Unit 3 : ACCCOMODATIONS

Learning Outcomes
At the end of this unit, the students must have:

1. identified the types of accommodation and distinguished one from others;

2. determined how hotels are classified and the rating systems;
3. explained the organization of the lodging industry and its management methods;
4. discussed some terminologies used in the lodging operations;
5. identified the types of rooms in the hotel industry and the room rates applied;
6. explained the concept of chain operations and frequent flyer links; and
7. assessed how the lodging businesses carry out their promotional strategies.

----------------------------------------------------------------------------------------------------

TYPES OF ACCOMODATION

Accommodation can be classified into various types: the most popular of which are the
following:

1. Hotels
Hotels can be a 10 room boarding house or building that has a thousand or more
rooms, convention and meeting facilities, recreation facilities such as swimming pools and
tennis courts, 24-hour room service, with several restaurants and bars and various types of
entertainment. Hotels have been designed and built to meet almost any kind of budget or
comfort level that the traveling public might want.

2. Motels or Motor Hotels

Normally, motels only offer rooms only and free parking to guest. These are often
found along busy highways and cater primarily to transient and cost-conscious travelers.

3. Resort Hotels
Resort hotels are intended for vacation travelers. These hotels range from budget to
luxury and can accommodate these travelers and even convention delegates. These are
usually located near beaches and offer more amenities, shops, and recreation opportunities.

4. Pensions
Pensions are found principally in Europe. These are usually family-owned
accommodation facilities. In German speaking parts of Europe, a pension is also called
Gasthaus. Pensions and Gasthaus usually offer continental breakfast but do not have
facilities for other meals. Pensions are known for their informal family atmosphere.

5. Parradors
 Paradors are unique to Spain. These are generally old castles, convents, or
monasteries that have been converted into Hotels by the government and are operated by
the government.

6. Condominium Hotels
Condominium hotels are a recent innovation. These are often hotels with
apartments (condominiums) instead of basic rooms. The condominium units are sold by the
hotel developers to individuals who are given a title to the physical real estate. The
individual owners then contract the developer or a management company to operate the
hotel and rent the space to visiting tourists. The individual owners have the right to stay on
their own units during specific periods of the year with a reduced room rate. The developer
or management company receives a fee managing and renting out the units. The resulting
profit is shared among the individual unit owners. Condominium hotels generally appeal to
families because of the apartments.

7. Campgrounds
Camping is a popular form of overnight accommodation in both Europe and North
America, there are at present more than 20,000 campgrounds, some of which are owned by
hotels, Campgrounds usually appeal to families who travel in recreational vehicles RVs.
Campgrounds and RVs stopping spots are often found in government parks and forests.

8. Bed and Breakfast

Bread and Breakfast is a form of lodging which originated in Europe. This form of
accommodation provides a bed for the night and breakfast the next day. It was only in the
1970s that the idea was brought to the United States. Retired and semiretired people with
large houses have contributed much to the growth of these establishments.

9. Tourists Inns
Tourist Inns are lodging establishments that cater to transients. These do not
normally meet the minimum requirements of an economy hotel.

10. Apartment-Hotels (Apartels)

Apartment Hotels are buildings which contain several independent and furnished or
semi-furnished apartments. These are leased to tourists and travelers on a long-term basis
and offer basic services to its tenant, similar to hotels.

11. Health Spas

Health spas are hotels and resort which cater to people who go to spas or mineral
springs for medical treatment or weight reduction. The idea of visiting health spas
originated in Europe. The Romans and the Greeks visited the spas as early as the first
century. The spas became the center of the social life of the English, The French, and the
Germans during the seventeenth and later centuries. At present, several health spas in
 Europe offer modern techniques such as medically supervised rejuvenation programs
which include supervised diets and rigorous exercises to shed fat and reduce weight.

12. Private Homes

The private home is the earliest form of overnight lodging for travelers. It provides
lodging to tourists who cannot be accommodated in hotels and motels during peak vacation
periods.

