CLODGING - The Hotel Industry

1. THE HOTEL
INDUSTRY
CLODGING
CHECK-IN, CHECK-OUT BY G. VALLEN & J. VALLEN
M. ALDANA
SHTM FACULTY

2. THETRADITIONAL HOTEL INDUSTRY
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3. The hotel industry has flourished by
keeping pace with the changing
environment that marks human progress.
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UNDERSTANDINGTHE
HOTEL BUSINESS

4. A CYCLICAL INDUSTRY
The hotel industry is a cyclical industry that
closely follows economic phases.
Wide swings carry innkeeping betwwen
peaks of exceptional profits and troughs of
outright distress.
Examples:
- Oil embargo in 1973
- Then in the 1980s, the government
imposed income tax on real estate
- The 2001 9/11 tragedy
- Economic recession in 2008
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• Perishability
• Vacant rooms are perishable.
• Unsold rooms tonight can never
be sold again
SPECIAL CHARACTERISTICS OFTHE HOTEL BUSINESS

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• Location
• Location, location, location –
three of the most important
aspects of hotels
• Good location is not easy to
acquire
SPECIAL CHARACTERISTICS OFTHE HOTEL BUSINESS

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• Fixed Supply
• Location is fixed, and so is the
supply of rooms
SPECIAL CHARACTERISTICS OFTHE HOTEL BUSINESS

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• High Operating Costs
• Hotels are both capital and
labor intensive
• Innkeeping’s break-even hurdle
is high
SPECIAL CHARACTERISTICS OFTHE HOTEL BUSINESS

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• Seasonality
• Throwing away the key is a
traditional practice when a new
hotel opens
• Hotels never close, yet it is a
seasonal business
• Commercial hotels have poor
weekends, while resorts have
poor weekdays
SPECIAL CHARACTERISTICS OFTHE HOTEL BUSINESS

10. TRADITIONAL
CLASSIFICATION
OF HOTELS
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• Lodging is an industry of rapid transformation.
• The inns of old evolved from private homes located along traveler’s
route.
• Today, hotels are often a point of destination even as it serves along its
traditional role of accommodating those in transit.
• Traditional classifications include: size, class, type, and plan.
• New terminologies: hostel, tavern, public house, inn, guest house,
hotel, resort, motel, motor lodge, motor inn, bed and breakfast,
timeshare, condominiums, etc.
CLASSIFICATIONS

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• The number of rooms available for
sale, is the standard measure for
size
• Hotels are grouped by size for
financial reporting
• Traditionally, large hotels are 300
rooms or more, medium hotels are
100-300 rooms, and small hotels
are less than 100 rooms.
• https://www.worldatlas.com/art
icles/largest-hotel-locations-in-
the-world.html
• First World Hotel – 7,351 rooms
• The Venetian / Palazzo – 7,117
• MGM Grand Las Vegas – 6,952
CLASSIFICATIONS - SIZE

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• The term motel (motor+hotel) was
coined after World War II when
Americans took to the highways
and the new freeway system.
• Usually owned and operated by
families, hence the term “mom-
and-pop”
MOM-AND-POP MOTELS

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• Class of a hotel is sensed as
often as it is measured, two
measures are used – price &
rating systems
CLASSIFICATION - CLASS

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• Average Daily Rate
• Delivering class, elegance, and
service costs money.
• Larger rooms, upgraded
furnishings, and extra employees
incur larger financing costs,
depreciation, energy usage, wages,
and more.
• The better the class of the hotel,
the higher the rate.
CLASSIFICATION - CLASS

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• Full-service & Limited service
• Full-service has superior facilities and a full complement of
services, lounges, room service, newspapers, exercise
facilities, electronic support
• Limited services mean vending machines or a nearby
restaurant
• Ex. Marriott Hotel vs. Red Planet Hotel
CLASSIFICATION - CLASS

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• Number of Employees
• The number of employees is another measure of class
CLASSIFICATION - CLASS

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• Rating Systems
• Most are standardized within the single country.
• Members of the World Tourism Organization have adopted
WTO’s five recommended classes:
• Deluxe or luxury class is at the top
• First class
• Tourist class
• Third and fourth (usually have no private baths, no centralized heat,
not even carpeting)
CLASSIFICATION - CLASS

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• Worldwide, there are some 100 rating systems.
• Almost all of them rank by using stars, coffee pots, alphabets,
even feathers
• Europe’s system is the most developed. Its four and five star
hotels have restaurant and bars.
• Hotel garni means no restaurant but a continental breakfast is
usually served. (breakfast included)
CLASSIFICATION - CLASS

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• Spain has standardized the ratings on its paradors
(stopping places)
• Italy adopted the on-to-five star plan, room size is a
criterion and staff of foreign-language speakers is
among the standards
• Japanese traditional inns, ryokans are rated
according to their rooms and baths and gardens
• Korea has its own version of traditional, budget-
priced lodging – yogwans. Many hanoks (traditional
Korean houses) have been converted into boutique
hotels.
CLASSIFICATION - CLASS

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• Research the Philippines’ Hotel Classification system.
• What differentiates one class from another?
• Give examples of each class.
ASSIGNMENT

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• Type has three traditional
subdivisions: commercial, resort, and
residential.
• Commercial Hotels
• Make up the largest category
• They locate close to their market, the
business community, usually in urban
areas
• Arterial highways, research parks,
airports, even in suburban shopping
centers
• Business persons relax on weekends
which explains the poor weekend
occupancy
CLASSIFICATION -TYPE

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• Residential Hotels
• Residential guests take permanent
occupancy
• Extended-stay Hotels – rooms are
designed differently because guests are
there for long-term stays. They provide
kitchens, grocery outlets, office space,
fireplaces, office equipment, exercise
rooms, laundries, even secretarial
support
CLASSIFICATION -TYPE

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• Resort Hotels
• Resort hotels cater to social guests
• Resorts market to groups and
conventions
• The Megaresort – large, self-
contained resorts. Entertainment and
recreational facilities are so
numerous and so varied that guests
need not leave the property.
CLASSIFICATION -TYPE

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• Plan identifies which meals, if any, are included in the quoted room
rate.
• European Plan – meals are not included in the rate quote, some European hotels
sometimes include a breakfast (coffee or chocolate, a roll and a bit of cheese)
which is called a Continental breakfast.
• American Plan – includes room and all three meals (similar to Full Pension,
except it includes a continental breakfast instead of a full English breakfast).
• Modified American Plan – includes breakfast and dinner. This is so that guests
are not restricted, they need not return for an inconveniently scheduled lunch.
• A dine-around plan is another variation, it allows guest to dine at other AP
hotels in the vicinity.
CLASSIFICATION - PLAN

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• Bed and Breakfast
• B&Bs are modern versions of rooming
houses, once called tourist homes.
• Guests take beds with private families
along with a mandatory breakfast
• Zimmer frei (rooms available) in Germany
• Minshuku in Japan
OTHERS

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• Airbnb
• A popular peer-to-peer rental
experience
• With 350,000 hosts in almost 200
countries
OTHERS

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• Boutique hotels
• Are the rage among the hip, the
chic and the cool
• They’re just hotels; with niche
appeal
OTHERS

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• Trophy hotels
• They carry a long historical lineage
OTHERS

31. THANKYOU
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