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• Patterns in the lodging industry include product, market, ownership, and management.
• These four patterns are interlaced, and a change in one impacts another.

New Product Patterns

• Segmentation is used to define different products and hotel types in the lodging industry.
• A brand is defined by customer recognition of the name and logo.
• Brand equity is the inherent value that shopper recognition gives to a brand.

A Segmented Industry

• Segmentation by activity includes casino hotels, convention hotels, and dude ranches.
• Segmentation by financing includes public corporations, private individuals, and REITs.
• Segmentation by location includes airport, highway, and seaside.
• Segmentation by management includes chain, management company, and self-managed.
• Segmentation by markets includes business, groups, and leisure.
• Segmentation by miscellaneous factors includes collar, hostel, and mixed-use properties.
• Segmentation by ownership includes chain, condominium, and mom-and-pop operations.
• Segmentation by plan includes American, Continental, and European plans.
• Segmentation by price (ADR) includes deluxe, midrange, and budget options.
• Segmentation by ratings includes five-star, four-star, and three-star ratings.
• Segmentation by service includes full service, moderate service, and self-service.
• Segmentation by structure includes high rise, low rise, and outside corridor layouts.
• Segmentation by type includes commercial, residential, and resort properties.
• Segmentation by use includes bed and breakfast, extended stay, and health spa facilities.
• The lodging industry can be divided and subdivided into many segments.
• Individual hotels and entire hotel chains can fall under many categories simultaneously
• A commercial, three-star property near an airport, for example, can be REIT-owned, chain-managed, and franchised.

New Product Segments

• Economy (budget or limited-service) hotels offer fewer amenities: amenity creep.
• An amenity is a special extra used to distinguish the property from its competitors.
• The history of the industry's ever-improving levels of service is called amenity creep.
• Budget hotels compete by forgoing some amenities and offering smaller rooms.
• All-suite hotels appeal to customers by offering two rooms for the price of one.
• Extended stay hotels were the original concept of the all-suite hotel.
• Extended-stay hotels often have higher occupancies and lower ADRs.
• Corporate housing is exempt from local room taxes and is permitted in areas not zoned for hotels.

Mixed Use Projects and Other Hotel Segments

• Mixed-use developments merge apartments, hotels, resorts, condos, shopping marts, and business towers into one project.
• Casino/hotels have a different focus as gaming revenue is the major income producer, not room sales.
• Casino/hotels are becoming the lodging industry's dominant segment.
• Conference centers are highly specialized facilities designed for meetings and conferences.
• Conference centers bundle rates for guest rooms, meeting rooms, food, drinks, and equipment.
• Spas focus on health.
• Seven spa types are club, cruise ship, day, destination, medical, mineral springs, and resort/hotel.

New Market Patterns

• Knowing guests in various circumstances and developing profiles enables hoteliers to manage a variety of market segments.
• All guests display some degree of elasticity, including business and leisure travelers.
• The World Tourism Organization (WTO) forecasts 102 million visitors to the US by 2020.
• Preferred guest programs allow guests to earn points with hotel chains.
• Nonguest buyers are intermediaries who buy guest rooms.
• The wholesaler (nonguest buyer) handles the mass movement of leisure travelers.
• Wholesalers buy at wholesale prices because they buy in quantity in tour packages..
• The inclusive tour (IT) package involves financial risks related to air and land transportation.
• Business/commercial groups include SMURF groups: societies, medical, university, religious, and fraternal organizations.
• Business groups include conventions, trade shows, single entity, and incentive tours.

New Ownership Patterns

• Income tax laws changed in the 1970s. This caused turmoil and rapid buying and selling, churning.
• Consolidation promises economies of scale and larger marketing and distribution networks for the chains.
• Ownership and financing alternatives include individual ownership.
• Real Estate Investment Trusts (REITs) are public companies that raise capital through the sale of stock.
• Condos are real estate purchases, but timeshares are not.

New Management Patterns

• 75% of all hotels are under the flag of chains.
• Parties to hotel deals include the developer, financier, ownership (equity), and management company.
• Contracts are agreements between the hotel owner and a management company.
• Management companies grew in importance because of three events: the Great Depression, the Oil Embargo of 1973, and the banking system collapse of the 1980s.
• Leasing (renting) is popular when times are good.
• Franchise fees have almost doubled during the past 20 years, now representing about 9% to 10% of room sales or 8% of sales from all sources.
• Hotelkeeping opens the 21st century at the peak of its cycle.
• The 21st century builds on dynamic changes in products, markets, financing, and operations that continue to reshape the ancient industry.