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Chapter 4 The Hotel Business

Chapter 4 The Hotel Business. Trump Tower Waikiki Hotel and Condos. Sunset Hula Show Sheraton Waikiki. After Reading and Studying This Chapter, You Should Be Able to:. Define the following terms: hotel franchising, partnerships, leasing, syndicates, and management contracts

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Chapter 4 The Hotel Business

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  1. Chapter 4The Hotel Business Trump Tower WaikikiHotel and Condos Sunset Hula Show Sheraton Waikiki

  2. 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. 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 Accor Hotels Sofitel – Novotel – Suitehotel- IbisEtap – Formula 1 – Red Roof Motel 6 – Studio 6 - Thalassa

  4. Franchised Hotels Among the Top 10 Corporate Chains

  5. Top 10 Management Companies

  6. 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 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

  7. Franchiseee-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. Franchisee-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. Benefits andDisadvantages for Franchisor • Disadvantages • Need to be careful in selection of franchisees • Difficulty in maintaining control of standards • Benefits • Increased market share/recognition • Up-front fees

  10. Cendant Corp Franchises

  11. Management Contracts • Contract • The Players • Owner - financial responsibility • Management company - operational responsibility • Fee structure • Trend toward expansion of contract provisions

  12. Ways to Classify Hotels • Classifying Hotels • Location • Types of services offered • Market price levels

  13. Hotel Rating Services • Rating Services • AAA • American AutomobileAssociation • Diamond Award • Mobil Travel Guide • Michelin • Five Star Awards

  14. 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 ChicagoandThe 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 MiamiandFour Seasons Hotel Las Vegasareprominent names in the Mobil Four-Star category..

  15. Location • Center city hotels • Resort hotels • Airport hotels • Freeway hotels • Casino hotels • Full service • Convention • Economy • Extended stay • Bed and breakfast Business Class King Bed RoomWaldorf Astoria Hotel – New York City A Deluxe City Center Hotel

  16. 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

  17. City Center Hotels • Public transportation available for business or leisure • Range of accommodations and services • Typically have a signature restaurant The Brown Palace - Denver

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

  19. More on Resorts • “Captured Clientele” • Food service is unique • Diversified marketing mix • Children – Groups – Eco-tourism The Grand Hotel – Mackinac Island, MI

  20. 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

  21. 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 Ala Moana Hotel and Condos

  22. Airport Hotels • High occupancy due to location • Business, group and leisure travelers • Full service • 200-600 rooms • Convenient location • Airport shuttle service • Economical pricing Chicago O’Hare Airport Hilton

  23. Freeway Hotels • Prominent in the 1950s • Easy access to roadways • Park outside the room entrance • Example • Motel 6 www.motel6.com Howard Johnson’sOmaha, NB Day’s Inn – Camarillo, CA Motel 6 – Savannah GA

  24. 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

  25. 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

  26. Full-ServiceHotels • Typically “Business Oriented” • Multiple food and beverage outlets • Meeting and convention services • Chain representation • Doubletree • www.doubletreehotels.com • Sheraton • www.sheraton.com Doubletree Alana Waikiki Sheraton Princess Kaiulani

  27. 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 Thriftlodge-Kissimmee, FL

  28. 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 Embassy Suites Beachwalk Waikiki

  29. 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 Manoa Valley Inn

  30. 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

  31. 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

  32. The Best Hotels • Some previous winners: • Oriental Hotel in Bangkok, Thailand • Regent of Hong Kong • Bel-Air of Los Angeles Bel-Air, Los Angeles

  33. 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

  34. Trends • Capacity control • Safety and security • Assets and capital • Technology • New management • Globalization Andrew Cosslett – CEO InterContinental Hotels Group

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