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©2006 Pearson Education, Inc.

Introduction to Hospitality, Fourth Edition Pearson Prentice Hall
John Walker Upper Saddle River, NJ 07458
 • Ellsworth Slater –Slater Hotels
Founders of Hotels

• Conrad Hilton - Hilton

• Kemmons Wilson – Holiday
Inn
• Cesar Ritz – Ritz Carlton

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Pearson Prentice Hall
Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 2 Upper Saddle River, NJ 07458
After Reading and Studying This Chapter, You Should Be
Able to:

• Define the following terms:

Independent ownership, chains,
franchising and management contracts
• Classify hotels by type, location and
price
• Name some prestigious and unusual
hotels
• Describe the effects of a global
economy on the hotel industry

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John Walker Chapter 4 - The Hotel 3 Upper Saddle River, NJ 07458
 Types Of Business Ownership

Definition:
Independent

“An individual or company

opens a hotel and manages
it, with complete
responsibility for the hotel’s
success or failure”

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John Walker Chapter 4 - The Hotel 4 Upper Saddle River, NJ 07458
 Types Of Business Ownership

▪ Property bears no branded

name and follows its own,
individualized approach to
Independent

operations.
• Originally the only existing
option
• If you have ever decide to open
your own restaurant – that is
it…..

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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 5 Upper Saddle River, NJ 07458
 Types Of Business Ownership

• Owners have complete control

over every aspect of business
• Owners have the freedom to
Benefits

implement and test ideas and

make changes anytime

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John Walker Chapter 4 - The Hotel 6 Upper Saddle River, NJ 07458
 Types Of Business Ownership

• These face most difficult

financial challenges
Drawbacks

• Must raise large amounts of

capital and show a very early
profit, despite limited
advertising and sales budget
when starting off

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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 7 Upper Saddle River, NJ 07458
 ▪ Characteristics
✔ Owner-Operated hotels
✔ Usually family operated where they
would handle all hotel operations
Two Types

and decision-making.
✔ They are usually small in size, with
minimum rules and regulations,
having a KISS (keep it simple &
sweet) concept.
✔ Such establishment could be found
when discussing Bed & Breakfast
units. 

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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 8 Upper Saddle River, NJ 07458
 ▪ Characteristics:
✔ Function similar to the owner-operated
hotels.
✔ Difference is that they hire a minimal
amount of staff to sustain their day to day
operations
✔ The sole owners will always run the
management.
✔ Usually owner operated or family owned
properties
✔ Has its own individual identity
✔ No relationship to other properties with
regard to policies, procedures, marketing
of financial obligations

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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 9 Upper Saddle River, NJ 07458
 Types Of Business Ownership

1.Parent company owned and

operated by brand name
▪ Bears the brand name of its
chain: company ownership
Chains

requires compliance with all the

chain’s policies and procedures.
▪ Management contract owned by
an investor/s and operated on
contract by the brand name

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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 10 Upper Saddle River, NJ 07458
 ▪ Characteristics
✔ Is a group of hotels that are
owned or managed by one
company.
✔ Usually imposes a certain
minimum standards, rules,
policies and procedures.
✔ Chains receive large discounts
for purchasing materials and
supplies

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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 11 Upper Saddle River, NJ 07458
 Types Of Business Ownership

• Strong national brand identity

shared by their hotels -
maintained through advertising
Benefits

campaigns
• All connected to the chain’s
centralised reservation system
• Has access to common expertise
of company

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 Types Of Business Ownership

• Need to establish brand loyalty

among potential guests
Drawbacks

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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 13 Upper Saddle River, NJ 07458
 Types Of Business Ownership

Definition:
Franchise
Franchising

1.“The authorisation given by

one company to another to sell
its unique products and
services”
2.” The name of the business
format or product that is being
franchised”

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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 14 Upper Saddle River, NJ 07458
 Types Of Business Ownership

