LECTURE-Lesson-2.pptx

UNDERSTANDING THE HOTEL INDUSTRY CLODGING LECTURE: LESSON 2  THE SERVICE CULTURE The hotel industry has flourished by keeping pace with the changing environment that marks human progress. By embracing innovation, responding to changing consumer needs, expanding into...

UNDERSTANDING THE HOTEL INDUSTRY CLODGING LECTURE: LESSON 2  THE SERVICE CULTURE The hotel industry has flourished by keeping pace with the changing environment that marks human progress. By embracing innovation, responding to changing consumer needs, expanding into new markets, and navigating regulatory landscapes, hotels have survived and thrived in an ever-evolving global landscape.  A CYCLICAL INDUSTRY The hotel industry is a cyclical industry that closely follows economic phases. The volatility of innkeeping leads to alternating between periods of significant profitability and periods of considerable distress. Examples: Oil embargo in 1973 Then in the 1980s, the government-imposed income tax on real estate The 2001 9/11 tragedy Economic recession in 2008 Covid-19 crisis A CYCLICAL INDUSTRY Hotel properties rebound quickly because room rates can easily adjust to changing economics. Revenge travel after the pandemic SPECIAL CHARACTERISTICS OF THE HOTEL BUSINESS PERISHABILITY Vacant rooms are perishable. Unsold room tonight can never be sold again. SPECIAL CHARACTERISTICS OF THE HOTEL BUSINESS LOCATION Location, location, location – three of the most important aspects of hotels Good location is not easy to acquire A fixed location in an uneven neighborhood requires astute management and a heavy dependence on marketing and sales. SPECIAL CHARACTERISTICS OF THE HOTEL BUSINESS FIXED SUPPLY Location is fixed, and so is the supply of rooms. What you see is what you must manage. SPECIAL CHARACTERISTICS OF THE HOTEL BUSINESS HIGH OPERATING COSTS Hotels are both capital and labor-intensive. Large built-in costs continue regardless of occupancy levels. Innkeeping’s break-even hurdle is high. SPECIAL CHARACTERISTICS OF THE HOTEL BUSINESS SEASONALITY Hotels never close, yet it is a seasonal business. Commercial hotels have poor weekends, while resort hotels have poor weekdays.  TRADITIONAL CLASSIFICATIONS OF HOTELS  CLASSIFICATIONS Lodging is an industry of rapid transformation. The inns of old times evolved from private homes located along traveler’s routes. Today, hotels are often a point of destination even as they serve their traditional role of accommodating those in transit. Traditional classifications include size, class, type, and plan. New terminologies: hostel, tavern, public house, inn, guest house, hotel, resort, motel, motor lodge, motor inn, bed and breakfast, timeshare, condominiums, etc.  CLASSIFICATION- Size The number of rooms available for sale, is the standard measure for size Hotels are grouped by size for financial reporting Traditionally, large hotels are 300 rooms or more, medium hotels are 100-300 rooms, and small hotels are less than 100 rooms.  CLASSIFICATION- Size LARGEST HOTEL IN TERMS OF NO. 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 First World Hotel The Venetian Resort MGM Grand Las Vegas  CLASSIFICATION- Class The class of a hotel is sensed often as it is measured. Average Daily Rate Full service to Limited Service Number of Employees Rating system Among the four, two categories quantify the appraisal of a hotel, ADR and Rating system  CLASSIFICATION- Class AVERAGE DAILY RATE Delivering class, elegance, and service costs money. Larger rooms, upgraded furnishings, and extra employees incur larger financing costs, depreciation, energy usage, wages, and more. The better the class of the hotel, the higher the rate.  CLASSIFICATION- Class FULL-SERVICE TO LIMITED SERVICE Full-service has superior facilities and a full complement of services, lounges, room service, newspapers, exercise facilities, electronic support Limited services (Focused service) mean vending machines or a nearby restaurant servicing several properties in the area Ex. Marriott Hotel vs. Red Planet Hotel  CLASSIFICATION- Class NUMBER OF EMPLOYEES The number of employees per guest room is another measure of class  CLASSIFICATION- Class RATING SYSTEM Most are standardized within a single country. Members of the World Tourism Organization have adopted WTO’s five recommended classes: Deluxe or luxury class is at the top First class Tourist class Third and fourth (usually have no private baths, no centralized heat, not even carpeting)  CLASSIFICATION- Class RATING SYSTEM Worldwide, there are over 100 rating systems. Almost all of them rank by using stars, coffee pots, alphabets, even feathers Europe’s system is the most developed. Its four- and five- star hotels have restaurants and bars. Every rating has cleanliness, maintenance, service (staff), furnishings, and physical appointments as its base. Ratings must also consider regional differences.  CLASSIFICATION- Class RATING SYSTEM Spain has standardized the ratings on its paradors (stopping places) Italy adopted the one-to-five star plan, room size is a criterion and staff of foreign-language speakers is among the standards. Japanese traditional inns, ryokans are rated according to their rooms, baths and gardens Korea has its version of traditional, budget-priced lodging – yogwans. Many hanoks (traditional Korean houses) have been converted into boutique hotels. RATING SYSTEM  CLASSIFICATION- Type Type has three traditional subdivisions: commercial, resort, and residential. Commercial Hotels Make up the largest category They are located close to their market, the business community, usually in urban areas. Large, commercial hotels are almost always full-service properties. Businesspersons relax on weekends which explains the poor weekend occupancy  CLASSIFICATION- Type Residential Hotels Residential guests take permanent occupancy Extended-stay Hotels – rooms are designed differently because guests are there for long-term stays. They provide kitchens, grocery outlets, office space, fireplaces, office equipment, exercise rooms, laundries, even secretarial support.  CLASSIFICATION- Type Resort Hotels Resort hotels cater to social guests Resorts market to groups and conventions at some expense to their traditional social guests. Resort hotels are accommodations that are usually placed in scenic places or have recreational facilities, such as water parks, pools, casinos, etc. The Megaresort – a large, self-contained resort. Entertainment and recreational facilities are so numerous and so varied that guests need not leave the property during their entire stay.  CLASSIFICATION- Plan Plan identifies which meals, if any, are included in the quoted room rate. European Plan – meals are not included in the rate quote, but some European hotels sometimes include a breakfast (coffee or chocolate, a roll, and a bit of cheese) which is called a Continental breakfast. American Plan – includes room and all three meals (similar to Full Pension, except it includes a continental breakfast instead of a full English breakfast). Modified American Plan – includes breakfast and dinner. This is so that guests are not restricted, they need not return for an inconveniently scheduled lunch. A dine-around plan is another variation, it allows guests to dine at other hotels in the vicinity.  VARIATIONS ON HOTEL CLASSIFICATIONS BED AND BREAKFAST B&Bs are modern versions of rooming houses, once called tourist homes. Guests take beds and baths with private families along with a mandatory breakfast Zimmer frei (rooms available) in Germany Minshuku in Japan AIRBNB an online marketplace that connects people who want to rent out their property with people who are looking for accommodations, typically for short stays. A popular peer-to-peer rental experience With 7 million vacation homes available in 220+ countries. BOUTIQUE HOTELS These types of hotels are the rage among the hip, the chic, and the cool. A hotel with niche appeal, attracting a defined customer/guest and using word-of-mouth and social networking and this contributes to their aura. Boutique hotels remain fashionable because of their good urban locations. TROPHY HOTELS Hoteliers acquire lodging’s “grand dames” because they add to their professional reputation. They carry a long historical lineage.