Learning Objectives

1. Describe the evolution of lodging, and relate it to changing patterns of transportation, destinations, and guest needs.
2. Identify the five criteria for classifying hotels, and name the types of hotels in each classification.
3. Describe the principal customer types served by the hotel industry.
4. Name the two categories of business travelers.
5. Identify the needs and preferences of business travelers, and provide examples of how the lodging industry accommodates them.
6. Provide examples of the ways in which lodging is responding to the needs of growing market segments, including senior travelers, female travelers, and family travelers.
7. Explain why international travel is important to the industry, and describe what operators can do to develop this source of business.
8. Give examples of how technology has impacted lodging in the following areas: sales, marketing, guest amenities, and services.
9. Describe how AAA and the Mobil Travel Service evaluate lodging properties, and identify criteria used in determining these ratings as well as describe how countries around the world approach the rating of hotels.
10. Define the term internal customer, and explain the importance of this concept in the delivery of quality service to guests.

Chapter Overview

This chapter sets forth a hotel typology. The chapter begins with a brief history of the development of the hotel industry. it then describes different types of lodging properties according to various criteria. Different market segments will be explained in relation to their demographics and subsequently their needs and expectations. The tremendous impact of technology and hotel rating criteria through organizations such as AAA and directories such as the Mobil Travel Guides are then discussed. The importance of employees as "internal customers" is also emphasized.