Definition:
Franchiser
An individual/company that licenses
Franchising

others to sell its products/services

Franchisee
“A person who purchases the right to
use/sell the product/ services of
franchiser”
Franchisor
“The company”

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John Walker Chapter 4 - The Hotel 15 Upper Saddle River, NJ 07458
 Types Of Business Ownership

• Business concept that allows company to

Why Franchising?
expand rapidly
• Franchisor grants franchisee certain rights
to use:
⮚ Trademark
⮚ Signs
⮚ Proven operating system
⮚ Operating procedures
⮚ Reservation systems
⮚ Marketing knowledge
⮚ Purchase discounts (bulk buying)

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 Types Of Business Ownership

• Uses other people’s money

Why Franchising?

(franchisee)
• Franchisee must sign contract to
follow guidelines set out by
franchisor
• Franchisee must pay fees:
franchise fees, advertising fees,
reservation fees and royalty fees
based on revenue (3-4%)

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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 17 Upper Saddle River, NJ 07458
 Types Of Business Ownership

1.Maintenance of quality
Major Challenges

standards
2.Avoiding financial failure
incurred by franchisee

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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 18 Upper Saddle River, NJ 07458
 Franchised Hotels Among the Top 10
Figure 4-1
Corporate Chains

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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 19 Upper Saddle River, NJ 07458
 Top 10 Management Companies
Figure 4-2

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John Walker Chapter 4 - The Hotel 20 Upper Saddle River, NJ 07458
 • Set of plans and specifications for
building
• National advertising
• Centralised reservation system
Benefits

• Participation in volume purchasing

discounts for furnishing, equipment
• Listing in the franchisor’s directory
• Low fee percentage charged by credit
card companies
• Brand identity

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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 21 Upper Saddle River, NJ 07458
 • Lack of operational power;
must conform to franchisor
Drawbacks

• High fees – initial fee and

ongoing royalties
• Must meet standards as set by
franchisor

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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 22 Upper Saddle River, NJ 07458
 Ben • Benefit • Drawbacks
efit • Increased • Need to be
& market share & careful in the
recognition selection of
dra franchisees
• Up front fees
wba • Able to expand • Difficulty in
ck to quickly maintaining
Fra control of
standards
nchi
se
Co
Introduction to Hospitality, Fourth Edition
Chapter 4 - The Hotel 23
©2006 Pearson Education, Inc.
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John Walker Upper Saddle River, NJ 07458
 Definition:
Management Contract
Management

“A written agreement between

Contracts

an owner and an operator of a

hotel/restaurant by which the
owner employs the operator as
an agent (employee) to assume
full responsibility for operating
and managing the property”
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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 24 Upper Saddle River, NJ 07458
 • The owner hires a chain or
company specializing in
lodging management to
manage the property
professionally in return for a
management fee.

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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 25 Upper Saddle River, NJ 07458
 • Contract
– The Players
• Owner - financial responsibility
Management

• Management company - operational

Contracts

responsibility
– Fee structure of 2 – 4.5% of gross
revenue
– Company manages in yearly terms
of 5, 10 or 20 years – renewable
after expiry
– Eg: Allsons International
– Hotel name would have "managed
by”

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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 26 Upper Saddle River, NJ 07458
 • Advantages • Disadvantages
✔ Operational ✔ High
expertise management
✔ CRS fees
✔ Volume ✔ Lack of
purchasing operational say
discounts
✔ National
advertising

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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 27 Upper Saddle River, NJ 07458
 Affiliated properties and ▪ Properties keep to their own identity.
▪ Join a consortia or reservation service,
consortia members

which may also offer central purchasing

capabilities. In many cases, certain
standards must be met to belong to the
consortia.
• Each hotel is individual but should have a
consistency in the quality of service
• Eg. of such a referral organization is Best
Westin in US & Golden Tulip in Europe.

