Hospitality Management - Classification PDF

INTRODUCTION TO HOSPITALITY MANAGEMENT 2. CLASSIFICATION OF TOURIST ACCOMODATION COMPANIES AND MANAGEMENT MODELS  INTRODUCTION TO HOSPITALITY MANAGEMENT - CLASSIFICATION TOURIST ACCOMMODATION Group of commercial companies that consistently and prof...

INTRODUCTION TO HOSPITALITY MANAGEMENT 2. CLASSIFICATION OF TOURIST ACCOMODATION COMPANIES AND MANAGEMENT MODELS  INTRODUCTION TO HOSPITALITY MANAGEMENT - CLASSIFICATION TOURIST ACCOMMODATION Group of commercial companies that consistently and professionally are dedicated to provide temporary residence to people with or without complementary services (in exchange of a price). INTRODUCTION TO HOSPITALITY MANAGEMENT - CLASSIFICATION There is no uniform hotel classification in the EU Community or international level In Spain competencies in Tourism have been transferred to the autonomous communities. They have the option to develop their own regulations, according to their interests.  INTRODUCTION TO HOSPITALITY MANAGEMENT - CLASSIFICATION It has two basic principles: 1- To keep a standard hotel classification based on a minimum requirements system. 2- Consider another type of classification based on quality criteria of the installations and the provision of services INTRODUCTION TO HOSPITALITY MANAGEMENT - CLASSIFICATION Currently it is in effect the Decree 75/2020 of the 6th August about Tourist accommodation establishments  INTRODUCTION TO HOSPITALITY MANAGEMENT - CLASSIFICATION Tourist Establishments: 1 – Hotels: 1.1-Hotels (H) -Hotel Apartament (HA) 1.2 -Hostals or Pensions (P) 2 –Tourist Apartments (AT) 3- Campingsites (C ) 4- Rural Housing 4.1 Farmhouses (with income from farming) 4.2 Rural accomodation (TR)  INTRODUCTION TO HOSPITALITY MANAGEMENT - CLASSIFICATION Campsite Establishments: - Luxury Category - First Category - Second Category - Third Category  INTRODUCCIÓ A LA DIRECCIÓ HOTELERA - CLASSIFICACIÓ Rural housing Establishments (TR) -Farmhouse (masia & masoveria)(far from urban area, with incomes from farming) -Rural housing (urban areas, w/out income from farming) -Shared village house (casa de poble compartida) -Dechated village house (casa de poble independent)  INTRODUCTION TO HOSPITALITY MANAGEMENT - CLASSIFICATION - Tourist Apartments: Apartments for tourist use (from the owner for a temporary stay) Categorized in accordance with voluntary national tourist categorization Decree 164/2010 of 9th November.  INTRODUCTION TO HOSPITALITY MANAGEMENT - CLASSIFICATION GENERAL FEATURES OF THE HOTEL INDUSTRY - It requires a significant initial investment -Difficulty to increase business in a short term -24 hours operation without interrumption -Difficulty to obtain an accurate forecast of services in advance (cannot measure the demand)  INTRODUCTION TO HOSPITALITY MANAGEMENT - CLASSIFICATION HOTEL CLASSIFICATION BY LOCATION - Sun & Beach -Urban -Roadside hotel -Rural hotel… HOTEL CLASSIFICATION BY MARKET SEGMENTATION -Leisure -Congresses -Low cost -Boutique… INTRODUCTION TO HOSPITALITY MANAGEMENT - CLASSIFICATION HOTEL CLASSIFICATION BY MANAGEMENT SYSTEM INDEPENDENT HOTELS Individual management of a hotel establishment www.monument-hotel.com www.hotelomm.com HOTEL CHAIN Unified management of a certain number of establishments Mandarin Oriental Barcelona www.mandarinoriental.es/Barcelona Hotel Arts Barcelona www.hotelartsbarcelona.com  INTRODUCTION TO HOSPITALITY MANAGEMENT - CLASSIFICATION INDEPENDENT HOTEL ADVANTAGES DISADVANTAGES Autonomy and High number of competitors independence, in terms of management and benefit. Low negotiating power Local brand Freedom to establish quality Difficulties to access new and service standards markets High cots (advertising, Higher polyvalence of purchasing, etc) workers.  INTRODUCTION TO HOSPITALITY MANAGEMENT - CLASSIFICATION HOTEL CHAIN ADVANTAGES DISADVANTAGES Business value and Uniform services, products & competitive advantage by procedures imposed by general brand (IMAGE). quality standards. Simplification and reduction in The management of other establishments in the chain could price of communication and affect the image advertising processes. Lower decision power for the Knowledge by customers of management of the the product, features and establishment equipment Limited creativity of management. Increased number of users  INTRODUCTION TO HOSPITALITY MANAGEMENT - CLASSIFICATION HOTEL CHAIN ADVANTAGES DISADVANTAGES Global cost reduction (higher Higher level of bureaucratic margins, better equipment, procedures in the operation. financial facilities). ( Scale Economies) Decisions taken in the hotel chain can not take into Higher efficiency, and account the features of each professionalism of Staff (trainig). establishment. Coordination, communication Career plans and control difficulties. Take over of parallel enterprises. Staff motivation difficulties.  