Hotel Industry: Overview & Professional Career Opportunities

Chapter 1:
Hotel Industry
Overview & Professional Career Opportunities
Lodging is Part of Tourism Industry:
Tourism Industry
Figure 1.1: Segments in the Tourism Industry
Tourism Industry
Retail (Shopping) Transportation Destination

Hospitality
Stores Services (Activity) Sites
Lodging F&B Operations

Operation
Tourism industry is
third largest retail industry following automotive & food stores
nation’s largest service industry
one of the nation’s largest employers
Hotel Operations Management, 1/e ©2004 Pearson Education

Hayes/Ninemeier Pearson Prentice Hall
Upper Saddle River, NJ 07458
Lodging (Hotel) Sector
Lodging properties are a segment within tourism industry
Figure 1.2: Range of lodging property alternatives
Destination Full-service Limited- Sleeping

resorts hotels service hotels rooms

A Brief History of Hotels
Figure 1.3 : Highlights in the modern history of the US hotel industry
Fewer than 10,000 hotels

1900 750,000 to 850,000 rooms
10,000 U.S. hotels
One million rooms
1910 300,000 employees
Average size: 60-75 rooms
Occupancy: 85%
Hotel construction reaches an all-time peak as
1920
thousands of rooms are added along the new state
and federal highways

A Brief History of Hotels (continued….)
Occupancy: 65%
1930 AHA’s Hotel Red Booklists 20,000 hotels
Occupancy: 64%
1940 Average room rate: $3.21
Occupancy: 80%
1950 Typical hotel: 17 rooms
Average room rate: $5.91
Occupancy: 67%
$3 billion in sales
1960
Typical hotel rooms: 2,400,450
Typical hotel: 39 rooms, independent and locally owned
A Brief History of Hotels (continued….)
Occupancy: 65%
$8 billion in sales
1970
Total hotel rooms: 1,627,473
Occupancy: 70%
$25.9 billion in sales
1980
Total hotel rooms: 2,068,377

A Brief History of Hotels (continued…)
Occupancy: 64%
$60.7 billion in sales
1990 Total hotel rooms: 3,065,685
45,020 properties
Occupancy: 63%
2000 $97 billion in sales

Close Look at Lodging Organizations
Figure 1.4: 2000 Property / Room Breakdown
By location Property Rooms
Urban 10.2% 16.0%
Suburban 33.6% 30.4%
Highway 42.2% 31.0%
Airport 7.7% 10.2%
Resort 6.3% 12.4%
By rate
Under $30 13.8% 3.3%
$30 - $44.99 26.9% 18.1%
$45 - $59.99 34.1% 27.3%
$60 - $85 16.2% 25.3%
Over $85 9.0% 26.0%
By size
Under 75 rooms 51.5% 22.5%
75 – 149 rooms 33.5% 35.1%
150 – 299 rooms 10.9% 21.3%
300 – 500 rooms 2.8% 9.9%
Over 500 rooms 1.3% 11.2%
Close Look at Lodging Organizations:
Typical Lodging Guests
Figure 1.5: Typical lodging guests
28.8% are transient business travelers
25.3% are attending a conference/group meeting
24.6% are on vacation
are traveling for other reasons (for example,

21.8% personal, family, or special event)

Lodging Industry Characteristics
Emphasis on safety, cleanliness & service
- Guests also consider “intangible” aspects of the purchase
decision
Inseparability of manufacture & sales

- A room exists & is sold at the same site
Perishability
- If a room is not rented on a specific date, the revenue is
lost forever
Repetitiveness
- Some operating procedures are routines
Labor Intensive
- Much of a hotel’s daily work involves employees
providing services
Lodging Industry Overview
Largest hotel affiliations
Figure 1.6: Top 5 lodging brands
Brands Rooms Properties

1. CENDANT CORPOPRATION 554,834 6,540
2. BASS HOTELS&RESORTS, INC. 481,482 3,030
3. MARRIOTT INTERNATIONAL 374,010 1,846
4. CHOICE HOTELS INTERNATIONAL 337,226 4,219
5.HILTON HOTELS CORPORATION 333,110 1,910
These five represent some 28 % (14,884 / 53,500 properties) of all

domestic properties, & 42 % (1,708,617 / 4,100,000 rooms) of all rooms.
The majority of these brands do not “own” their hotels, but hotel owners
elect to affiliate with the brand, for a fee.
Lodging Industry Overview (continued….)
Hotel ownership / management
Single-unit property not affiliated with any brand
Single-unit properties affiliated with a brand
Multi-unit properties affiliated with the same brand
Multi-unit properties affiliated with the same brand
Multi-unit properties affiliated with different brands
Multi-unit properties operated by the brand or others
Multi-unit properties owned by the brand

Figure 1.7: Hotel Ownership / Management Alternatives
Hotel property
Affiliation Franchise Non-Franchise
Franchise
Ownership Independent company Independent
(Franchisor)
Franchise Management Management

Operation Independent company Independent
(Franchisor) company company

Hotel Organizational Structures
Small Hotel (75 rooms)
Figure 1.8: Organizational Chart for Small (75 Rooms),

limited-service hotel
Bookkeeper
Manager
/Accountant
Custodial Housekeeping
personnel personnel
Hotel Organizational Structures (continued….)
Large Hotel (350 rooms)
Figure 1.9: Organizational Chart for Large (350 rooms),

full-service hotel
Administrative Assistant G.M.

