2. New Industry Patterns
• Hotel management is very dynamic. Change keeps coming. Hotel
executives adapt new patterns, new thinking, new ways of acting
upon the strategic changes that drive the modern industry.
• The four patterns (products, markets, ownership, and
management) that structure innkeeping are inseparable. Change
in one invariably impacts another. New methods of financing
have created new management patterns. New products have
responded to the demands of new markets even as new markets
have emerged from new products.
3. Segmentation
• To improve occupancies and profits,
hotels have moved vertically – upward
or downward.
• Examples:
• Holiday Inn – Crown Plaza
• Radisson Collection – Park Inn
4. Brand
• Customer recognition is what defines a brand:
recognition of the name and the logo.
• Hotel chains have poured advertising dollars into
the creation of brands. But many guest do not know
– or even care.
• Example: Renaissance Hotels are actually Marriotts
• Most large hotel chains have brands. Some of them
have been created, others purchased.
5. Brand Equity (Image)
• Brand equity is the inherent value that the shopper’s
recognition gives to the brand. There is equity or
value in the brand if that recognition carries a positive
image. There is no brand equity if guests know the
brand but will not stay.
• Four criteria change brand recognition into brand
equity: instant identification (the Hilton name),
broad distribution (Holiday Inn Hotels), consistent
quality (Hampton Inns), and an assured level of
service (Four Seasons).
7. Economy (Budget or limited-service hotels)
• Inexpensive lodging dates back to the roadside motor courts of the 1930s
• Then came Holiday Inn Hotels, a chain of clean, no-frills accommodations.
• It started what is now known as amenity creep – the history of the industry’s
ever improving levels of service. An amenity is a special extra that distinguishes
the property from competitors – it helps establish the brand image and gives it
equity. After time, guests expect the amenity – it no longer is viewed as an extra,
and it is soon offered industry wide.
8. How budgets compete
• As costs including amenities pushed room rates upward, new, less expensive
chains entered the fray at the lower end. The earlier budgets suddenly found
themselves midrange.
• New entries start out with smaller rooms. Nonessentials like pools, lobbies,
meeting rooms, and restaurants are gone.
• There are degrees within budget chains – economy, budget, limited-service, and
low-end.
9. All-suite Hotels
• Separate living-sleeping accommodations are attractive to executives who wish to conduct
business outside the intimacy of a bedroom. That helped the all-suite market expand from
only extended stay.
• Living space contains a sofa-bed and often a second bath. This opened a third market –
travelling families seeking economical accommodations.
10. All-suite Hotels – Extended Stay
• Long-term business travelers, relocating families, and reassigned military
personnel are markets for extended-stay properties.
• So too, are company training sessions and employees on long-term but
temporary assignments.
• With no transient guests, some extended-stay properties close overnight.
11. All-suite Hotels – Corporate Housing
• Companies often send employees from different departments to one city.
• Rather than booking hotel rooms, companies take long-term leases on apartment
accommodations that provide hotel services.
12. Mixed-Use Projects and Other Hotel Segments
• Mixed-use, a buzz word in real estate, takes innovation to the next step.
Apartments, hotels, resorts, condominiums, shopping marts, and business
towers. Mixed-use resorts add tennis, golf, skiing, swimming. Combining
residential, business, recreation, and entertainment is the modern version of a
small town.
13. Mixed-Use Projects and Other Hotel Segments
• Dual brands are another type of mixed-use. Combining transient and extended-
stay hotels on one site draws on tow distinct markets and maximizes expensive
urban land costs; not an incidental savings.
14. Casino/Hotels
• Casinos have spread across the nation and the world.
Casinos are almost never freestanding. They are
casino/hotels; more accurately casino/resorts.
• Casino/hotels focus differently than traditional hotels.
Gaming revenue (called win) usually generates more
income than rooms do.
• So having hotel rooms occupied (having potential
gamblers in the house) is more important than ADR or
even RevPar. Similarly, two guests in the same room
double the casino “action.” So single and double rates are
kept the same and rooms are often “comped”
(complimentary, free).
15. Conference Centers
• Conference Centers (CCs) first appeared in the 1960s. What began in renovated
mansions morphed into highly specialized facilities designed for meetings and
conferences.
• CCs offer dedicated space, audiovisual equipment, theaters, closed-circuit television,
and simultaneous translation capabilities.
• Unlike convention hotels, conference centers take no transient guests. Foodservice is
not open to the public.
• Double occupancy is high in CCs. Rates are bundled: guest rooms, meeting rooms,
food, drinks, and equipment, is included in the rate quote, called the corporate
meeting package (CMP).
16. Spas
• The term originated in the city of Spa, Belgium, where
Romans “took the waters”
• The resorts of 19th century New England developed
around mineral springs, so the resort themselves
became known as spas.
• There are “stay spas”, destination spas with a resort
component; and there are “day spas” which may or
may not have lodging facilities.
• The mantra of the spa-goer, stress reduction – no
competition – fits perfectly with a new catchphrase of
lodging, “lifestyle hotels.”
17. Fitness Centers
• Also known as “health clubs”, these work-out facilities preceded the
introduction of the spa.