INTRODUCTION TO HOSPITALITY MANAGEMENT- CLASSIFICATION To start managing a hotel establishment, there are two types of resources needed: - Financial Resources: Capital - Human Resources: Staff In relation with those two factors, we can find different hotel management models What are the basic needs What are the main services or priorities when looking offered by an external hotel for an external hotel company? company? The owners of a hotel establishment before joining a Hotel association, group or franchise, they should refer to two Key questions  INTRODUCTION TO HOSPITALITY MANAGEMENT - CLASSIFICATION HOTEL MANAGEMENT MODELS 1- Own management , owned hotel 2-Own management and central reservations affiliation 3- Own management and voluntary chain affiliation 4- Own management and franchise agreement 5- Lease agreement with an operator 6- Management contract with a hotel chain/company 7- Joint venture 8-Sale and lease back Being part of a hotel association, or deciding the most suitable management model will affect on a clear and direct way the hotel activity, (operationally as well as strategically).  INTRODUCTION TO HOSPITALITY MANAGEMENT - CLASSIFICATION 1. OWN MANAGEMENT, OWNED HOTEL. Hotel Management lies on the property owner. Preferred option when : - Advanced operational experience - The property location is a singular building - The organization has a high number of repeat customers  INTRODUCTION TO HOSPITALITY MANAGEMENT - CLASSIFICATION 1. OWN MANAGEMENT, OWNED HOTEL ADVANTAGES DISADVANTAGES Freedom in hotel Limited market coverage management Risk in case of loss No operation costs (100% Unlimited negotiating benefit) power No operations bureaucracy Limited funding (easy to take decisions) (financiamiento) Easy to react tou unexpected  INTRODUCTION TO HOSPITALITY MANAGEMENT - CLASSIFICATION 2-OWN MANAGEMENT AND INDEPENDENT CENTRAL RESERVATIONS AFFILIATION An independent hotel can be adhere to a hotel central reservations office to compete with the big hotel chains. Central Reservations are companies that offer reservations and commercialization process to their customers (*TTOO, final customers) Hotel Alimara INTRODUCTION TO HOSPITALITY MANAGEMEN - CLASSIFICATION INDEPENDENT CENTRAL RESERVATIONS  INTRODUCTION TO HOSPITALITY MANAGEMEN - CLASSIFICATION Main advantatges for their associates: -Commercialization process -Call Center -Business Advice -Revenue Management  INTRODUCTION TO HOSPITALITY MANAGEMEN - CLASSIFICATION 3-OWN MANAGEMENT AND VOLUNTARY CHAIN AFFILIATION Owner keeps the individual identity hotel and management and gains the chain advantatges: -Brand and prestige -Central reservations -Comercial Structure -Scale economies INTRODUCTION TO HOSPITALITY MANAGEMENT - CLASSIFICATION 3. OWN MANAGEMENT AND VOLUNTARY CHAIN AFFILIATION  INTRODUCTION TO HOSPITALITY MANAGEMENT - CLASSIFICATION 3-Own management and Voluntary Chain affiliation Owner Advantages Owner disadvantages National and international Maximum risk if loss representation Acces to central reservations Affiliation costs offices Freedom in management Reduced cost affiliation, (2-3% of revenue) from room sale  INTRODUCTION TO HOSPITALITY MANAGEMENT - CLASSIFICATION 3-Own management and Voluntary Chain affiliation CHAIN ADVANTAGES CHAIN DISADVANTAGES Groth with minimal Minimal Quality and investment standards control Income increase (afiliation Revenue limited to fee) affiliation fees and percentage of sales revenue (2-3% of each reservation)  INTRODUCCIÓ A LA DIRECCIÓ HOTELERA - CLASSIFICACIÓ 4. Own management and franchise agreement - A franchise is the agreement of a license of processes, technologies and brands by the franchisee. -The Franchisee therefore adopts as its own brand image and management systems of the franchisor. -The Franchisee undertakes its capital and labor in exchange for the kownledge of the franchisor. Ex. Hotel