• Lodging Industry
• Hotel
• Hotelier
• Market
• Tourist

• all businesses that provide overnight accommondations for guests
• establishment that provides sleeping rooms as well as various services to the traveling public
• owner/manager of one or more hotels
• the potential customers for a business's products and services
• a person who travels for pleasure

• value
• full-service hotel
• room service
• limited-service hotel 

• price paid to rent a room relative to the quality of the room & services rendered
• a lodging facility that offers complete F&B services
• delivery of F&B to a hotel guest's sleeping room
• a lodging facility that offers no, or very restricted, F&B services.  Also known as a "select-service hotel"

• bed & breakfast inns
• camps/park lodges

• very small properties owned or managed by persons living on-site; these businesses typically offer one meal a day
• sleeping facilities in national, state, or other parks & recreational areas that accomodate visitors to these areas

• extended-stay hotels
• convention hotel
• conference center

• moderately priced, limited-service hotel marketing to guests desiring accommodation for extended time periods  (week or longer)
• lodging property w/ extensive & flexible meeting & exhibition spaces that markets to associations, corps, & other groups bringing ppl together for meetings
• specialized hospitality operation specifically designed for & dedicated to the needs of small & medium sized meetings of 20-100 ppl

• resort
• timeshare

• a full-service hotel with additional attractions that make it primary destination for travelers
• a lodging property that sells its rooms to guests for use during a specific time period each year; also called vacation ownership property

• private clubs
• cruise ship
• casino

• membership organizations not open to the public that exist for people enjoying common interests; country club
• a passenger vessel designed to provide leisure experiences for people on vacation at sea
• business operation that offers table & card games along w/ slot operations & other games of skills or chance & amenities that are marketed to customers seeking gaming activites & entertainment

• Average Daily Rate (ADR)
• What is the equation used to calculate ADR?

• the average (mean) selling price of all guest rooms in a hotel, city, or country for a specific period of time

Total Revenue from Room Sales = ADR

Total Number of Rooms Sold           

What is Occupancy Rate and how do you calculate it?

• the ratio of guest rooms sold to the # of guest rooms available for sale in a given time period & expressed as a %

Total Rooms Sold    

What is RevPAR and how do you calculate it?

• the average revenue generated by each guest room available during a specific time period.  RevPAR combines the info from ADR & occupancy rate into a single measure.

ADR (x) Occupancy Rate = RevPAR

• GOPPAR (Gross operating profit per available room)
• Gross operating profit

How do you calculate GOPPAR?

• the amount of profit made from room sales divided by the # of rooms available to sell
• amount of revenue generated in a defined time period minus its mgmt controllable expenses for that same period

Gross Operating Profit   = GOPPAR

Rooms Available to Sell                   

Hospitality Industry

Organizations that provide lodging accomodations & food services for ppl when they are away from home

The toursim industry consists of:

Hospitality

Retail (Shopping) Stores

Transportation Services

Destination (Activity) Sites

• F&B and lodging operations (including hotels) that house and feed travelers
• Stores & shops that appeal to travelers
• Businesses such as bus lines, airlines, & rental car companies that help move travelers from place to place
• Locations offering activities & attractions enjoyed by travelers.  i.e. amusement parks, ski resorts

1.  Leisure Travelers

2.  Business Travelers

1. persons who travel bc they like the experience of visiting new places, returning, or participating in some leisure activity
2. make up lrg & extremely important portion of travel business; more than half

• hotel products & services designed to attract guests; i.e. WiFi, hair dryers, irons, microwave, etc.
• vehicle used by hotel to transport guests to & from such destinations as airport, restaurants, & shopping
• typically a big-city airport within a short driving distance of a very lrg pop. center; used to economically connect travelers w/ flights to their desired departure & arrival cities

Charter

Bus Types:

Economy

Deluxe Motor Coach

Executive Motor Coach

• form of transportation rented exclusively for a specific grp. of travelers; planes & buses 
• school-type buses, lowest  cost, bench seating, no restroom
• tour-type, longer trips, 40-55 seats w/ DVD, multiple TVs, restrooms
• top-of-the-line bus, extra-luxurious bus, full bedroom, showers, kitchens, Max capacity 5-20 ppl

• Trains; How'd Amtrak get its name?
• Rental Cars

• "American" and Track; official name Ntl Railroad Passenger Corporation; 65,000 ppl per day; NY, Philly, Washington where most used
• most popular method of travel; Cali, FLA, & TX greatest # cars rented

