Chapter 5 Accommodation

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Chapter 5 Accommodation

• In Ireland, the main developments in the last few
  years have been
• Expansion of luxury hotel sector
• Creation of budget hotel concept
• Increasing popularity of hostels
• Growth in unapproved sector
• Fall in demand for the BB sector

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• Accommodation Terms
• Hotel a lodging accommodation offering rooms
  for hire for leisure or business (at least 15
  rooms under Irish law) of varying quality
  depending on grading
• Grading quality rating assigned by reputable
  agency
• Budget Hotel - limited service but usually
  comfortable lodging accommodation
• Categorisation - refers to separation of
  accommodation by type
• Classification - physical features of
  accommodation (e.g. Georgian Town House)
• Rack Rate - full published rate, not discounted

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• Bed Stock number of rooms available in a
  hotel/city
• Bed Nights number of rooms available in a
  particular timeframe (e.g. 100 rooms x 365 nights
  in a year 36,500 bed nights in a year for a 100
  room hotel)
• BB bed and breakfast
• Half Board - room and breakfast, with either
  lunch or dinner
• Full Board - room and breakfast, as well as lunch
  and dinner
• Hotelier hotel manager or management company
  running a hotel
• A Hotel Chain/Consortia group of hotels that
  co-operate in key functional areas (e.g.
  marketing and distribution)

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• Bedstock in Ireland 2005
• No. of Rooms
• Premises (nearest 000)
• Hotels 854 46,000
• Guesthouses 448 5,000
• Farmhouses and Town and
• Country Homes 3,161 13,000
• Self-Catering 3,000 8,000
• University Accommodation 13 3,000
• Hostels 167 9,000
• incl. specialist and pub accommodation
• two hostel beds constitute one room

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• The term hotel
• Sangster (2003) defines the concept of a hotel as
• .a business that, as its main activity, rents
  at least four bedrooms. The rooms need to be
  available to the general public who must be able
  to rent the room for a minimum of one night.
  Excluded are guesthouses, farmhouses, private
  clubs, hostels and boarding houses. Hotel groups
  are defined as organisations responsible for, on
  a continuing basis, at least one management
  function for more than one hotel.

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• Irish Hotel Structure
• Hotel sector is dominated by a number of Irish
  companies and increasingly by overseas companies
• Irish hotels have taken particular advantage of
  government grants to address under-capacity of
  1990s
• Increases in the budget sector reflecting visitor
  profile and domestic demands
• Improved ability to cater for conferences,
  seminars and business meetings
• Increased marketing in the domestic market
• Overseas expansion by Irish groups

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• Today, it is usual for medium and large
  establishments to be owned by property companies
  and for a hotelier to operate a management
  contract or lease.
• Therefore, there are 2 businesses operating in
  different markets
• Property Company seeking an investment vehicle
  with capital appreciation and rental/profit
  sharing returns.
• Hotelier relieved of fixed cost finance payments.
  If fee or rental is linked to profit/revenues,
  then the cost becomes semi-variable.

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• Cost Pricing
• - Hotel Example
• Cost structure contains large fixed component
• Choice to sell fewer rooms at full rack rate or
  more at a discounted rate
• e.g. 60 rooms _at_ 200 12,000
• or 90 rooms _at_ 150 13,500
• Extra revenue of 1,500 may be swallowed up by
  variable costs

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Occupancy Measurement

• Hotels/Motels possess a fixed supply of rooms
  available for letting
• Ideally, hotel managers wish to sell all their
  capacity, i.e. obtain 100 occupancy
• Occupancy can be measured in three different
  ways
• Basic occupancy rate of rooms used on any given
  night
• Bed occupancy rate number of guests physically
  accommodated as a of maximum
  capacity
• Revenue occupancy comparison of total revenue on
  one particular night in comparison to
  maximum revenue (full occupancy at rack
  rate)

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• Occupancy Example
• Hotel New Ross has 100 twin rooms
• Rack rate is 100
• On one particular night
• 30 rooms occupied by couples at rack rate
• 30 rooms occupied by couples at group discount
  rate of 70
• 20 rooms at single occupancy rate of 60
• Therefore
• Room occupancy 80 100 x 100 80
• Bed occupancy 140 200 x 100 70
• Revenue occupancy 6,300 10,000 x 100 63
• Always remember A hotelier would like to sell
  100 rooms at full occupancy at rack rate

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Grading

• Introduced to make it easier for guests and
  prospective guests to evaluate a hotel prior to
  purchase
• Typical international classification is based on
  a star system, i.e. 5 to 1
• Some of the best known internationally are AA,
  RAC and Egon Ronay