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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 28 Upper Saddle River, NJ 07458
 • Classifying Hotels
Ways to Classify
– Location
– Types of services offered
Hotels

– Market price levels

• To allow guests to make
selection as well as personal
preference

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Pearson Prentice Hall
Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 29 Upper Saddle River, NJ 07458
 Loc • Center city hotels
• Resort hotels
atio • Airport hotels
n • Freeway hotels
• Casino hotels
• Full service
• Convention
• Economy
• Extended stay
• Bed and breakfast

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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 30 Upper Saddle River, NJ 07458
 • Budget - US$29-$39
• Economy -US$40 - $60
Hotels by Price

• Mid-price - US$60 - $100

Segment

• Up scale - US$100 - $200

• Luxury - US$140 - $450
• All-suites - US$95 - $175

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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 31 Upper Saddle River, NJ 07458
 Cit • Luxury
y • First class
Ce • Mid-scale
nte • Economy
r • Suites
Hot
els Burj Al Arab, Dubai

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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 32 Upper Saddle River, NJ 07458
 Cit • Public
transportation
y available for
business or
Ce • leisure
Range of
nte accommodations
and services
r • Typically have a
signature
Hot restaurant/coffee
shop
els Traders Hotel, KL

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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 33 Upper Saddle River, NJ 07458
 Res • Luxury
orts • Mid-scale
… • Economy
suites
• Condominium
• Time-share
• Convention

Nexus Karambunai, Sabah

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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 34 Upper Saddle River, NJ 07458
 Res • Originally began due to
rail travel
orts • Travelling to exotic
… locations became pleasure
experience
• Resorts usually built
around an attraction,
nature, beach and
mountains
• Focus mainly on sport
activities – golf, fishing,
skiing
Greenbrier, West Virginia

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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 35 Upper Saddle River, NJ 07458
 Mor • “Captured
e on Clientele”
Res • Food service is
unique
orts • Diversified
marketing mix
– Children
– Groups
– Eco-tourism
Pangkor Laut Resort, Perak

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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 36 Upper Saddle River, NJ 07458
 Definition:
Vacation Ownership

“A person purchases the

use of a unit similar to a
condominium for blocks
of times, usually in
weeks”

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John Walker Chapter 4 - The Hotel 37 Upper Saddle River, NJ 07458
 • Fastest growing segment of
Vacation Ownership
travel industry
• Time share
– A condo that is owned
– Purchaser uses for a specific
period of time each year
– Eg: Marriott Vacation Club Int
– Berjaya Vacation Club

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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 38 Upper Saddle River, NJ 07458
 Air • Luxury
port • Mid-scale
Hot • Economy
els • Suites

Pan Pacific, KLIA

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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 39 Upper Saddle River, NJ 07458
 • High occupancy due to location
• Business, group and leisure travelers
Airport Hotels

• Offers full service

• Generally has 200-600 rooms
• Convenient location encourages
businessmen to fly in, meet and fly
out
• Airport shuttle service
• Economical pricing

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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 40 Upper Saddle River, NJ 07458
 Fre • Mid-scale
ewa • Economy
y suites
Hot
els

Motel 6

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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 41 Upper Saddle River, NJ 07458
 • Prominent in the 1950s and
1960s
Freeway Hotels

• Easy access to roadways

• Guest drive up, park outside
office, register, rent a room and
park outside the room entrance
• Facilities: lounges, restaurants,
pools, soft dink machines, game
rooms, satellite TV

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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 42 Upper Saddle River, NJ 07458
 Cas • Luxury
inos • Mid-scale
• Economy

Genting Highlands Hotels

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John Walker Chapter 4 - The Hotel 43 Upper Saddle River, NJ 07458
 • Heavy growth segment
• Leaning towards “family
friendly” hotels
• Low room rates
Casinos

• Subsidised food and beverage

• Themes are popular
• 500 plus guest rooms
• Variety of food operations
• Contains a gaming room
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 Casinos

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 • Meet the needs of large groups
Convention Hotels
• 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

