1. Introduction to Hospitality, Fourth Edition John Walker ©2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Chapter 4 The Hotel Business

2. Introduction to Hospitality, Fourth Edition John Walker ©2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 After Reading and Studying This Chapter, You Should Be Able to: 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

3. Introduction to Hospitality, Fourth Edition John Walker ©2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Franchising Allows for a company to expand rapidly Uses other people’s money (franchisee) Franchisor The company Over 180 franchised hotel brands in North America today

4. Introduction to Hospitality, Fourth Edition John Walker ©2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Figure 4-1 Franchised Hotels Among the Top 10 Corporate Chains

5. Introduction to Hospitality, Fourth Edition John Walker ©2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Figure 4-2 Top 10 Management Companies

6. Introduction to Hospitality, Fourth Edition John Walker ©2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Trends in Franchising 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

7. Introduction to Hospitality, Fourth Edition John Walker ©2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Benefits 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

8. Introduction to Hospitality, Fourth Edition John Walker ©2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Drawbacks Lack of operational power; must conform High fees – both to join and ongoing Central reservations produces 17- 26% of reservations Must meet standards as set by franchisor

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

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

11. Introduction to Hospitality, Fourth Edition John Walker ©2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Hotel Rating Services Rating Services AAA American Automobile Association Diamond Award Mobil Travel Guide Five Star Award

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

13. Introduction to Hospitality, Fourth Edition John Walker ©2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Figure 4-5 Hotel Rating Guide

14. Introduction to Hospitality, Fourth Edition John Walker ©2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Location Center city hotels Resort hotels Airport hotels Freeway hotels Casino hotels Full service Convention Economy Extended stay Bed and breakfast

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

16. Introduction to Hospitality, Fourth Edition John Walker ©2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 City Center Hotels Public transportation available for business or leisure Range of accommodations and services Typically have a signature restaurant

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

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

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

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

21. Introduction to Hospitality, Fourth Edition John Walker ©2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Airport Hotels High occupancy due to location Business, group and leisure travelers Full service 200-600 rooms Convenient location Airport shuttle service Economical pricing

22. Introduction to Hospitality, Fourth Edition John Walker ©2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Freeway Hotels Prominent in the 1950s Easy access to roadways Park outside the room entrance Example Motel 6 www.motel6.com

23. Introduction to Hospitality, Fourth Edition John Walker ©2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Casinos 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

24. Introduction to Hospitality, Fourth Edition John Walker ©2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Convention Hotels 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

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

26. Introduction to Hospitality, Fourth Edition John Walker ©2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Economy/Budget Hotels 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

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

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

29. Introduction to Hospitality, Fourth Edition John Walker ©2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Vertical Integration 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 Luxury -Clarion Mid-scale -Quality Inn/Suites Budget-Comfort Inn Economy-Sleep Inn www.hotelchoice.com

30. Introduction to Hospitality, Fourth Edition John Walker ©2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Marketing Consortiums 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

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

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

33. Introduction to Hospitality, Fourth Edition John Walker ©2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Trends Capacity control Safety and security Assets and capital Technology New management Globalization