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• In conjunction with the star rating, a shamrock
  approved system denotes accommodation which is
  approved by Fáilte Ireland
• Some hotels remain unclassified for the following
  reasons
• some are not long enough in business to be fully
  assessed
• some are undergoing redevelopment
• some are not happy with the grade they are
  awarded
• Fáilte Ireland outsource the grading of Irish
  accommodation, but still set the standards,
  policies and framework for grading
• It also monitors the effectiveness of the company
  to which it has outsourced these tasks

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• In 2004 it was outsourced to a company called
  Excellence in Tourism Limited
• Caused outrage in summer 2004 by downgrading 4
  prestigious Dublin hotels from 5 to 4
• The Shelbourne Hotel, St Stephens Green
• The Radisson SAS, Stillorgan Road
• Jurys Ballsbridge
• The Conrad on Earlsfort Terrace
• Fáilte Ireland ordered their reinstatement as 5
  pending their appeal

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What is 5 Star?

• Fáilte Irelands Classification System for Hotels
  in Ireland is a 27-page document setting down the
  many criteria which a hotel wishing to be
  classified as a 5 star hotel must satisfy.
• The document regulates standards in all aspects
  of the hotel, including reception, bedrooms,
  bathrooms, dining, bar and car park.
• The following are some of the requirements
• A staff member must be present to park residents
  cars, and the hotel must have its own parking
  area
• The hotel must have a lift if it is three or more
  stories high
• There must be a porters desk, separate from
  reception desk, and it must be staffed by a
  uniformed concierge

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• Reception desk must be staffed 24 hours a day in
  city hotels
• At least a quarter of all rooms must have a
  safety deposit box
• They must have facilities to book theatre, car
  hire and travel
• They must have fax, typing and photocopying
  facilities
• Double rooms must be at least 18.5 metres square
• TV and radio must be controllable from the bed
• 24-hour valet service
• Laundry facilities
• Nightly bed linen turn down service
• Room service department, with full menus in each
  room
• A manager, proprietor or senior deputy must be
  available 24 hours
• At least one staff member on the day and evening
  shifts must be able to conduct business in French
  and German

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• 5 Hotel Dining
• Dining facilities must include a table dhôte
  menu (set menu) and an a la carte menu
• Napkins must be provided for all meals
• Secure and staffed cloakroom facilities must be
  provided

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Budget Hotels

• Definition A budget hotel is a limited service
  lodging accommodation offering the benefit of
  good value for money in standardised, modern
  accommodation
• The aim is to provide a good quality, low-priced
  accommodation for leisure and business tourists
  who are looking for guaranteed standards at
  affordable prices
• Before budget hotels, affordable prices were
  found in two star hotels
• Standards vary amongst budget hotel companies
• The quality in budget hotels is usually as good
  as three or four star hotels without the frills

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• The French dominate the budget hotel market in
  Europe for the following reasons
• 1. Long summer holidays
• 2. French attract car-borne holidaymakers across
  its borders, primarily land borders
• 3. Most French take domestic holidays
• 4. French are committed to spending more on food
  and drink, rather than accommodation
• Examples Urbis, Formule 1 and Ibis (part of
  Accor Group)

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How can budget hotels offer competitive tariffs
and remain viable financially?

• 1. Savings in Construction Costs
• High degree of standardisation
• Economies through mass construction
• Emphasis on bedrooms rather than lavish public
  areas
• Bedrooms are also highly standardised - bulk
  buying of furniture, fixtures and fittings
• Many built on out of town sites where land is
  cheaper

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• 2. Savings in Operating Costs
• Staffing kept to a minimum
• Extensive use of automation
• Buffet breakfasts and standardised menus used
• Guest pays for all extras (e.g. meals, movies,
  etc.)
• Aggressive marketing
• E-commerce
• Budget hotels are sometimes considered to be the
• Ryanair of the hotel sector

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• The Market for Budget Hotels
• Includes, but not limited, to people on a budget
• e.g. families, retired, self-employed business
  travellers, touring sports teams
• Only an estimated 10 of European population use
  hotels - significantly higher in North America
• The marketing emphasis is on convenience,
  consistency and value for money

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• The Impact of Budget Hotels
• New product with broad appeal
• Exert pressure on mid-priced hotels
• Opens up hotel accommodation to price-sensitive
  travellers
• Tourist activity in any region depends heavily on
  the supply of good quality (and value)
  accommodation

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• Future Prospects for Budget Hotels
• Well placed to benefit from increasing popularity
  of short breaks in Europe
• Lower construction costs mean budget hotels are
  more likely to grow - reduced business risk
• Attractive to newer markets
• Opportunities for franchises