13. Time-Sharing
Time-Sharing is a more recent unique type of accommodation. It started in Europe
in the 1960s when people found it difficult to make reservations every year in popular
hotels during summer. Time-Sharing is the selling of vacation lodging, usually
condominiums in resort were bought and marketed as either a second home or primary
home depending on the needs of the buyer. The resort would rent the units during the time
when the owner was not in residence, thus providing an income to help with the payments.
Later a new marketing approach that would sell more lodging facilities at a higher profit to
the developer was adopted. By selling weeks instead of permanent residence, the total
asking price could be higher. For example, the unit which sells for $100,000 as residential
structure would sell for $500,000. Time-Sharing also increases the number of potential
buyers since the average person who is restricted by both time and money would then be
able to afford a week at a resort and still receive the benefits of having mmade an
investment in property.

Time-Sharing began in the United States in the early 1970s when oil prices
increased. Florida developers, unable to sell their whole unit condominiums, decided to
adapt them to time-sharing. Therefore, the early North American time-shared developers
split each whole condominium unit into 52 individual weekly portions and sold the portions
or share. In this way, the buyers no longer had to pay $150,000 for the entire unit but only
$3,000 for one week or $6,000 for two weeks. There are two basic types of time-sharing
programs that have been developed. First, the free simple program provides the buyer with
both an occupancy and ownership right to a specific resort unit for a fixed period annually.
This unit can be sold or leased and used for tax purposes like any other real estate purchase.
Second the Right-to-use program guarantees an annual occupancy right for a specific period
but does not convey ownership interest in the proper. Both types of time-share ownership
interest in the property and both payment of a pro-rate share of the annual maintenance
costs of the entire property.

A later development which has increased the attractiveness of time-shares is a

system of exchange. This allows a person who buys a time-share in a particular resort to
trade for another time-share in another resort. Several companies provide computerized
trading services for owners.
 14. Hostels
Hostels provide basic amenities such as a bunk bed and a commonly shared toilet
and bathroom. The traveler provides his or her own bedding. Hostels appeal primary to
young travelers.

The idea of a hostel was conceived in 1909 by an elementary school teacher in Germany
who wanted to provide low-cost overnight lodging to travelers throughout Europe. In 1930, there
were more than 2,000 youth hostels that were established in Germany. In 1934, the first hostel was
established in the United States.

At present, hostels are run by individuals or nonprofit organizations. A few are run by the
national organization.

Classification of Hotels

There are different ways of classifying hotels, such as location, type of guest, and price.
According to location, hotels may be center-city, suburban, airport, or highway. Based on guest
type, hotels are classified as commercial, conventions, or resort. According to price, hotels are
categorized as economy, standard, first class or deluxe.

Rating System

A number of independent rating guides have been published by individuals, automobile

associations, and travel organizations using various combinations of star, dots, and alphabetical
indicators. Most rating systems are based on the quality of the physical structure, furnishings,
maintenance, housekeeping, and overall service. Experienced individuals inspect the hotels and
restaurants every year. Many are regional field representatives who submit detailed reports to the
appropriate office.

The raters are not known by the establishment being rated.

The following are used to rate hotels, motels, inns, resorts, and guests ranches;
1. 1-star= Good, better than average;
2. 2-star= Very good;
3. 3-star= Excellent;
4. 4-star= Outstanding; and
5. 4-star= One of the best in the country
Organization of the Lodging Industry

A hotel organization can be large and complex. A typical hotel has seven major divisions,
namely: personnel, engineering and maintenance, accounting, security, food and beverage,
marketing and sales, and room division is run by its own division head.