Alexandra (Double Tree by Hilton)  INTRODUCTION TO HOSPITALITY MANAGEMENT- CLASSIFICATION 4. Own management and franchise agreement Advantages owner Disadvantages owner National / International coverage Economic risk in case of loss Access to central reservations Franchise fee Freedom in the daily management Costs for selling rooms (5-7% of with the limitations of the rooms sale) accomplishing the operating manual (manual de explotación) Negative image in case of a weak and procedures of the franchise. franchise Assistance and advice in the development, pre-opening, and property management  INTRODUCTION TO HOSPITALITY MANAGEMENT- CLASSIFICATION 4. Own management and franchise agreement Advantages franchisor Disadvantages franchisor Hotal network growth with Minimum quality control in the minimal investment daily operations management of the hotel establishment Increase of revenue with minimal cost Income limited to membership fees and a percentage of sales revenue  INTRODUCTION TO HOSPITALITY MANAGEMENT- CLASSIFICATION 5. Lease agreement with an operator -Agreement between the hotel ownership and a management company -The management company is responsible of management financial obligations and payment of a rent to the owner. - Renting can be: Fixed Percentage of sales Percentage of G.O.P. (revenue-operations expenses) Mixed (fixed + variable % of sales or G.O.P.)  INTRODUCTION TO HOSPITALITY MANAGEMENT- CLASSIFICATION 5. Lease agreement with an operator Owner Advantages Owner disadvatages Possibility of investing in Difficulty in the case of hotels with no breaking the lease contract management experience Minimum profitability Profitability known in limited to rent advance Minimal risk if market crisis Loss of control in the operation management or Easier operation funded if the operator has good the hotel market reputation Risk of default (morosidad)  INTRODUCTION TO HOSPITALITY MANAGEMENT- CLASSIFICATION 5. Lease agreement with an operator Operator Advantages Operator disadvantages Chain growth with minimal Own economic risk or moderate investment management and in case of crisis situation Increased revenue after Hotel loss once the lease covering rental costs agreement finishes. Direct and complete management control  INTRODUCTION TO HOSPITALITY MANAGEMENT- CLASSIFICATION 6. Management contract with a hotel chain - Agreement between the hotel ownership and a management company to be responsible for the administration and hotel administration. - Staff and resources are property owned by the ownership except directors and managers paid by the management company. (management team-hotel chain Line employees-ownership)  INTRODUCTION TO HOSPITALITY MANAGEMENT- CLASSIFICATION 6. Management contract with a hotel chain Owner advantages Owner disadvantages possibility of investing in Difficulty to break the hotel industry without management contract experience Loss of control in hotel Easier finance investment if management the chain has a good reputation Economic risk in case of Higher benefits with the loss, plus management exception of management costs (5-9% of total fees and other costs revenue)  INTRODUCTION TO HOSPITALITY MANAGEMENT- CLASSIFICATION 6. Management contract with a hotel chain Hotel Chain Advantages Hotel Chain disadvantages Chain growth with minimal Difficulty to convince the or moderate investment ownership about the need for new investments Increase revenue with minimal cost Incomes limited to the management fee. No minimum payment to the To be dependent on the owner financial capacity of the owner Hotel loss when the management contract ends- up  INTRODUCTION TO HOSPITALITY MANAGEMENT- CLASSIFICATION 7. Sale and lease back - Sale of assets or portfolio of assets by the hotel company to an investor (bank, investment fund,...) in exchange for the commitment of a future renting process during a long period of time - It is a type of operation that combines the interests of both sides.  INTRODUCTION TO HOSPITALITY MANAGEMENT- CLASSIFICATION 8- Joint venture - Joint of efforts and interests between two or more different companies to develop a common project which usually equally participation. - The advantage is the quick access with a lower economic effort to important projects that require a significant participation. - The inconvenience is to share business with (generally) no hotel companies.