Understanding the World of Hotels

1
Understanding the World of Hotels

• Chapter 6

2
The Hotel Industry

• Global, changing
• 1960s new locations
• 1970s intense competition
• 1980s pampering guests
• 1990s quality service, innovation, segmentation
• 2000s mergers, acquisitions, joint ventures,
  partnerships/alliances

3
Hotel Guest Segments

• Corporate Individuals
• Corporate Groups
• Convention and Association Groups
• Leisure travelers
• Long-term stay/relocation guests
• Airline related guests
• Government and military travelers
• Regional getaway guests

4
Different Hotels Types

• Center-city
• Hotels built near business districts
• Business travelers
• Full service
• Chain properties
• Room service
• Resort
• Located in desirable destinations
• Successful resorts have higher occupancies and
  rates
• Are attracting more business guests

5
Different Hotels Types (Cont)

• Suburban
• Lower land costs/rents
• Smaller than downtown hotels
• Mostly chain properties
• Superior restaurants
• Airport
• Mostly chain properties
• High occupancy rates

6
Different Hotels Types (Cont)

• Highway
• Holiday Inn pioneer
• Large signs
• Plentiful parking
• Informal atmosphere
• Chain properties
• Fewer employees/services than center-city and
  suburban hotels

7
Hotel Ownership/Operation

• Independently owned and operated
• Independently owned, leased to an operator
• Owned by an entity or group, operated by a hotel
  management company
• Owned and operated by a chain
• Owned by an independent investor or group,
  operated by a chain
• Owned by an individual or group, operated as a
  franchise of a chain

8
Chain vs. Independent Hotels

• Large percentage of the worlds hotel room
  inventory are chain hotels
• Independent hotels are independently owned and
  managed but often part of a referral or marketing
  association
• Price Categories
• Economy and budget
• Mid-price
• First-class/luxury

9
Hotel Categories

• All-suites
• Bigger hotel rooms at a reasonable price
• Appeal to extended-stay travelers,
  businesspeople, travelers
• Conference Centers
• Almost exclusively book groups for conferences,
  meetings, seminars
• Outside distractions kept to a minimum
• More audiovisual equipment

10
Hotel Categories (cont)

• Timeshare Properties
• People buy blocks of time at a property that they
  have to share with other timeshare owners
• Interval International, RCI
• Timesharing grew 1000 percent between 1980 and
  1999

11
Hotel Categories (cont)

• Condominium hotels
• Investors take title to specific hotel rooms,
  staying in their rooms whenever they wish and
  renting them out at other times
• New properties combine traditional hotels with
  condo hotels that have permanent residents
• Seniors housing
• Independent living units
• Congregate communities
• Assisted-living facilities
• Continuing care retirement communities
• Life-care centers targeted at affluent
  seniors

12
Steps in Developing and Planning New Hotels

• Site Selection
• Accessibility is the key
• Site must be adaptable to the size and type of
  the proposed hotel

13
Steps in Developing and Planning New Hotels
(cont)

• Feasibility Study
• Determines the potential return on investment
• Helps with financing, contract negotiations,
  planning, initial budgeting
• Feasibility Study Report
• Market area characteristics
• Site and area evaluation
• Competition analysis
• Demand analysis
• Proposed facilities and services
• Financial estimates

14
Steps in Developing and Planning New Hotels
(cont)

• Financing
• Hard costs
• Soft costs
• Permanent financing loans (take-out)
• Construction financing loans