1. The personnel division recruits new employees and administers policies and employee
benefits for the company.
2. The engineering and maintenance division makes the necessary repairs and implements the
hotel’s energy management program.
3. The accounting division handles the financial activities of the operation which include
payment of bills, sending out statements, payroll, and compiling monthly income statements.
4. The security division provides protection for both employees and guests.
5. The food and beverage division is responsible for the food and beverages that are served.
6. The marketing and sales division is responsible for selling the rooms and food service. It is
involved in advertising, development of promotional materials, and making direct contacts
with prospective clients.
7. The room division is responsible for the frontdesk, telephone, reservations, and
housekeeping department.

Management Methods

Traditionally, hotels are operated by the people who own the property. In some cases, the
operator may lease the hotel from the owner and then mange it. In other cases, special
arrangements are made such as franchising and management contracts.

Franchising

Hotels that are franchised are usually owned and operated by the same person or company.
The hotel operator or franchisee signs a contact with the franchisor to maintain certain operating
standard and to use the franchise name on the hotel or motel.

Management Contracts

Hotel management contracts are a recent phenomenon. Although the first management
contract was signed in 1946 by the International Hotels, It was only in the 1970s that management
contracts became widespread.

Under a management contract, the investment rent is transferred from the operator to the
property owner. The management contract also allows hotel-operating companies to widen their
investment base by increasing the number of rooms managed, thereby increasing their profits.
Developers who do not have experience in hotel management usually build large hotels and then
turn them over to hotel management companies to run them. It was the management contract that
enabled hotel companies such as Hilton International to expand rapidly around the world. The
expansion was due to its ability to get capable management teams.

Chain Accommodation Operations

Most hotels and motels are part of a chain operation. The individual units in the chain may
all be owned by one large company, be partly owned and partly franchised, or may all be
franchised. In any case, the owning company or franchisor establishes the standards and operating
policies to which each individual unit must conform. Because of their size, chain operations often
have the potential to implement employee selection and training programs, to buy major
equipment and furniture in bulk, and to conduct market research on such matters as guest room
layouts and productivity improvements. All these benefits are passed on to the owners or managers
of the chain units who also benefit from chain marketing and a chain reservation system.

Referral Groups

Referral groups have become popular because the individual owner or operator can remain
independent while achieving many of the benefits of a chain group. This is through voluntary
membership in the referral organization. Examples of these benefits are advertising and
reservation referrals. One of the largest referral groups in North America is best Western which has
approximately 3,000 properties which more than 200,000 rooms.

Hotel Terminology

Room rates for hotels are quoted in terms of what meals are included in the price. European
Plan (EP) means that there are no meals included. This is the most commonly used room rate
quoted by North American hotels. American Plan (AP) means that breakfast, lunch, and dinner are
included in the quoted price. In Europe, AP is known as full pension. Meals are usually a fixed menu
with little or no choice. Modified American Plan (MAP) includes breakfast and dinner but not lunch
or breakfast and lunch out nut not dinner. In Europe, this is known as demi pension.

A Continental Breakfast is offered by most European hotels and is included in the room rate.
In Europe, this type of plan is known as hotel garni or pension garni which consists of rolls, coffee,
and sometimes juice.

The Bermuda Plan (BP) is offered by hotels in Bermuda and some other places. It includes
both a room and a full English or American type of breakfast. Bed and breakfast hotels operate on a
Bermuda Plan in Britain and the United States and on continental breakfast plan in continental
Europe.
Room Types

Though rooms may vary hotel by hotel, the following room-type definitions are common:

 Single: A room assigned to one person. May have one or more beds.
 Double: A room assigned to two people. May have one or more beds.
 Triple: A room assigned to three people. May have two or more beds.
 Quad: A room assigned to four people. May have two or more beds.
 Queen: A room with a queen-sized bed. May be occupied by one or more people.
 King: A room with a king-sized bed. May be occupied by one or more people.
 Twin: A room with two beds. May be occupied by one or more people.
 Double-double: A room with two double (or perhaps queen) beds. May be occupied by one or
more people.
 Studio: A room with a studio bed – a couch that can be converted into a bed. May also have an
additional bed

Types of Suites can include:

 Master Suite: A parlour or living room connected to one or more bedrooms.

