The Lodging Industry Chapter 3 PDF

THE LODGING INDUSTRY CHAPTER 3  Agenda - Template Identify influences affecting the hotel 01 industry over the years. Explain how lodging 02 properties can be...

THE LODGING INDUSTRY CHAPTER 3  Agenda - Template Identify influences affecting the hotel 01 industry over the years. Explain how lodging 02 properties can be classified. Discuss the advantages of operating independent and chain companies. 03 Compare the company-owned, franchise 04 licensed and management contract forms of chain owner-ship. Identify the eight ‘Ps’ of hospitality marketing. 05 2 THE EVOLUTION OF LODGING FACILITIES 01 1. Lodging continually changes to accommodate its guests. 2. The lodging industry is influenced by political stability, technological improvements in transportation and changing social conditions. 3. Since the industry depends on the ability of its guests to travel from their homes to lodging facilities, changing method of transportation have always had a direct impact on the lodging component of the hospitality network. 3 THE INFLUENCE OF TRANSPORTATION TECHNOLOGY 02 1. As stagecoach routes were established in 1960s, coaching inns were developed where travelers were fed and lodge overnight and tired horse were exchanged for rested ones. 2. ‘Public Houses’- private homes that were opened to feed and house guest. 3. The invention of the railroad in 1825 brought more changes in lodging choices. New inns, taverns and restaurants flourished close to railway station. 4. ‘The hotelier’- the keeper, owner or manager of the property. 5. The introduction of commercial jets changed the nature of travel. New resort were built in places easily accessible by air.  Stagecoach Flight Train Car Bus Walk 5 THE INFLUENCE OF ECONOMIC FLUCTUATIONS 03 1. The healthy economy at the beginning of the twentieth century ushered in The Golden Age of hotels. Lodging industry flourished and large hotels were constructed. 2. Great Depression, a time when banks failed, unemployment skyrocketed, and travel sharply decreased. 3. Economic boom in 1980’s helped fuel extensive hotel development as tax incentives were given to investors and expectation of higher demand. 4. ‘The Occupancy Rate’ is a percentage derived by dividing the total number of rooms occupied during a given time period (night, week, year) by the total number of rooms available for occupancy during that time period. This ratio of guests to rooms helps analysts track the overall health of the industry. 6 CLASSIFICATION OF HOTELS AND MOTELS The necessity for classifying hotels came about when hotels began to differ from one another enough to appeal to different groups of people. As room supply increased, hotels were appealing to conventioneers, business groups and special-interest groups. Descriptive hotel classifications helped potential guests locate suitable lodging. Old system of hotel classifications are midpriced, economy, business, extended stay, all suite and upscale. As lodging classification became more complex, facilities were then grouped according to size, amenities offered, price, type of guest and type of hotel.  DESCRIPTIVE LABELS HOTELS MOTELS ALL-SUITE HOTELS CONVENTION HOTELS RESORTS OTHER LODGING TYPES Varying greatly in style and Motels offered fewer All-suite hotels rent Provide meting and A resort is a space, Hostels – inexpensive rooms and service. Most hotels share amenities and were only suites, often banquet facilities for similar to a hotel, community kitchen privileges. a similar structure. less expensive to build combining living large groups. that offers relaxation and operate than space with kitchen Bed & Breakfast – personal and or recreation to Guest rooms usually have a downtown hotels. facilities or a Large lobbies to service and charming location, its patrons. bed, bath, telephone and bedroom section accommodate group include breakfast rate. television. Lower rates, basic with an attached arrivals, high accommodations, Private homes – open for parlor. percentage of double Most often located in or roadway locations, occupancy and overnight guest near business district, lack of central lobby, emphasize more in Residential hotels – cater for travel destinations and free parking and less food and beverage formal service than long term guests. airports. Usually have service. recreation facilities, hotels. Lodges – provides business center, restaurant accommodations and and bars. housekeeping for those interested in specific activities 8 such as hunting and skiing. HOTELS 9 MOTELS 10 ALL-SUITE HOTELS 11 CONVENTION HOTELS 12 RESORTS 13 OTHER LODGING TYPES 14 RESORTS ▪ mainly frequented by businesspeople staying in town overnight ▪ The hotel's slogan is "making the best of a small space“ ▪ The capsules are located on multiple levels, separated into male and female floors  Luxury Hotels And Resort ▪ Descendants of the grand hotels, featuring