Hotel Industry Overview

The Service Culture

• The hotel industry has adapted to changing environments, consumer needs, and markets to survive and thrive globally.
• The industry is cyclical, with periods of profitability and distress, influenced by economic phases and events (e.g., oil embargo, 9/11, economic recession, and COVID-19 pandemic).

Special Characteristics of the Hotel Business

• Perishability: Unsold rooms cannot be sold again, making room rates adjustable to changing economics.
• Location: A crucial aspect of hotels, with good locations being difficult to acquire and requiring astute management and marketing.
• Fixed Supply: The number of rooms is fixed, making management and marketing essential.
• High Operating Costs: Hotels are capital- and labor-intensive, with built-in costs regardless of occupancy levels, resulting in a high break-even hurdle.
• Seasonality: Hotels operate year-round, but commercial hotels have poor weekends, while resort hotels have poor weekdays.

Traditional Classifications of Hotels

• Hotels are classified by size, class, type, and plan.
• Size Classification: Measured by the number of rooms available for sale, with large hotels being 300 rooms or more, medium hotels being 100-300 rooms, and small hotels being less than 100 rooms.
• Largest Hotels in Terms of Number of Rooms: First World Hotel, Pahang, Malaysia - 7,351 rooms; The Venetian Resort, Las Vegas - 7,115 rooms; MGM Grand Las Vegas - 6,852 rooms.

Classification - Class

• Average Daily Rate (ADR): A measure of class, with higher rates indicating a higher class of hotel.
• Full-Service to Limited Service: Full-service hotels have superior facilities and services, while limited service hotels have minimal amenities.
• Number of Employees: A measure of class, with more employees per guest room indicating a higher class of hotel.
• Rating System: A standardized system for rating hotels, with various countries having their own rating systems (e.g., WTO's five recommended classes).

Classification - Type

• Commercial Hotels: The largest category, located close to business communities in urban areas, with poor weekend occupancy.
• Resort Hotels: Cater to social guests, often in scenic locations, and provide recreational facilities.
• Residential Hotels: Offer permanent occupancy, with extended-stay hotels providing amenities like kitchens and office space.

Classification - Plan

• European Plan: Meals are not included in the room rate, but some hotels offer a Continental breakfast.
• American Plan: Includes room and all three meals.
• Modified American Plan: Includes breakfast and dinner.
• Dine-Around Plan: Allows guests to dine at other hotels in the vicinity.

Variations on Hotel Classifications

• Bed and Breakfast: A modern version of rooming houses, offering beds and baths with private families and a mandatory breakfast.
• Airbnb: An online marketplace connecting people who want to rent out their property with those looking for accommodations.
• Boutique Hotels: Hotels with niche appeal, attracting a defined customer/guest, and often located in good urban areas.
• Trophy Hotels: Luxury hotels with a long historical lineage, acquired by hoteliers to add to their professional reputation.

This quiz covers the basics of the hotel industry, including its evolution, cyclical nature, and adapting to changing consumer needs and regulatory landscapes.