• Travel Agent
• Package
• Global Distribution System (GDS)

• prof. who assists clients in planning & purchasing travel
• grp. of travel services, hotel, meals, & airfare, sold for one price
• computer system that connects travel professionals worldwide for the purpose of reserving hotel rooms & other services for clients

• Online travel agent (OTA)
• Opaque Rate Model
• Merchant Model
• Tour Operators
• Guided tour

• an organization that provides travel booking services on the internet 
• rates not seen until they have successfully "bid" for a room; Priceline.com
• room rates (hvy discounted) readily viewed; OTA chrg hotel fee for reservation
• a company or individual who plans & mrkts travel pkgs
• grp tour pkg that includes the services of 1+ tour guides

• Professional Development 
• Trade Shows
• Vendors

• process by which hoteliers continue to improve their knowledge & skills
• industry-specific event that allows suppliers to interact with, educate, & sell to individuals who are part of the industry
• those who sell products & services to hoteliers

1. lrgst, oldest national hotel trade assoc.; 1910, Washington, DC; collection of state-level hotel assoc. wrking 2gether to meet the educational, social, & legislative needs of members
2. to provide "an active forum in which Asian Am. Hotel Owners, thru an exchange of ideas w/ a unified voice, can communicate, interact, & secure their position in the industry
3. Paris; exclusively devoted to promoting & defending interests of worldwide hotel & restaurants; non profit
4. Orlando; affiliated w/ AHLA; creates/mrkts prof. development & training programs; mission is to help hotel owners/mgrs become better trained & to provide resources  

1.  to meet the needs of the traveling public
2.  return on investment

Return on investment

How do you calculate it?

The percentage rate of financial return achieved on the money invested in a hotel property.

  After tax profits    = ROI%

Total hotel investment             

Profit

The owner of a hotel actually owns 2 distinctly different assets:

REITS (Real Estate Investment Trusts)

money remaining after all the expenses of operating a business have been paid

1. Real Estate; land, buildings, & furnishings

2. the operating business itself 

public, stock-issuing companies that can own & operate their own hotels

1. Depreciation

2. Appreciation

1. reduction in value of an asset as it wears out.  Often termed "tax write-off" bc the decline in value of the asset is tax deductible

2. the increase, over time, in the value of an asset.  The amount of the increased value is not taxed unless asset changes hands.

1.  owner/operator

2.  General Manager (GM)

3.  Management company

fees charged?

1.  a hotel investor who also manages (operates) the hotel

2.  trad. title of the individual @ a hotel property who is responsible for final decision making regarding property-specific operating policies & procedures; LEADER

3.  organization that operates a hotel for a fee "contract company"; 1-5% of the hotel's monthly revenue

The financial success of any lodging facility is dependent, in lrg measure, upon what?

1.  Depressed Market

2.  Repossession

The quality & skill of its on-site management team!

1.  a hotel mrkt area where occupancy rates and/or ADRs are significantly below their historical levels

2.  the taking back of a property by a seller or lender, usually iin response to nonpayment by the buyer

Structure of hotel mgmt companies

1.  First tier

2.  Second tier

3.  "tier" refers to? 

1.  operate hotels for owners using the mgmt company's trade name as the hotel brand; Hyatt, Hilton, Sheraton

2.  operate hotels for owners & don't use the mgmt company name as part of the hotel name; Summit, Winegardner

3.  whose name is on the hotel the mgmt company is operating

Hotel mgmt companies are often ranked in size, by the # of rooms they manage rather than by the # of hotels

Arrangements:

1.  the mgmt company is neither a partner in nor an owner of the hotels it manages

2.  the mgmt company is a partner w/ others in the ownership of the hotels it manages

1.  hotel investors hire the mgmt company; when lenders involuntarily take possession of hotel; concentrate only on managing & will not participate in hotel investment (ownership)

2.  common; mgmt comp. collaborating w/ an investor to jointly own & manage 1+ hotels; shared loses

Arrangements:

1.  the mgmt company only manages hotels it owns

2.  the mgmt company owns some of the hotels it manages & none or only a part of others it manages

1.  participate in industry as both investors & managers; will benefit from its own success; if loses, mgmt company loses

