The Lodging Industry - Chapter 3

The Lodging Industry - Chapter 3

• The lodging industry is constantly evolving to accommodate guest needs.
• Political stability, technological advancements in transportation, and changing social norms influence the industry.
• The lodging industry's success depends on guests' ability to travel to lodgings, with changing transportation methods having a direct impact on the industry.
• Stagecoaches and coaching inns were early forms of lodging, followed by 'Public Houses' adapting existing homes for overnight guests.
• The invention of railroads brought changes to lodging, with inns, taverns, and restaurants developing near railway stations.
• The development of commercial jets and easier air travel led to the building of new resorts in accessible locations.
• The 20th century's economic health brought about the "Golden Age of Hotels," with widespread lodging development.
• The Great Depression led to a sharp decrease in travel and lodging demand.
• Economic booms of the 1980s fueled extensive hotel development, incentivizing investors and raising demand expectations.
• Occupancy Rate is a key metric for lodging industry health calculated as the percentage of rooms occupied during a specific time (night/week/year), divided by the total available rooms during that time.

Agenda - Template

• Identify historical influences affecting the hotel industry.
• Explain various lodging property classification methods.
• Discuss the advantages and disadvantages of independent and chain companies.
• Identify the 8 Ps (Product, Price, Place, Promotion, People, Process, Physical evidence, and Positioning) of hospitality marketing.
• Compare company-owned, franchised, licensed, and management contract lodging chain ownership.

The Evolution of Lodging Facilities

• Hotels adapt to guest needs over time.
• Major factors influencing the lodging industry include political stability, technological advances, and evolving social trends.
• Changing transportation methods significantly impact travel and thus the lodging sector.

The Influence of Transportation Technology

• Stagecoach routes led to the development of coaching inns.
• "Public Houses" were private homes offering lodging and meals.
• The invention of the railroad changed lodge choices, encouraging new taverns and inns near stations.
• Hoteliers managed lodging establishments, including those near railway stations.
• Commercial jets influenced travel patterns, encouraging resorts to be built in more accessible locations.

Classification of Hotels and Motels

• Hotels and motels needed classification to appeal to various guest types (business, conventions, leisure).
• Descriptive classifications helped guests locate suitable lodgings based on needs (economy, business, extended stay, upscale).
• Lodging classification systems became more complex, considering facilities, amenities, price, guest type, and hotel type.

Descriptive Labels

• Hotels vary greatly in style and service; commonly including beds, baths, telephones, and televisions.
• Motels are less expensive compared to downtown hotels often featuring lower rates and basic facilities.
• All-suite hotels focus on suites offering multiple living areas, including kitchens.
• Convention hotels provide meeting and banquet facilities, supporting large groups.
• Resorts often provide recreation and entertainment facilities, aiming at relaxed leisure travel.
• Hostels, bed-and-breakfasts, private homes, lodges, and other lodging types are all considered, catering to various guest needs.

Types of Lodging Ownership

• Chain: Includes company-owned/operated, franchised/licensed, and management contract properties.
• Independent: Owned and operated individually, without affiliation with any hotel chain.

Independent Ownership

• Advantages include complete control over operations, strong community ties, improved knowledge of the community support and discounts from suppliers.
• Disadvantages include confronting financial challenges, limited advertising potential, and higher risk of system failure/incorrect implementation.

Chain Ownership

• Advantages of chain ownership include strong brand recognition, access to large reservation systems, increased capital and bulk purchasing power, and using company expertise.
• Disadvantages include needing to build brand loyalty, handling strong competition both within and outside the chain.

Company-Owned and Operated Systems

• These properties are owned and managed by the company with a consistent brand identity.
• Chain properties may maintain independence by not being part of a management contract or franchise agreement.

Franchise Systems

• Franchisors offer standard operating systems, training programs and centralized reservation systems to franchisees.
• Franchise agreements allow franchisees to utilize a brand (name) and operating systems.

Management Contract Systems

• An agreement allows an outside company to manage the property for a fee.
• Fees are frequently calculated based on gross operating revenue. Incentive fees might be paid on the gross profit.

Marketing

• Marketing involves planning and executing strategies for a hotel's target market to satisfy individual and organizational goals through effective strategies.
• Hotels often utilize market segmentation to identify specific guest types (business, leisure) with tailored service offerings that cater to their needs.
• The use of well-defined marketing plans in the lodging industry has become crucial for success due to growing complexity, fierce competition, and evolving needs/expectations of guests.

Market Segmentation

• Market segmentation allows more effective marketing strategies tailored to specific guest demographics.
• This can include targeting specific needs of business travelers (well-lit workspaces, internet access, etc.), as well as leisure travelers (recreation and entertainment opportunities).
• This approach can improve efficiency in the management of costs.

The Marketing Plan

• Marketing plans involve strategies for short-term (less than a year) and long-term (five years or more) marketing objectives.
• These plans should detail a budget, time schedules, market analysis, and the intended image of the property.
• Hospitality marketing differs from product-based marketing as service is a key selling point for lodging.
• The 8 P's can be used as a guide for hospitality services marketing plan development.

Elements of Marketing Method

• Product aspects encompass service, ambiance, facilities, and amenities.
• Packaging refers to bundled services (e.g., weekend gateway or honey-moon packages).
• Programming often includes customized offerings for groups with shared interests (e.g., educational programs or event-based initiatives.)
• Place marketing emphasizes desirable locations, and partnerships often form between industries or companies.
• Pricing strategies often consider location, amenities, and amenities.
• Promotional activities typically encompass special events, discounts, and advertising.

The Evolution Process Continues

• Positioning in the market is an evolving process.
• Maintaining hotel relevance in a complex industry requires ongoing evaluation and adjustment of strategies to address industry changes such as evolving consumer needs and market dynamics.