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 Convention Hotels

Palace of Golden Horses Hotel

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 • Typically “Business Oriented”
Full-Service Hotels
• Facilities include:
✔ Multiple food and beverage outlets
✔ Meeting and convention services
✔ Business centre
✔ In-room computer
• Chain representation
Eg: Hilton, Holiday Inn, Marriott, Ritz-
Carlton, Le Meridien, Sheraton

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 Full-Service Hotels

Sheraton Hotel and Towers, KL

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 • Offers clean, reasonably sized
Economy/Budget Hotels
and furnished rooms
• Focus is on selling beds, not
meals or meetings
• Also considered budget hotels
• Offers Continental breakfast

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John Walker Chapter 4 - The Hotel 50 Upper Saddle River, NJ 07458
 Economy/Budget Hotels

Sri Malaysia, Port Dickson

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 • Cater to guests for long term stay
All-Suite Extended-Stay
(more than 5 days)
• Reduction in rate based on length of
stay
Hotels

• Guest consist of business and

professional/technical, relocating
families
• More space than typical hotel
• Additional space offered for lounge
or kitchenette
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Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 52 Upper Saddle River, NJ 07458
 All-Suite Extended-Stay
Hotels

Suites

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John Walker Chapter 4 - The Hotel 53 Upper Saddle River, NJ 07458
 • Concept began in Europe
Bed and Breakfasts
• Started as overnight lodging in
a private home
• A home away from home
• Accommodation with an owner
who lives on premises
• Maintains a few rooms
• Offers breakfast
• Personable and quick service

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John Walker Chapter 4 - The Hotel 54 Upper Saddle River, NJ 07458
 Bed
and
Bre
akfa
sts

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John Walker Chapter 4 - The Hotel 55 Upper Saddle River, NJ 07458
 • Some previous winners:
– Oriental Hotel in Bangkok,
The Best Hotels

Thailand
– Peninsular, Hong Kong
– Oberoi Udaivilas, Udaipur
India

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 The Best Hotels

Oriental Hotel, Bangkok

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 The Best Hotels

Peninsular, Hong Kong

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 The Best Hotels

Oberoi, Udaipur

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 • Some previous winners:
The Largest Hotels
– MGM Grand, Las Vegas 5690
rooms
– Venetian Hotel, Las Vegas 6172
rooms
– MGM, Macau 6000 rooms
– First World Hotel, KL 6118
rooms
– By 2010, Asia Asia Hotel in
Dubai6500 rooms

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 Ice Hotel, Swedish Lapland
Un
usu
al
Hot
els

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John Walker Chapter 4 - The Hotel 61 Upper Saddle River, NJ 07458
 The Treetops Hotel, Kenya
Un
usu
al
Hot
els

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 Capsule Hotel, Japan
Un
usu
al
Hot
els

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 Unusual HotelsBeckham Creek Cave Haven, UK

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 Unusual HotelsBeckham Creek Cave Haven, UK

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 Unusual Hotels Gamirasu Cave Hotel, Turkey

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 Unusual Hotels Ariau Towers Hotel, Brazil 

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John Walker Chapter 4 - The Hotel 67 Upper Saddle River, NJ 07458
 Unusual Hotels Wild Canopy Reserve, India

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 Unusual Hotels White Pod, Switzerland

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 Unusual Hotels Three Camel Lodge, Mongolia

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 Unusual Hotels Das Park Hotel, Austria

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 Beagle Bed and Breakfast, USA
Unusual Hotels

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 Unusual Hotels Utter/Otter Inn, Sweden

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 Unusual Hotels Freighter Plane , New Zealand

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 Poseidon Resorts, Fiji
http:/
/
www
.pose
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posei
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main ©2006 Pearson Education, Inc.