G.M.
assistant
Director Front
Controller F&B H.R. of sales & Executive Chief
office
director Manager marketing housekeeper engineer
manager
Hotel Departments
Line & staff departments
Those directly involved in the “chain of command”.
Line Directly responsible for revenues
department - Front Office & Food / Beverage
Also responsible for property operations
- Housekeeping, Maintenance, & Engineering
Providing technical, supportive assistance to
Staff support line decision-makers
department Making recommendations to (but not decisions for)
line decision-makers
- Purchasing, human relations, and accounting
Hotel Departments (continued….)
Revenue and cost centers
A hotel department that generates revenue

Revenue - Front office & food / beverage departments
center - Also revenues from telephone services, space
rental and fees from parking garages, vending
machines, and golf courses
A hotel department which incurs costs in support

Cost center of a revenue center
- Marketing, maintenance, accounting, human
resources, & security departments
Lodging is a Service Business
Successful hotels greatly emphasize serving their guests to
the best possible extent.
The brand name a hotel uses is not the most important

factor in a hotel’s success.
When hotels put guests’ needs first, those hotels will do

well.
Consistent delivery of quality of products and services to guests

must be addressed first,Facility
rather than considering tactics to
Engineering & Maintenance
maximize revenue; minimizing costs comes next!

Lodging is a Service Business (continued….)
Questions that must be addressed to deliver quality
service:
How will we show our staff and tell them about the need for
high quality guest service?
How exactly will we evaluate the level of service quality being
provided to our guests?
What exactly are our service strategies and our service
procedures?
How will we train our staff about service concerns and the
tactics to deliver service?
How will we reinforce our service strategies?
What can we do to emphasize service as a philosophy rather
than as a program with a definite start & end time?
What can we do to excel in the guests’ moments of truth?
Current Issues confronting Hoteliers:
Operating Issues
Labor shortages
Managers should implement procedures to: a) reduce
turnover levels, b) increase productivity levels, c) recruit
from non-traditional employee labor markets.
Cost containment
Hoteliers 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.
Increased competition
Overbuilt problem
Current Issues confronting Hoteliers: Marketing
Issues
Market segmentation is increasing
Efforts to focus on a highly defined, smaller group of
travelers.
Brands overlap
The more the number of brands increase, the harder
consumers find it to differentiate between them.
Increased sophistication of consumers
Results in a more competitive selling environment for
hoteliers (e.g., online room booking)
Increased number of amenities
Various amenities (e.g., business centers) increase costs for
hotel owners yet sometimes appeal to only a small segment
of the hotel’s market.
Current Issues confronting Hoteliers: Technological
Issues
Recent technological innovations include:
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
Current Issues confronting Hoteliers:
Economic Issues
“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
Economies of the world, the country, the state and the community
play on the financial success of a lodging organization & the
Facility Engineering & Maintenance
individual properties which comprise it.

G.M / Rooms division M. / Front office M. / Controller /
Executive housekeeper / Catering M. / Executive steward / F &
B M. / Banquet M. / Chef / Executive chef / Food production
M. / Pastry Chef / Sous chef / Room service M. / F & B
controller / Restaurant M. / Beverage M. / Purchasing Director /
Human Resource M. / Credit M. / Executive assistant M. /
Convention M. / Marketing & sales M. / Auditor / Director of
security / Convention services director / Resident M / Chief
engineer
Typical Multi-Unit Positions: Area G.M. / Regional G.M. /
Director of Training / Vice president, finance / Vice president,
real estate / Director of franchising
Professional Career Opportunities in Lodging:
Get Started With Career Planning
How does one start to plan for a career in the lodging industry?
Enrolling in and graduating from hospitality-related programs
of study
Working in a variety of lodging positions (including
educational internships)
Developing a career ladder for professional development within
the lodging industry
- Working with a mentor
Obtaining suggestions by talking with G.M.s at hotels nearby
industry leaders and educators

Hotel Industry: Overview & Professional Career Opportunities

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Chapter 1:

Retail (Shopping) Transportation Destination

Lodging F&B Operations

Hotel Operations Management, 1/e ©2004 Pearson Education

Lodging properties are a segment within tourism industry

Figure 1.2: Range of lodging property alternatives

Destination Full-service Limited- Sleeping

Hotel Operations Management, 1/e ©2004 Pearson Education

Fewer than 10,000 hotels

Hotel Operations Management, 1/e ©2004 Pearson Education

Hotel Operations Management, 1/e ©2004 Pearson Education

Hotel Operations Management, 1/e ©2004 Pearson Education

Figure 1.5: Typical lodging guests

28.8% are transient business travelers

25.3% are attending a conference/group meeting

24.6% are on vacation

are traveling for other reasons (for example,

Hotel Operations Management, 1/e ©2004 Pearson Education

Inseparability of manufacture & sales

Figure 1.6: Top 5 lodging brands

Brands Rooms Properties

These five represent some 28 % (14,884 / 53,500 properties) of all

Hotel Operations Management, 1/e ©2004 Pearson Education

Affiliation Franchise Non-Franchise

Franchise Management Management

Hotel Operations Management, 1/e ©2004 Pearson Education

Small Hotel (75 rooms)

Figure 1.8: Organizational Chart for Small (75 Rooms),

Figure 1.9: Organizational Chart for Large (350 rooms),

Administrative Assistant G.M.

A hotel department that generates revenue

A hotel department which incurs costs in support

The brand name a hotel uses is not the most important

When hotels put guests’ needs first, those hotels will do

Consistent delivery of quality of products and services to guests

maximize revenue; minimizing costs comes next!

Hotel Operations Management, 1/e ©2004 Pearson Education

Interactive reservation system

Impact of globalization on the lodging industry

Lodging industry is an integral part of the tourism industry

individual properties which comprise it.

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