2.  depends on hotel involved

* own all of a specific hotel as well as manage

* manage & be an owning partner in another hotel

* manage, but not own any part of, yet another hotel property

1.  Liable

2.  Mgmt Contract; may include?

1.  legally bound to compensate for injury or loss

2.  agreement between owners & mgmt company,for a fee; preopening services; hiring & training, purchasing inventories, & other operational activities that must be done before the 1st overnight guest can be served

Major Elements of Mgmt Agreements

• length
• procedures for early term by either; extending contract
• terms in event hotel's sale
• basic mgmt fees
• incentive fees earned or penalties related to operating performance
• how frequently reports produced; ins requirements
• status of employees 
• control, if any, owner has in selection or removal of GM & other managers

Pros of a Mgmt Company

• Improved mgmt quality
• Documented managerial effectiveness is available 
• Payment for services can be tied to performance 
• Partnership opportunities are enhanced

Cons of a Mgmt Company

• Owner can't generally control selection of the on-site GM & other high-level managers
• Talented managers leave frequently 
• The interests of hotel owners & the mgmt companies they employ sometimes conflict
• The costs of mgmt company errors are borne by the owner
• Transfer of ownership may be complicated

1. Buy-out

2. Franchise

3. Franchisor

4. Franchisee

5. Brand

1. an arrangement in which both parties to a contract agree to end the contract early as a result of one party paying the other the agreed-upon financial compensation

2. arrangement whereby one party (franchisor) allows another party to use its logo, brand name, systems, & resources in exchange for a fee

3. organization that manages a brand & sells the right to use the brand name

4. individual/company that buys, under specific terms/conditions, the right to use a brand name for a fixed pd. of time & at an agreed-upon price

5. name of a specific hotel group.

Chain

Who started the first one and what was it called?

"Membership" hotels?

What is the name of the largest one?

The hotels operated by a group of franchisees who have all franchised the same hotel brand name.

Kemmons Wilson, Holiday Inn, 1950s

hotels made up of independent hotel owners who band together to create their own brand

Best Western

Conversion

How is it beneficial?

How can it be harmful?

The changing of a hotel from one brand to another;

"re-flagging"

Beneficial:  they all it to grow more quickly

Harmful:  if coverted properties don't have the features & quality levels of the hotels already in the brand

1. What are the primary advantages a hotel investor has when buying a franchise?

2. How are the total fees figured that a hotel owner needs to pay to the brand manager?

1. allows the hotel to acquire a brand name w/ regional or national recognition & connects the hotel to the Global Distribution System (GDS)

2. related to the strength of the brand name & to the revenue the name will bring to the hotel; 3-15% of the revenue generated from selling rooms

Factors hotel franchisees look for prior to affiliating with a specific hotel brand

1. Perceived quality/service level of the brand

2. The quality & experience of the brand managers; demonstrate great integrity when dealing w/ their franchisees

3. The amount of fees paid to the franchisor

4. Direction of the brand; most important

System-wide

Franchise agreement 

Brand Standard

term used to describe a characteristic of all hotels within a single brand; ADR for our brand $99.50

legal contract between a hotel's owner (franchisee) & the brand managers (franchisor) that describes the duties & responsibilities of each in the franchise relationship

a hotel service/feature that MUST be offered by any property entering or remaining in a specific hotel brand

Federal Trade Commision (FTC)

Franchise Offering Circular (FOC)

Gov't agency that enforces federal antitrust & consumer protection laws.  Also seeks to ensure that the nation's business mrkts function competitively & are free of undue restrictions caused by acts or practices that are unfair or deceptive

Franchise disclosure document prepared by a franchisor & registered & filed w/ the state governmental agency responsible for administering franchise relationships

Asian American Hotel Owners Association (AAHOA)

Market share

assoc. of hotel owners who, through an exchange of ideas, seek to promote professionalism and excellence in hotel ownership

the percentage of a total mrkt ($ spent) captured by a property; $200,000 (rm rental)/$1,000,000 ($ spent yr.) = 20% (mrkt share)

Ways hotels can be owned and managed:

1.  single-unit property not affiliated w/ any brand

2. single-unit properites affiliated w/ a brand (most common)

3. multiunit properties affiliated w/ same brand; makes operating easier

4. multiunit affiliated w/ different brands

5. multiunit operated by a mgmt company or brand

6. single or multiunit owned by the brand

 Franchise Service Director (FSD)

the rep of a franchise brand who interacts directly w/ a hotel franchisee; hotel owner's relations w/ a brand

