Chapter 4 LODGING The Hotel Business Sunset Hula

Chapter 4 LODGING The Hotel Business Sunset Hula Show Sheraton Waikiki Introduction to Hospitality, Fourth Edition John Walker Mr. White Econ 296 Trump Tower Waikiki Hotel and Condos © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

After Reading and Studying This Chapter, You Should Be Able to: n n n Define the following terms: hotel franchising, partnerships, leasing, syndicates, and management contracts Classify hotels by type, location and price Explain vertical integration Name some prestigious and unusual hotels Describe the effects of a global economy on the hotel industry Introduction to Hospitality, Fourth Edition John Walker Mr. White – Econ 296 © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

Franchising n n n Allows for a company to expand rapidly Uses other people’s money (franchisee) Franchisor n n The company Over 180 franchised hotel brands in North America today Introduction to Hospitality, Fourth Edition John Walker Accor Hotels Sofitel – Novotel – Suitehotel- Ibis Etap – Formula 1 – Red Roof Motel 6 – Studio 6 - Thalassa Mr. White – Econ 296 © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

Franchised Hotels Among the Top 10 Corporate Chains Introduction to Hospitality, Fourth Edition John

Top 10 Management Companies Introduction to Hospitality, Fourth Edition John Walker © 2006 Pearson

Trends in Franchising n n n Curb appeal (fresh looks) Location near highways, airports and suburbs Expansion in smaller cities New markets in proximity to golf courses and other attractions Foreign expansion to increase brand awareness Introduction to Hospitality, Fourth Edition John Walker Mr. White – Econ 296 BW ROOMS: 316, 095 worldwide; 86, 375 Europe; 8, 426 Asia and the Middle East; 8, 924 Australia, New Zealand the South Pacific; 6, 592 South and Central America; 610 Africa; 201, 659 North America © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

Franchiseee-Benefits n n n Set of plans and specifications for building National advertising Centralized reservation system Participation in volume purchasing discounts Listing in the franchisor’s directory Low fee percentage charged by credit card companies Introduction to Hospitality, Fourth Edition John Walker Mr. White – Econ 296 © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

Franchisee-Drawbacks n n Lack of operational power; must conform High fees – both to join and ongoing Central reservations produces 1726% of reservations Must meet standards as set by franchisor Introduction to Hospitality, Fourth Edition John Walker Mr. White – Econ 296 © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

Benefits and Disadvantages for Franchisor n Benefits n n Disadvantages Increased market share/recognition Up-front fees Introduction to Hospitality, Fourth Edition John Walker • Need to be careful in selection of franchisees • Difficulty in maintaining control of standards Mr. White – Econ 296 © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

Cendant Corp Franchises Introduction to Hospitality, Fourth Edition John Walker Mr. White – Econ

Management Contracts n Contract n The Players n n Owner - financial responsibility Management company operational responsibility Fee structure Trend toward expansion of contract provisions Introduction to Hospitality, Fourth Edition John Walker Mr. White – Econ 296 © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

Ways to Classify Hotels n Classifying Hotels Location n Types of services offered n Market price levels n Introduction to Hospitality, Fourth Edition John Walker Mr. White – Econ 296 © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

Hotel Rating Services n AAA n n American Automobile Association Diamond Award Forbes-Mobil Travel Guide – 5 Stars Michelin n Introduction to Hospitality, Fourth Edition John Walker Five Star Awards Mr. White – Econ 296 © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

Forbes (Mobil) Travel Guide Hotel Ratings Forbes-Mobil Five-Star Hotels: Distinctive luxury environment offering expanded amenities and consistently superlative service make these hotels and inns the best in the U. S. and Canada. Attention to detail and anticipation of guests' every need are evident. The Mobil Five-Star lodging category includes such hotels as The Peninsula Beverly Hills, the Four Seasons Hotel Chicago and The Ritz-Carlton San Francisco. Forbes-Mobil Four-Star Hotels: Outstanding establishment in a distinctive setting with expanded amenities and exceptional service to create a luxury experience. Services may include, automatic turndown service, valet parking and 24 hour room service. The Ritz-Carlton Laguna Niguel, Mandarin Oriental Miami and Four Seasons Hotel Las Vegas are prominent names in the Mobil Four. Star category. . Introduction to Hospitality, Fourth Edition John Walker © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

AAA Five Diamond Classifications Introduction to Hospitality, Fourth Edition John Walker © 2006 Pearson

Location n n Center city hotels Resort hotels Airport hotels Freeway hotels Casino hotels Full service Convention Economy Extended stay Bed and breakfast Business Class King Bed Room Waldorf Astoria Hotel – New York City A Deluxe City Center Hotel Introduction to Hospitality, Fourth Edition John Walker © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

Hotels by Price Segment n n n Budget Economy Mid-price Up scale Luxury All-suites - Introduction to Hospitality, Fourth Edition John Walker $29 -$39 $40 - $60 - $100 - $200 $140 - $450 $95 - $175 Mr. White – Econ 296 © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

City Center Hotels n n n Public transportation available for business or leisure Range of accommodations and services Typically have a signature restaurant Introduction to Hospitality, Fourth Edition John Walker Mr. White – Econ 296 The Brown Palace - Denver © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

Resorts… n n Originally began due to rail travel Greenbrier in West Virginia n n The Halekulani in Waikiki, Hawaii n n www. greenbrier. com www. halekulani. com The Ritz Carlton Kapalua in Maui, Hawaii n www. ritzcarlton. com Introduction to Hospitality, Fourth Edition John Walker The Greenbrier Resort © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

More on Resorts n n n “Captured Clientele” Food service is unique Diversified marketing mix n Children – Groups – Eco-tourism The Grand Hotel – Mackinac Island, MI Introduction to Hospitality, Fourth Edition John Walker © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

