while having the complete risk of his business Franchisee pay Entrance fee, royalties, marketing fees Franchise most common form of contract in USA, in Europe only 25% Different forms of franchise agreements in hotel business: real estate developed by grantor or franchisee, franchise to existing hotel etc. Closer connection compared to cooperation of independent hotels Example: http://www.accorhotels.com/de/franchise/index.shtmlhttp://www.accorhotels.com/de/franchise/index.shtml 18