• Users are often business persons, so staff scheduling must be accommodative, be
there early and late.
18. Marketing to the Individual Guest
• Hotels cater to particular market segments (niches). What appeals to one type of
guest may be of indifference to another.
19. Guest Profiles
• Guests have several profiles; they wear different hats under different
circumstances. Personas change depending on the stay. Sometimes guests are
business persons, sometimes family members. They may be transient travelers,
convention goers, tour group members, or excited tourists, etc.
• Profiles are gathered by many agencies, not just hotels. The typical study focuses
on demographics: age, income, job, gender, residence, education, the number of
persons in the party, etc.
20. Marketing to the Individual Guest
BUSINESS/LEISURE TRAVELERS
• Price is less important – not unimportant,
but less important – to business persons
than to leisure travelers.
• Business men (or women) do not cancel
trips because of high rates – they are an
inelastic market, but leisure guests are
discouraged by high rates (elastic market)
INTERNATIONAL GUESTS
• The UNWTO forecasts high numbers
of international travelers by 2020.
• International guests spend about
twice the time and money reaching
their destination, so they stay longer
and spend more money than
domestic guests.
21. Marketing to the Individual Guest
PREFERRED-GUEST PROGRAMS
(PGP)
• Similar to frequent flyer points with airlines,
guests earn points with hotel chains.
• Points are turned into gifts or free stays.
• Ex. – room upgrades, check-cashing
privileges, daily newspapers, late check-outs,
guaranteed rates, fruit baskets, a bottle of
special water, free in-room films, etc.
NON-GUEST BUYERS
• Non-guest buyers are intermediaries,
not guests. They have no intention of
becoming guest.
22. Marketing to the Group
TOURIST/LEISURE
• Groups of tourists buys from
wholesalers
• These wholesalers offers a package
for retail, it can include ground
handling and baggage along with
other goodies
INCLUSIVE TOUR (IT)
• Similar to the wholesaler’s tour
packages, but marketed towards
individuals
• The tour package becomes profitable
when numerous individual buyers
purchase the packages
23. Marketing to the Group
TOURIST/LEISURE
• Groups of tourists buys from
wholesalers
• These wholesalers offers a package
for retail, it can include ground
handling and baggage along with
other goodies
INCLUSIVE TOUR (IT)
• Similar to the wholesaler’s tour
packages, but marketed towards
individuals
• The tour package becomes profitable
when numerous individual buyers
purchase the packages
24. Marketing to the Group
SMURF / SMERF / MICE
• SMURF – Societies, military,
university, religious, fraternal
• SMERF – social, military,
educational, religious, fraternal
• MICE – meetings, incentives,
conventions, and exhibits
• The need a range of facilities
THE SINGLE ENTITY
• Guests belong to a group (orchestra,
a company, a college ball team)
• The unit makes the reservation and
pays the bill
25. Marketing to the Group
INCENTIVE TOURS
• Are special, highly prized single
entities.
• Companies use this to motivate
employees
26. Ownership Patterns
• Churning – is any rapid buying and selling of hotels
• Consolidation – growth comes from acquisitions – adding of new properties,
and creation of new brands. This is made possible because of the global village –
the shrinking of political differences and interlocking economies worldwide
27. Ownership and Financing Alternatives
• Individual Ownership – usually small, fall within the economy class of roadside
motels and carry a franchise flag
• Crowdfunding – an innovation that raises funds from the “crowd” or public
• Real Estate Investment Trusts (REITs) – are public companies that raise capital
through the sale of stocks, they can own hotel properties just as individual
owners or corporations do.
28. Ownership and Financing Alternatives
• Condominiums – condos are real estate purchases, because condo owners are
not always in residence, there’s an opportunity to rent the unit
• Timeshares – buyers to don’t buy a unit, they buy only the right to use a unit for
so many days each year over a fixed period
29. Ownership and Financing Alternatives
• Joint ventures and strategic alliances – similar to partnerships except the
participants are not individuals, but legal entities.
• Joint ventures are usually financial marriages warranted by rising costs and
ever-larger megadeals
• Strategic alliances spreads the risks and tap the capabilities of different
organizations
30. New Management Patterns
• Hotel Chains
• Travel evokes the unknown and the unfamiliar – since it is impossible to test the
facilities beforehand, the decision rests on the individual hotel or, more likely, on its
chain membership
• Chains bring strengths in site selection, access to capital, and economies of scale in
purchasing, advertising, and reservations.
31. New Management Patterns
• Consortia and Membership Organizations
• To fight back chain-linked operators, independent operators have affiliated
32. Management Contracts
• A management contract is an agreement between a hotel owner and a
management company.
• The management company operates the hotel within conditions set down by the
contract, e.g. the owner usually pays 2% - 4% of revenues to the management
company
34. Franchising
• A franchise buyer (franchisee) pays for and acquires the rights from a seller
(franchisor)
• The franchisee may not use the franchisor’s name, products, techniques, and
advertising within a fixed geographic area.
• Franchising allows the franchisee to operate as an independent but have the
benefits of the chain.
