Hotel Management Introduction

What is Hospitality? ▪ The reception and entertainment of guests, visitors, or strangers at resorts, clubs, conventions, attractions, special events; and other services for travelers and tourist.

What Is Hospitality? ▪ Many peoples’ definition of hospitality extends only to restaurants and hotels ▪ In reality, it goes far beyond this and includes any organization that provides food, shelter and other services to people away from home ▪ When viewed in this light, the hospitality industry can be quite large and far reaching ▪ Also, the numerous career opportunities become readily apparent

Primary Sectors ▪ So, what are some of the primary sectors within the hospitality industry? They include: ▪ Lodging (not just limited to traditional hotels) ▪ Foodservice (not just limited to restaurants) ▪ Gaming operations ▪ Private clubs ▪ Theme parks ▪ Destination management companies

Primary Sectors (continued) ▪ Meetings and conventions (planning and operations) ▪ Managed park environments (natural) ▪ Resorts ▪ Senior living

Tourism ▪ Tourist travel and the services connected with it

The following diagram shows the relationship between the hospitality and tourism industry. Can you think of more services with examples to add to the diagram?

Hospitality Industry ▪ Accommodations – Hotels – Resorts – Motels – B&B ▪ Transportation – Airlines – Cruise Ships – Car rentals ▪ Food and Beverage ▪ Attractions – Theme parks – Zoos – National, state, and local parks

Two main business sectors in the hospitality industry: Accommodation – To provide accommodation (and usually food and drink) to people who for whatever reason are away from home Food and beverage – To provide food and beverage to local, commuting, transient customers and tourists

Hotel Operations Management, 1/e © 2004 Pearson Education Hayes/Ninemeier Pe arson Prentice Hall U pper Saddle River, NJ third largest retail industry following automotive & food stores nation’s largest service industry one of the nation’s largest employers Tourism Industry Hospitality Retail (Shopping) Stores Transportation Services Destination (Activity) Sites Lodging is Part of Tourism Industry: Tourism Industry Lodging Operation F&B Operations Tourism industry is Figure 1.1: Segments in the Tourism Industry

Lodging/Accommodation ▪ To temporarily have a room in a hotel, motel, inn, bed & breakfast, or hostel.

There is no generic rule for classifying accommodation establishments globally. One method is to divide accommodation into two main groups:  Non-commercial  Commercial Accommodation Non-commercial Commercial Private e.g. Private Home e.g. Apartments Private e.g. Private Home e.g. Apartments Non-profit e.g. Shelter Non-profit e.g. Shelter Institutional e.g. University Institutional e.g. University Hotels Figure 1: Accommodation structure

Hotel Operations Management, 1/e © 2004 Pearson Education Hayes/Ninemeier Pe arson Prentice Hall U pper Saddle River, NJ Lodging is Part of Tourism Industry: A Brief History of Hotels Figure 1.2 : Highlights in the modern history of the US hotel industry 1910 Fewer than 10,000 hotels 750,000 to 850,000 rooms 10,000 U.S. hotels One million rooms 300,000 employees Average size: rooms 1920 Occupancy: 85% Hotel construction reaches an all-time peak as thousands of rooms are added along the new state and federal highways

Hotel Operations Management, 1/e © 2004 Pearson Education Hayes/Ninemeier Pe arson Prentice Hall U pper Saddle River, NJ Occupancy: 65% AHA’s Hotel Red Booklists 20,000 hotels Lodging is Part of Tourism Industry: A Brief History of Hotels (continued….) 1940 Occupancy: 64% Average room rate: $ Occupancy: 80% Typical hotel: 17 rooms Average room rate: $ Occupancy: 67% $3 billion in sales Typical hotel rooms: 2,400,450 Typical hotel: 39 rooms, independent and locally owned Average room rate: $5.91 Figure 1.3 : Highlights in the modern history of the US hotel industry

Hotel Operations Management, 1/e © 2004 Pearson Education Hayes/Ninemeier Pe arson Prentice Hall U pper Saddle River, NJ Lodging is Part of Tourism Industry: A Brief History of Hotels (continued….) 1970 Occupancy: 65% $8 billion in sales Total hotel rooms: 1,627,473 Average room rate: $ Occupancy: 70% $25.9 billion in sales Total hotel rooms: 2,068,377 Average room rate: $45.44 Figure 1.4 : Highlights in the modern history of the US hotel industry

Hotel Operations Management, 1/e © 2004 Pearson Education Hayes/Ninemeier Pe arson Prentice Hall U pper Saddle River, NJ Lodging is Part of Tourism Industry: A Brief History of Hotels (continued…) Occupancy: 63% $97 billion in sales Occupancy: 64% $60.7 billion in sales Total hotel rooms: 3,065,685 45,020 properties Average room rate: $58.70 Figure 1.5 : Highlights in the modern history of the US hotel industry