.html
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 Poseidon Resorts, Fiji
Un
usu
al
Hot
els

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 Poseidon Resorts, Fiji
Un
usu
al
Hot
els

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 Accommodations Wigwam Motel, USA
Unusual

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 Accommodations Woodlyn Park, New Zealand
Unusual

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 Accommodations The Lighthouse, North Wales
Unusual

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 Accommodations Malmaison, UK
Unusual

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 Accommodations Celica (Cell), Slovenia
Unusual

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 Accommodations VAT Hotel, Holland
Unusual

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 • The Andaman Langkawi in Kedah
Green Hotels in M’sia
• Shangri-La’s Tanjung Aru Resort & Spa in
Kota Kinabalu
• Mines Wellness Hotel in Selangor,
• Shangri-La’s Rasa Ria Resort in Tuaran
• Renaissance Kuala Lumpur Hotel.
• Hotel Melia Kuala Lumpur
• Nexus Resort Karambunai in Sabah
• Shangri-La’s Rasa Sayang Resort and Spa
in Penang
• Shangri-La Hotel Kuala Lumpur
• The Frangipani Langkawi Resort and Spa

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John Walker Chapter 4 - The Hotel 84 Upper Saddle River, NJ 07458
 OT

TH
EL

H
E
©2006 Pearson Education, Inc.
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John Walker Upper Saddle River, NJ 07458
 • Lodging/
accommodations
• Serve and enrich society
Function

• Profit for the owners

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John Walker Chapter 4 - The Hotel 86 Upper Saddle River, NJ 07458
 Division of the Hotel
• Revenue centre - departments that
involve in generating revenue for the
hotel. Also known as front of the
house
• Support centre - departments that
do not directly involve in generating
revenue for the hotel instead
rendered support to the Revenue
centre departments. Also known as
back of the house.

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John Walker Chapter 4 - The Hotel 87 Upper Saddle River, NJ 07458
 • Revenue • Cost Centres
Centres (Support)
✔ Front Office ✔ Housekeeping
✔ F&B ✔ Maintenance
✔ Sales ✔ Security
✔ Recreation ✔ Finance
✔ Human
Resource
✔ Public
Relations

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 Organisation Chart
Gene
ral
Mana
ger
Direct Direct Direct Direct
or or or or
Finan
of of of of Chief
cial
Room Food Sales Huma Engin
Contr
s and and n eer
oller Bever Marke
Divisi Resou
on age ting rces

©2006 Pearson Education, Inc.

Pearson Prentice Hall
Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 89 Upper Saddle River, NJ 07458
 ©2006 Pearson Education, Inc.
Pearson Prentice Hall
Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 90 Upper Saddle River, NJ 07458
 Executive Committee • General Manager
• Director of Human Resources
• Director of Food and Beverage
(EXCO)

• Director of Rooms Division

• Director of Marketing and Sales
• Director of Engineering
• Director of Accounting

©2006 Pearson Education, Inc.

Pearson Prentice Hall
Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 91 Upper Saddle River, NJ 07458
 Res • Guest • Sales &
satisfaction Marketing
posi plans
• Employee
bilit satisfaction • Renovations
ies • Total quality • Energy
management conservations
• Occupancy • Major items on
forecast expenditure
• Training

©2006 Pearson Education, Inc.

Pearson Prentice Hall
Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 92 Upper Saddle River, NJ 07458
 Normal shifts
• 7am-3pm
• 3pm -11pm
• 11pm-7am
Shifts

• 12 noon-8pm
Split Shift
• 10am-3pm 5pm -8pm
• 11am-3 pm 5pm -9pm

©2006 Pearson Education, Inc.

Pearson Prentice Hall
Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 93 Upper Saddle River, NJ 07458
 Exercises
• Generate a list of hotels (access websites
and other sources) in the area and classify
the hotel properties using the categories
from the text.
• Identify which type of hotel you would like
to work for and why.
• Which type of hotel would you like to own

©2006 Pearson Education, Inc.

Pearson Prentice Hall
Introduction to Hospitality, Fourth Edition
John Walker Chapter 4 - The Hotel 94 Upper Saddle River, NJ 07458