Key Concepts

1. Trace the evolution of the lodging industry.
• The history of lodging is rich in variety and dates back to about 1800 B.C. when the Code of Hammurabi used terms such as "tavernkeeping" and "innkeeping".
• In the American colonies of the seventeenth and eighteenth centuries, inns and taverns were important centers of activity.
• Luxury hotels in the nineteenth century mainly existed in Europe. Towards the end of the nineteenth century, North American hotels grew to serve the rail travelers by being physically connected to railway stations.
• The first two decades of the twentieth century saw the beginnings of several major hotels companies that are still prominent today.
2. Discuss the development of motels and motor hotels.
• The development of motels and motors hotels was sparked by the huge growth in auto ownership after World War II, which greatly increased auto travel.
• Built near highways, motels offered an informal atmosphere, as well as a personal touch, at a low rate.
• Developed in the 1950s, the motor hotel combined the advantage of a hotel's broad range of services with a motel's convenience.
• The basic distinctions of "hotels" and "motels" have been blurring. Many major hotel corporations have properties in each lodging category.
3. Identify the criteria for classifying hotels and types of hotels under each criteria.
• Hotels can be classified on the basis of price, function, location, particular market segment, and distinctiveness of style or offerings.
• By price, there are limited service hotels, full service hotels, and luxury hotels.
• By function, there are convention hotels and commercial hotels.
• By location, there are downtown hotels, suburban hotels, highway/interstate hotels, and airport hotels.
• By market segment, there are executive conference centers, resorts, casino hotels, health spas, and vacation ownership.
• By distinctiveness of style or offerings, there are all-suite hotels, extended-stay hotels, historic conversions, bed and breakfast inns and boutique hotels.
4. Discuss the differences among limited-service, full-service, and luxury hotels.
• Limited-service hotels are typically characterized as offering guestrooms only. In 2002, the average daily rate was $64.15.
• Full-service hotels offer a wide range of facilities and amenities. The 2002 average daily rate was $103.52.
• Luxury hotels have upscale décor and furnishings that may be unique to the particular hotel. They offer a full array of services and amenities. The average daily rate in 2002 was $245.
5. Explore the differences between convention and commercial hotels.
• Convention hotels are large, with 500 or more guest rooms. They offer extensive meeting and function space, and food and beverage operations. They are often close to convention centers or provide facilities for citywide conventions and trade shows.
• Commercial hotels are smaller, with 100 to 500 guest rooms. There are fewer public areas, smaller meeting and function space, fewer food and beverage outlets, and limited recreational amenities. Many of these hotels are located in downtown areas.
6. Describe different hotels classified by market segments.
• Executive conference centers are often in secluded or suburban settings with fewer than 300 guest rooms. They offer well-designed learning environments, provide a variety of small meeting rooms, and classrooms featuring full audio-visual and technological support.
• Resorts are typically located in picturesque settings with 200 to 500 guest rooms. Resorts provide a comprehensive array of recreational amenities depending on the geographic location.
• In casino hotels/resorts, gaming operations are the major revenue centers for these properties.
• Health spas, often located in resort-type settings, provide amenities focusing on needs ranging from losing weight to reducing stress to pampering oneself.
• Vacation ownership involves a type of shared ownership in which the buyer purchases the right to use a residential dwelling unit for a portion of the year.
7. Describe other hotel classifications.
• All-suite hotels' guest rooms are larger than the typical hotel room, usually more than 500 square feet. A living area or parlor is separate from the bedroom, with some properties offering kitchen areas. All-suite hotels are found in urban, suburban, and even residential locations.
• Extended-stay hotels provide many of the same features and amenities as the all-suite properties. The room rates are often significantly less. Typically, there are no on-site food and beverage outlets in extended stay hotels.
• Historic conversions are hotel properties with historic significance that have been renovated to their original splendor.
• A bed-and-breakfast inn (B&B) typically has five to ten rooms, although some are larger. Breakfast is served and included in the room rate. Typically, there is no on-site restaurant or license for alcohol service.
• Boutique hotels span all price segments and are noticeably different in look and feel from traditional lodging properties.
8. Identify principle customer types.
• Among customer types, the highest percentage of travelers (29 percent) is transient business travelers, individuals with no connection to a group or convention.
• Twenty-five percent of lodging customers are business travelers attending a conference.
• Among all travelers, 24 percent are on vacation and 22 percent are traveling for other reasons including personal or family reasons or for a special event.
9. Delineate different types of business travelers.
• One type of business traveler, the corporate traveler, is from a for-profit company and has more money to spend.
• Association travelers are more cost-conscious. They are individuals or companies who have banded together in sharing common purposes or goals.
10. Focus on the international travel market.
• As the global economy expands, an increasing number of people travel internationally.
• The U.S. still receives a larger share of world international tourism receipts than any other country.
• American brands are expanding rapidly abroad.
• Overseas travelers are more likely to visit the U.S. than other destinations when they travel outside their own area.
• U.S. companies must have properties in both the international market and in the international traveler's U.S. destination market. The best way to publicize a chain at international points of origin is to have a property in that country.
• This makes local people familiar with the brand.
11. Discuss the needs and preferences of different segments of travelers.
• Business travelers need high-speed wireless Internet access and other technology equipments.
• Senior travelers account for $130 billion in travel spending and take one-third of all trips. The 50- to 59- year olds are more active, more health conscious, and more activity driven.
• Female travelers account for nearly 50 percent of all business travelers in the U.S., with expectations they will outnumber male business travelers within the next ten years. Hotels are responding to this growing number with more emphasis on personal service, secure electronic door locks, etc.
• Families also represent a significant market segment. Thirty-three percent of adult travelers took at least one vacation with children in 2000. Hotels are finding ways to compete for these young guests with features such as free-stay programs, children's menus in the restaurants and room service, swimming pools, and in-room video games.
12. Explain quality service.
• Quality service "consistently meets and exceeds customer expectations." Since service is perception-based, the true measurement is with the individual customer.
13. Describe how lodging properties are evaluated by AAA and Mobil Travel Guide.
• The Mobil Travel Guide offers a one- to five-star rating system for hotels, motels, inns, resorts, and restaurants in more than 3,000 towns and cities in the U.S. and Canada.
• The American Automobile Association (AAA) rates lodging properties based on a system of one to five diamonds.
14. Explain the importance of "internal customers" in delivering quality service to customers.
• With the large number of employees, large payrolls, and high turnover rate, the industry is addressing the need to attract and retain the "best of the best" in the labor force.
• For many hotel companies, a positive work place is a fundamental aspect of the organizational culture.
• Hotels increasingly must treat employees as the "internal customers" by offering English classes for international employees, childcare assistance, tuition reimbursement, and flexible benefit plans, as well as offering extensive employee recognition programs.

Study Questions

1. What is an all-suite hotel and how does it differ from a traditional hotel room?
2. What is a limited-service hotel and how does it differ from a full-service hotel?
3. What is the largest single cost of most lodging facilities?
4. What characterizes extended stay properties?
5. What is the number one reason why a customer would choose a particular hotel?
6. How do time-shares work?
7. What is the customer mix in the tyical hotel in terms of liesure travelers, vacationers, business and conference travelers, families etc.
8. What is the difference between economy and budget hotels and motels?
9. Which lodging properties outperform the industry in higher rates and occupancy?
10. What factor led to the resurgence of downtown hotels?
11. What is the biggest challenge of those serving the business traveler?
12. What type of hotel has 500 or more guest rooms, extensive meeting and function space, and large ballrooms?
13. Which group of travelers represents the largest group of travelers?
14. What is ecotourism?
15. Generally speaking, which type of hotel has the highest room rate?
16. What does SMERF refer to?
17. What is a major reason for international travel?
18. What does hotel segmentation mean?
19. How is technology used in lodging operations?
20. Which type of travelers show the least seasonal travel patterns?