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

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

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

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

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

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

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

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

9. Introduction to Hospitality, Fourth Edition John Walker ©2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Mr. White – Econ 296 Franchisee-Drawbacks Lack of operational power; must conform Lack of operational power; must conform High fees – both to join and ongoing High fees – both to join and ongoing Central reservations produces 17- 26% of reservations Central reservations produces 17- 26% of reservations Must meet standards as set by franchisor Must meet standards as set by franchisor

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

11. Introduction to Hospitality, Fourth Edition John Walker ©2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Mr. White – Econ 296 Cendant Corp Franchises

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

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

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

15. Introduction to Hospitality, Fourth Edition John Walker ©2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Mobil Travel Guide Hotel Ratings      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. The Peninsula Beverly HillsFour Seasons Hotel Chicago The Ritz-Carlton San FranciscoThe Peninsula Beverly HillsFour Seasons Hotel Chicago The Ritz-Carlton San Francisco     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.. The Ritz-Carlton Laguna NiguelMandarin Oriental MiamiFour Seasons Hotel Las VegasThe Ritz-Carlton Laguna NiguelMandarin Oriental MiamiFour Seasons Hotel Las Vegas

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

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

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

19. 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 Originally began due to rail travel Greenbrier in West Virginia Greenbrier in West Virginia www.greenbrier.com www.greenbrier.com www.greenbrier.com The Halekulani in Waikiki, Hawaii The Halekulani in Waikiki, Hawaii www.halekulani.com www.halekulani.com www.halekulani.com The Ritz Carlton Kapalua in Maui, Hawaii The Ritz Carlton Kapalua in Maui, Hawaii www.ritzcarlton.com www.ritzcarlton.com www.ritzcarlton.com The Greenbrier Resort

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

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

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

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

24. Introduction to Hospitality, Fourth Edition John Walker ©2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Mr. White – Econ 296 Freeway Hotels Prominent in the 1950s Prominent in the 1950s Easy access to roadways Easy access to roadways Park outside the room entrance Park outside the room entrance Example Example Motel 6 www.motel6.com Motel 6 www.motel6.com www.motel6.com Motel 6 – Savannah GA Howard Johnson’s Omaha, NB Day’s Inn – Camarillo, CA

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

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

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

28. Introduction to Hospitality, Fourth Edition John Walker ©2006 Pearson Education, Inc. Pearson Prentice Hall Upper Saddle River, NJ 07458 Mr. White – Econ 296 Economy/Budget Hotels Represents 12 percent of total hotel rooms Represents 12 percent of total hotel rooms Accomplished 37 percent of industry growth Accomplished 37 percent of industry growth Average room rate of $48.68 Average room rate of $48.68 However, profit revenue is slow with an annual rate of 1 percent However, profit revenue is slow with an annual rate of 1 percent Also considered budget hotels Also considered budget hotels Clean rooms Clean rooms Reasonably sized and furnished Reasonably sized and furnished Continental breakfast Continental breakfast Thriftlodge-Kissimmee, FL

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

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

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

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

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

34. 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 Ice Hotel in Swedish Lapland The Treetops Hotel in Kenya The Treetops Hotel in Kenya Underwater Hotel in Australia Underwater Hotel in Australia Capsule Hotel in Japan Capsule Hotel in Japan The Burj Al Arab in Dubai The Burj Al Arab in Dubai

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