Airport Hotels n n n n High occupancy due to location Business, group and leisure travelers Full service 200 -600 rooms Convenient location Airport shuttle service Economical pricing Chicago O’Hare Airport Hilton Introduction to Hospitality, Fourth Edition John Walker Mr. White – Econ 296 © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

Freeway Hotels n n Prominent in the 1950 s Easy access to roadways Park outside the room entrance Example n Motel 6 www. motel 6. com Motel 6 – Savannah GA Introduction to Hospitality, Fourth Edition John Walker Howard Johnson’s Omaha, NB Mr. White – Econ 296 Day’s Inn – Camarillo, CA © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

Casinos n n n n Heavy growth segment Low room rates Subsidized food and beverage Themes are popular 500 plus guest rooms Variety of food operations Contains a gaming room Introduction to Hospitality, Fourth Edition John Walker Mr. White – Econ 296 © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

Convention Hotels n n n Meet the needs of large groups 500 plus rooms Larger public areas to accommodate greater public demand Banquet areas within and around the hotel High percentage of double occupancy Full-service oriented Introduction to Hospitality, Fourth Edition John Walker Mr. White – Econ 296 © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

Full-Service Hotels n n Typically “Business Oriented” Multiple food and beverage outlets Meeting and convention services Chain representation n Doubletree Alana Waikiki www. doubletreehotels. com Sheraton Princess Kaiulani www. sheraton. com Introduction to Hospitality, Fourth Edition Mr. White – Econ 296 John Walker n © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

Economy/Budget Hotels n n n n Represents 12 percent of total hotel rooms Accomplished 37 percent of industry growth Average room rate of $48. 68 However, profit revenue is slow with an annual rate of 1 percent Also considered budget hotels Clean rooms Reasonably sized and furnished Continental breakfast Thriftlodge-Kissimmee, FL Introduction to Hospitality, Fourth Edition John Walker Mr. White – Econ 296 © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

All-Suite n n Cater to guests for an extended period Reduction in rate based on length of stay More space than typical hotel Examples n Embassy Suites n www. embassysuites. com Introduction to Hospitality, Fourth Edition John Walker Embassy Suites Beachwalk Waikiki Mr. White – Econ 296 © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

Bed and Breakfasts n n n A home away from home Accommodation with an owner who lives on premises Maintains a few rooms Offers breakfast Personable and quick service Introduction to Hospitality, Fourth Edition John Walker Mr. White – Econ 296 Manoa Valley Inn © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

Vertical Integration n n Lodging companies meeting the needs of several types of guests based on price, facilities and amenities Choice hotels which have several chains that meet its diverse clientele n n n Luxury Mid-scale Budget Economy - Clarion Quality Inn/Suites Comfort Inn Sleep Inn www. hotelchoice. com Introduction to Hospitality, Fourth Edition John Walker Mr. White – Econ 296 © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

Marketing Consortiums n n Also called referral organizations Numerous independent properties unite to compete with the marketing power of chain operations Similar benefits as franchises, at a lower cost Provides incentives for clients Introduction to Hospitality, Fourth Edition John Walker Mr. White – Econ 296 © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

Vacation Ownership n n Fastest growing segment of travel industry Time share n n n A condo that is owned Purchaser uses for a specific period of time each year Vacation club n n Purchase points that entitle purchaser to use of facility Not real estate based Introduction to Hospitality, Fourth Edition John Walker Mr. White – Econ 296 © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

Vacation Ownership n n A person purchases the use of a unit similar to a condominium for blocks of times, usually in weeks. Began in the French Alps during the late 1960 s. The politically correct way of saying time-share. Fastest growing segment of U. S. travel and tourism industry. Ala Moana Hotel and Condos Introduction to Hospitality, Fourth Edition John Walker Mr. White – Econ 296 © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

Vacation Ownership n n n Estimated that 2 million households own vacation intervals at 3500 resorts in almost 90 countries Hlps ensure purchaser today’s prices for tomorrow Yearly maintenance fees Fixed or floating times Example n www. rci. com Ala Moana Hotel and Condos Introduction to Hospitality, Fourth Edition John Walker Mr. White – Econ 296 © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

Vacation Ownership 12, 500 average cost to consumer. Offers high-quality accommodations. Purchasers: Gather points to use as currency for vacation getaways. Are locked into time constraints. Many in Hawaii – Marriott - Hltons – Disney Aulani Introduction to Hospitality, Fourth Edition John Walker Mr. White – Econ 296 © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

The Best Hotels n Some previous winners: Oriental Hotel in Bangkok, Thailand n Regent of Hong Kong n Bel-Air of Los Angeles n Introduction to Hospitality, Fourth Edition John Walker Mr. White – Econ 296 Bel-Air, Los Angeles © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

Unusual Hotels n n n Ice Hotel in Swedish Lapland The Treetops Hotel in Kenya Underwater Hotel in Australia Capsule Hotel in Japan The Burj Al Arab in Dubai Introduction to Hospitality, Fourth Edition John Walker © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

International Perspective n We are all part of a huge global economy that is splintered into trading blocks (i. e. , The European Union and the North American Free Trade Agreement). n n This comprises a total population of 350 million consumers. In developing countries, once political stability has been sustained, hotel development quickly follows as part of an overall economic and social progression. Introduction to Hospitality, Fourth Edition John Walker © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458

Trends n n n Capacity control Safety and security Assets and capital Technology New management Globalization Introduction to Hospitality, Fourth Edition John Walker Mr. White – Econ 296 Andrew Cosslett – CEO Inter. Continental Hotels Group © 2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458