 Mini-Suite or Junior Suite: A single room with a bed and sitting area. Sometimes the sleeping
area is in a bedroom separate from the parlour or living room.

Other types of rooms can include:

 Connecting rooms: Rooms with individual entrance doors from the outside and a connecting
door between. Guests can move between rooms without going through the hallway.
 Adjoining rooms: Rooms with a common wall, but no connecting door.
 Adjacent rooms: Rooms close to each other, perhaps across the hall.

Room Rates

Standard Room Rates used in the hospitality industry:

Rack Rate: Is the Standard rate or Published tariff defined by the hotel management for a
particular room category/type. This is generally printed on the tariff sheet of the hotel and these
details are also submitted to the local government authorities for hotel licensing and in some
countries for Gov. tax compliance. In other word's these rates are always without any sorts of
discounts.

Corporate or Commercial Rate: These are rates offered to companies that provide frequent
business for the hotel or its chain. This rate may vary according to the volume of business
guaranteed by the companies. Eg: NEG1, COR1 etc.
ADHOC Rate: These are normally non-standard rates which are offered as special one-time rates
for first time corporate's.

Group Rate: These are rates which are offered to groups, meetings and conventions using the hotel
for their functions.

Promotional Rate: These rates are generally offered during low occupancy periods to any guest to
promote occupancy. Early Bird Rates, Stay for 3 and pay for 1 etc. are some examples. These rates
may also include certain add-ons to attract the customers like free WiFi for 24 Hrs, free buffet
dinner etc.

Incentive Rate: The Rate offered to individuals who belong to an association or holders of special
membership cards or Credit cards. Eg: Amex / VISA / Master cardholders get 5% discount on Rack
Rate, Lufthansa Frequent Flyer members get a 25% discount etc. For hotels, these rates always give
potential referral business.

Early-bird Rate: This type of rates are only open X days before arrival. Eg: Open only when 7 Days
before arrival, 14 Days Before Arrival, 30 Days Before arrival Etc.

Family Rate: A rate reserved for families with children. Usually, these rates include Extra Bed
charges and may also include some free add-on activities for children.

Package Rate: Rates that includes a guest room in combination with other available events or
activities. ( Eg: a package which includes room rental, all meals, site seeing, airport transfers etc. )
Package rate can be also a simple room and meal package like American Plan ( AP), Modified
American Plan (MAP), Continental Plan ( CP ) etc.

The revenue that is not obtained for a guest room is gone and cannot be recovered, Thus,
hotels offer discounted rates to special classes of people to encourage them to stay in the hotel. For
example, there are special rates for business travelers, government employees, airline employees,
and other similar groups.

For conventions and conferences, hotels compete with one another by offering the lowest
room rate. Profits on banquet meals and sales of liquor make up for the discounted room rates.

Accommodation Reservation

Many large hotels have computerized reservation systems. However, despite these system,
overlooking still occurs. Overbooking is selling more rooms than the actual available rooms. Hotels
do it for a reason. If hotels book only to capacity, they would often end up with empty rooms
because of “no-shows” or people whom do not advise that they want their reservations cancelled.
Hotels know from experience that there is a no-show percentage that can be compensated by
overbooking. However, the numbers do not always work out correctly. The result is disappointed
customers and negative publicity.

Hotels use different methods to avoid overbooking and reduce the no-show factor, One
method is for a hotel to advise the customers that it will honor a reservation only if the customers
arrives at a certain stipulated time. Another method is for the hotel to ask for a deposit when a
room is booked. Upon receipt of the deposit, the hotel will give the customer a written document
confirming that the reservation has been made. The hotel guaranteed that the room will be
available and the customer guarantees that the room will be paid even if he or she does not show
up.