Quality

Service (guest); 2 important points

Value

Employee-to-guest ratio

the consistent delivery of products & services according to expected standards

process of helping guests by addressing their wants/needs w/ respect & dignity & in a timely manner; 1. service is not the same as servility 

2. emphasizes helping guests by addressing needs/wants

relationship between price paid & the quality of the products/services received 

# of employees relative to the # of guests

Commodity

Service inserparability

When guests arrive they should feel?

a commonly available & most often unspecialized product

refers to the tendency of guests to associate the quality of service provided w/ the actual person who provides it 

Important, special, comfortable, & if not met, fix promptly w/ postive attitude

6 Ingredients for quality guest service

1. consider the guests being served

2. determine what the guest desires

3. develop procedures to deliver what the guest wants

4. train & empower staff

5. implement revised systems

6. evaluate & modify service delivery systems

Supervisor

Manager

Benchmark

Cross-functional teams

Empowerment

 directs the work of line-level employees

directs the work of supervisors

search for best practices & an understanding about how they are achieved in efforts to determine how well a hospitality org. is doing

grp of employees from each dept. w/in operation who wrk together to resolve operating problems

act of granting authority to employees to make key decisions w/in their areas of responsibility

Repeat business

"Moments of truth"

Wow factor

Word of Mouth Advertising

guests who return for additional visit after first visit

any/every time a guest has an opportunity to form an impression about org; positive & negative

the feeling guests have when they experience an unanticipated & positive "xtra" as they interact w/hotel

favorable/unfavorable comments made when previous guests of operation tell others their experiences

Zero defects

Accountability

Employer of choice

Turnover rate

Mission statement

goal of no guest complaints

obligation created when a person is delegated duties by higher levels of mgmt

concept that operation is a preferred place of employment 

prop. of wrk force replaced during designated time pd.

a planning tool that broadly identifies what a hospitality operation would like to accomplish & how it will accomplish it

Continuous Quality Improvement (CQI)

Professional

Licensing 

Registration

ongoing efforts to better meet/exceed guest expectations & to define ways to perform work w/ better, less costly, & faster methods

ppl wrking in a job that requires extensive knowledge & skills in a specialized body of knowledge

formal authorization to practice a profession that is granted by a governmental agency

acceptance for one to wrk w/in a profession granted by a nongovernmental agency i.e. association

Malcolm-Baldrige National Quality Award

Commitments:

granted to US businesses that demonstrate successful quality-related strategies relating to leadership, info/analysis, strategic planning, HR development/mgmt, process mgmt, business results, & customer satisfaction

welcome all guests

provide finest service for every guest

treat all guests w/ respect & dignity

maintain positive attitude in all dealings w/ guest

maintain the highests standards of cleanliness

protect the safety of guests & security of possessions

look & act professionally at all times

Management

Planning 

Short-range goals

Long-range goals

the coordination of individual efforts to achieve est. goals

process of considering the future & est. goals of an organization

goals that are to be achieved in the very near future (less than a year)

goals achieved over an extended period of time (+year)

Authority

Organizational Chart

The art of mgmt consists of:

Science of mgmt teaches a manager ?

Art of mgmt teaches a manager ?

the power/right to direct the activities of others & to enforce compliance

a visual potrayal of the jobs & positions of authority w/in an organization

an individual mgr's creative power & personal skill

to know

to do

FF&E

Role Model

Mentor

Line-level

furniture, fixtures, & equipment

individual who displays positive personal/professional characteristics that others find

to serve as a personal teacher; guide or coach

employees whos jobs are nonsupervisory "hourly" employee

Comp

Quality Inspection Scores

Who is the GM supervised by?

"complimentary" or "no-charge" 

Quality Assurance; results of annual inspections conducted by a franchise company to ensure that franchisor-mandated standards are being met by franchisee

either the mgmt company or property owner

Regional Manager

Line of Authority

ind. responsible for the operation of multiple hotels in a designated geographic area

direct superior-subordinate relationship in which one person (superior) is completely responsible for directing & exercising control over the actions of another (subordinate)

What are the advantages of a GM reporting directly to the hotel's owner?

Disadvantages?

Direct Bill

Better understanding of ownership goals & objectives

Direct access; rapid answer 

Clear lines of authority

Lack of owner experience in hotel operating methods

Multiple lines of authority 

Issues of multiple loyalties 

financial arrangement whereby a guest is allowed to purchase hotel services & products on credit terms