Hotel Operations Management, 1/e © 2004 Pearson Education Hayes/Ninemeier Pe arson Prentice Hall U pper Saddle River, NJ Overbuilt problemHoteliers should examine ways to reduce costs without impacting quality. An excessive emphasis on cutting service or product quality will ultimately result in reduced hotel revenue. Managers should implement procedures to: a) reduce turnover levels, b) increase productivity levels, c) recruit from non-traditional employee labor markets. Labor shortages Current Issues confronting Hoteliers: Operating Issues Cost containment Increased competition

Hotel Operations Management, 1/e © 2004 Pearson Education Hayes/Ninemeier Pe arson Prentice Hall U pper Saddle River, NJ Various amenities (e.g., business centers) increase costs for hotel owners yet sometimes appeal to only a small segment of the hotel’s market. Results in a more competitive selling environment for hoteliers (e.g., online room booking) The more the number of brands increase, the harder consumers find it to differentiate between them. Efforts to focus on a highly defined, smaller group of travelers. Market segmentation is increasing Current Issues confronting Hoteliers: Marketing Issues Brands overlap Increased sophistication of consumers Increased number of amenities

Hotel Operations Management, 1/e © 2004 Pearson Education Hayes/Ninemeier Pe arson Prentice Hall U pper Saddle River, NJ Interactive reservation system - Allows potential guests to make reservations at preferred room rates in reduced time Guestroom innovations - Two (or more) telephone lines enabling Internet access / interactive menu ordering for room service / electronic games and guestroom checkout Data mining technology - Analyzing guest- (and other) related data to make better marketing decisions Yield management - Matching guest demand with room rates Recent technological innovations include: Current Issues confronting Hoteliers: Technological Issues

Hotel Operations Management, 1/e © 2004 Pearson Education Hayes/Ninemeier Pe arson Prentice Hall U pper Saddle River, NJ “As goes the economy, so goes the lodging industry”Impact of globalization on the lodging industry Lodging industry is an integral part of the tourism industry - It is affected by the extent to which travelers, both within the country and worldwide travel Facility Engineering & Maintenance Economies of the world, the country, the state and the community play on the financial success of a lodging organization & the individual properties which comprise it. Current Issues confronting Hoteliers: Economic Issues

OUTLOOK FOR HOSPITALITY The outlook for the industry is very positive but there are several trends/factors that are affecting how the industry operates and the products and services that are offered to customers.

OUTLOOK FOR HOSPITALITY The effects of September 11th and other recent events have resulted in: ▪ Travel restrictions ▪ Safety and security issues ▪ Cost of operations ▪ Government regulations ▪ Destinations that have been effected

OUTLOOK FOR HOSPITALITY Accelerating Competition ▪ Competition across segments has increased dramatically ▪ International competition has also increased ▪ Competition had led to more emphasis on creating specialized niches and better management practices ▪ Factors include: Cost of money and demand for specific services

OUTLOOK FOR HOSPITALITY Service is the Difference ▪ Service is more and more what brings customers back (or prevents them from returning) ▪ Companies that provide excellent service inevitably lead their segments ▪ Not limited to hospitality

OUTLOOK FOR HOSPITALITY Value Consciousness ▪ Customers are getting smarter and more selective ▪ Customers look for value in all hospitality experiences and purchases ▪ Value doesn’t mean the lowest price ▪ Customers also tend to balance time and money spent

OUTLOOK FOR HOSPITALITY Technology ▪ The hospitality industry has been one of the “laggards’ in terms of adapting to new technologies but the industry has made some inroads ▪ Perhaps the segment that is the most advanced is the airline industry, both in terms of on-line interaction with customers as well as up-to-the-minute pricing ▪ New technologies are being introduced every year

OUTLOOK FOR HOSPITALITY Concern with Security ▪ Concern for personal security and safety has resulted in destinations, organizations and society in general attempting to provide a greater level of safety for travelers ▪ Examples include airline marshals, hotel security forces, cameras, and increased education

OUTLOOK FOR HOSPITALITY Concern with Sanitation ▪ Increases in foodborne illness has resulted in a raised concern on the part of consumers ▪ Raised concerns in the US probably began with the Jack-in- the Box incident in the 1970s ▪ More recent incidents have also raised questions about the quality of the food supply and even the water supply (e.g., bottled water).

OUTLOOK FOR HOSPITALITY Globalization (Last but not least) ▪ Globalization is perhaps one of the greatest factors affecting the industry as it impacts every facet of operations including: – Competition – Work force – Travel patterns – Company alliances, etc.

Assignment- Due Tomorrow! ▪ Hotels and Wi-Fi article ▪ Some hotels charge $9.95-$19.95/ day ▪ $3.95 for more bandwidth ▪ Wi-Fi cost the hotel around: $3,000-$4,000/month for 100 megabits of data/sec