expensive, lavishly decorated public LEVELS OF SERVICE area and the highest levels of customer service. ▪ Offer finest cuisine, full range of amenities, well trained and efficient staffs. ▪ Have the ability to perpetuate an exclusive image by charging high rates. Full-Service Properties ▪ Offer a wide range of services at lower rates than luxury hotels. ▪ Generally, offer clean, well-decorated hotels with meeting and restaurant facilities, limited room-service menu and a variety of recreational activities. Limited-Service Properties ▪ Usual offerings included simple, clean rooms with a telephone, swimming pools and an adjacent restaurant. Staff’s service other than housekeeping were limited. ▪ Some all-suite hotel fit into this category because of their service and amenities and small public areas. Economy Properties ▪ Offering only the basic bed and bath facilities. ▪ Focus ion ‘more values for the dollar’ 17 Market Price Levels Luxury Properties with actual room rates above the 85th percentile in their geographic market. Upscale Properties with actual room rates above the 70th percentile and below the 85th percentile in their geographic market. Midprice Properties with actual room rates above the 40th percentile and below the 70th percentile in their geographic market. Economy Properties with actual room rates above the 20th percentile and below the 40th percentile in their geographic market. Budget Properties with actual room rates below the 20th percentile in their geographic market. 18 OLD SERVICE SEGMENTS NEW MARKET PRICE SEGMENTS Luxury Luxury 75% 75% Upscale Upscale 70% Full 70% Service Midprice Midprice All 40% 40% Service Types Economy Economy Upper Limited 20% 50% Service Economy Budget Moderate Before August 1993 Effective August 1993 TYPES OF LODGING OWNERSHIP Company owned and operated Franchise – CHAIN licensed TYPES OF OWNERSHIP Management INDEPENDENT contract 20  01 INDEPENDENT OWNERSHIP An individual or company opened a hotel and manage it. It will then take the complete responsibility for the hotel’s success or failure. ADVANTAGES DISADVANTAGES ▪ Complete control over every aspect of ▪ Confront the most difficult financial their business. (selecting equipment challenges and hotel policy.) ▪ Limited advertising and sales budget ▪ Unusual bond with the community. ▪ High risk (system failure and incorrect ✔ Firsthand knowledge implementation) ✔ Community support ✔ Discounts from supplier ▪ Operating freedom (freedom to implement own ideas and new policies.) 21  02 CHAIN OWNERSHIP ADVANTAGES DISADVANTAGES ▪ Strong national brand identity by the ▪ The need to establish brand loyalty hotel image. among potential guests and to diversify property offering. ▪ Connected to chain’s centralized reservation system. ▪ Strong competition (beyond and within the chain.) ▪ Greater access to capital & bulk purchasing power. ▪ Excess to the common expertise of the company. 22 COMPANY OWNED AND OPERATED SYSTEMS ▪ Parent-owned and operated by the brand name. ▪ an individual or a company own and manage the property. ▪ Chains remain independent, which are not bond in any management contract or franchising agreement. 23 FRANCHISE SYSTEMS Franchise agreements are Franchisee will build the hotel The purpose of franchise is to contracts in which the and buy the equipment offer an owner the advantage franchisor ( the brand owner), needed and pay several fees of a large chain while still in grants the franchisee (buyer) such as franchise fee, royalty control of the ownership. the right to use franchisor’s fees etc. name and proven method of operating business Franchisor provides standard The owner of a hotel or motel Owned by the investors and operating system, training obtain the right to use the operated by management programs, centralized name of and belong to a who contract to use the name reservation system and national or international and systems of a brand advertising cooperation. chain, known as a franchiser. The owner of the hotel (franchisee) agrees to abide by the management policies for an area, plus a percentage of gross sales. 24 MANAGEMENT CONTRACT SYSTEMS The owner of a hotel or motel write up a contract with a chain to operate the property for a fee and/or a percentage of gross revenue. The owner become an investors who allow someone else to manage their investments. The management company is responsible for operating the property (with the owner money) fees will be paid to the management company. Fee based is determine by gross operating revenue Incentive fees is based on gross operating profit. 