Registration Cards

Accommodation establishments use the guest registration card as marketing tool. A guest
registration card provides information about the guests such as his or her name, address,
geographical origin, and other facts. This information can be used to produce a direct mail list
which is used for sending future promotional material. This list can be expanded to include the
names and addresses of clients who have made reservations, canceled them, and even customers
who made reservations but never arrived.

The guest registration card information can also be used to produce a typical customer
profile. The customer profile can be presented to different print or broadcast advertising media
which can then determine if the market they serve fits this profile. If it does, the establishment may
then be able to use that medium for its advertising.

Hotels and Airline

At present, there is a natural link between airline companies and hotels. This is due to the
changed nature of transportation. One of the forts links was Pan Am which tied in with the
International Hotels in the 1940s.

According to lane (1994), there are three major reasons why airline companies link with
hotels. There are:

1. Their desire to protect insisting business and develop future business, thus increasing their
profits:
2. The expectation that hotel ownership will boost tourism development in their home
countries; and
3. The desire to expand national culture.
 Today, there are many airline-hotel links such as KLM Hilton International, Air France and
Meridian Hotels, Air Langus (Ireland) and Dunfey Hotels, and Japan Airlines and Nikko Hotels. The
links between hotels and airlines are not always formed by ownership or merger. They can also be
partial ownership or a working agreement.

Frequent Flyer Links

Many of the frequent flyer programs of airlines are also linked to hotel usage. This means
that airlines grant airline passengers extra mileage points for staying in participating hotels.

Accommodation Promotion

Most accommodation establishments promote their properties to members of the travel

trade as well as to tour wholesalers and travel agencies. They provide the travel trade with printed
promotional literature and invite them as guest on familiarization trips. They offer discounted room
rates to representatives of the travel trade when the stay in hotels but are not on a familiarization
trip. Large hotel chains install promotional booths at a travel trade expositions and advertise in
travel trade publications. These travel trade advertisements emphasize the benefits that will be
derived by the tour wholesaler or travel agency in recommending the hotel. These benefits are the
commission the wholesaler or agency will receive from the hotel and the repeat business that will
be generated for the wholesaler or agency. Many travel agencies handle resort hotel booking
especially when these are tied in with air travel as a package.

Accommodation establishments also use newspapers for promotion. They spend more
money on newspaper advertisement than on any other advertising vehicle. They use the business
sections of newspapers to reach the business traveler and the travel sector to reach the vacation
traveler. They also advertise on radios and televisions, on highways and airport billboards, on city
magazines or directories, and on telephone directories. Large hotels use direct mail operations for
advertising. Majority of hotels advertise in travel journals, travel and recreation magazines, and
airline in-flight magazines.

Resort hotels advertise on magazines, on television, and by direct mail. Some resorts give
posters to travel agencies for window displays. Resort often get free publicity when they have
stories to tell the media. The story may be about the arrival of a celebrity or the filming of a
television show at the resort. Another type of publicity is when a resort hotel is featured in a
documentary. Many large resorts have produced short video cassettes about their properties which
are given away or sold.

Several chain organization emphasize their image and uniqueness in their advertising. This
works if it is presented creativity in advertising. Budget emphasizes price in their advertising.
 Some accommodation entities feature the hotel’s president or general manager in their
advertisements. They may also feature the chef in their restaurant advertising.

----------------------------------------------------------------------------------------------------------------------------

Unit Exercises

Direction: In a piece of yellow pad, answer the following questions:

1. Discuss the advantages of franchising in the lodging industry. (10 points)

2. Give examples of strategies or factors to be considered to effectively promote a hotel
business. (10 pints)
3. Explain the following: (5points each)
a. Rack rate
b. Promotional rate
c. European plan (EP)
d. American plan (AP)
e. Overbooking
4. What are the major divisions/departments in the hotel and explain their major functions
and activities. (20 points)

Note: Once finished answering, kindly put your work in a short size brown envelope and wait
for instruction from the teacher on when and how to submit it. Don’t forget to write your name, course
and section on your paper.