25  MARKETING Market Segmentation ▪ Is a smaller, identifiable group with common characteristics. ▪ Marketing is the process of planning ▪ These segments can be defined using any set of the hotel's concept (type of facility, characteristics, such as those found in geographic, or service offered and location) what psychographic information. rates to charge, and how to reach potential customers, all in a way that ▪ Often, information from different sources is combined. (eg: satisfies individual and geographic area and financial status.) organizational objectives. ▪ Business Guests or Business Travel is the most important source of guests for 80 percent of all hotels. ▪ Fierce competition, growing market ▪ their needs are specific: well-lighted workspaces; a complexity and guest sophistication telephone; and access to equipment like personal have all heightened the importance computers, modems, high-speed Internet (ideally of successful marketing. wireless), and comprehensive business services. ▪ The hotel marketing department ▪ can be further defined by socioeconomic and conducts research to stay current psychographic factors. with the needs and desires of ▪ Leisure Guests Personal and leisure travel accounts for 50 potential guests, and to plan and percent of all hotel stays. implement ways to meet those ▪ Leisure travelers’ desires may vary widely—from one needs. night’s stay in basic accommodations to several weeks at a resort with extensive recreation, entertainment, and food and beverage facilities. MARKET SEGMENTATION ADVANTAGES OF SEGMENTATION Many travelers may not want, need or be able to distinguish between lodging concepts. Can be a time-and money-consuming A clearer understanding of guest needs helps endeavor. the marketer select appropriate marketing methods. Which allows the company to get The final results are not always particularly ‘get the most bang for its buck’ useful, and some companies may find themselves appealing to a nonviable A clearer guest image also helps keep segment. management costs at the most efficient level, since hotel design and operations depend on who the potential guests. Segmentation also allows companies to place DISADVANTAGES OF SEGMENTATION more than one brand on a single reservation system. They are able to do this by highlighting the differences between each of their brands’ service offerings and facilities. 27 THE MARKETING PLAN ▪ Generally, two marketing plans are used. A short-term plan determines the marketing strategies for a year or less; a long-term plan covers five years or more. ▪ strategies outlined in a plan include budgeting and time schedules for each goal, market analysis and the company's’ intended image or marketplace. ▪ The process of marketing services is different from processes used marketing goods. In goods-producing industries, the product is tangible (e.g.: clothes, furniture, etc.). ▪ The hospitality product is largely intangible. The product is the service guest receives from the hospitality firm and its staff. ▪ The successful marketer uses a variety of methods to promote the lodging industry including direct or personal sales, advertising, public relations, promotions and packaging. 28 ELEMENTS OF MARKETING METHOD Elements are categorized into the eight Ps of marketing. Each element may be used alone or as a part of a mix. Generally, in a mix, one element is given priority. Product The product in hotel industry is the service, ambiance, facilities and amenities. Product marketing is being used in hotel industry as this type of add appeals to the guest who is looking for specific amenities. People Either the guests or the staffs is being used in the marketing methods. An example might be an advertisement featuring a chef holding an apple pie and the caption ‘just like mom used to make’ Packaging Is define as offering more than one product or service together, to the consumer for one total price. Example: ‘weekend gateway package’ , ‘Honey-moon Package’ Programming Tailor-made offerings for groups sharing a special interest. Examples are hotels developing special activities, events, and short term educational programs. Place The success of place marketing depends. Of course, upon the desirability of its location. Hotels located at popular destination sites such as Cameron Highland and Pulau Sipadan, will use the popularity of the site to attract guests Partnership Partnership requires the cooperative efforts of several industry groups. Examples are Realrewards and Bonuslink partnership with hotels and restaurants Price Budget hotel often use a combination of price and location elements in their marketing mix. Inexpensive yet clean and comfortable lodging located along travel routes appeals to many people on a long trip. Promotion Promotions are activities, that may include special events, offers, exhibits or discounts. Promotions make use of advertising, sales, and public relations 29 THE EVOLUTION PROCESS CONTINUES Positioning is the process of establishing a distinctive place in the market (and in the minds of potential guests. With constantly changing industry conditions, positioning is not a one-time event; repositioning is also necessary to keep properties operating the highest potential. 30