12 C H A P T E R 1 ■ I N T R O D U C T I O N T O H O T E L M A N A G E M E N T

recovery will be exceptionally robust. In 2011 and 2012, PKF-HR forecasts that RevPAR will increase on an average annual basis of 9.2 percent, while profits will rise at a 17.8 percent pace. “If you are an owner, investor, or lender that can weather this year and next, the return to prosperity should be strong and quick,” Woodworth added.23

The economic downturn of the late 2000s had its effect on marketing effort and operations in hotels. Marketing is a vital planning tool that hotels rely on to determine customers, to determine customers’ needs, and to make a profit. Activities related to business include advertising (newspapers, radio, television, Internet); public relations and publicity; and promotions (coupons). Concerns for hotel-operations cost include labor and product.

Carol Verret, in her article “Selling Into a Bad Economy: Overcoming Fear and Stealing Share,” says the following about hotel sales in tough economic times.

Pull way back if not eliminate expensive hard copy print advertising in favor of Internetbased strategies. How do you buy things, how do you research your options for a purchase? Consumer buying behavior has changed and this also applies to the business and leisure consumer—accessing information on the web. Take calculated risks—try platforms that you haven’t tried before or increase your presence on those that you are already on. Some of these will represent “electronic billboards” that consumers will use for research prior to making direct contact.24

At the eighth annual Americas Lodging Investment Summit (ALIS), “2009: Industry Looks to the Long Term, Leaders, and Innovation,” Frits van Paasschen, president and CEO of Starwood Hotels and Resorts Worldwide, commented, “Focus on operations, watch costs and prepare for a turnaround and growth. You must have an enormous amount of will to ask how we can be internally more efficient and reach out to our guests and stakeholders.25

These issues—marketing, delivering hospitality, the possibility of terrorism, and the economic recession of the late 2000s—are ongoing concerns hoteliers must continue to discuss. They must focus on goals and subsequent planning for implementation of a safe environment for guests and employees.

Overview of the Hotel Industry

A working knowledge of the classifications used in the hotel industry is important to understanding its organization. The types of properties, their market orientation and location, sales indicators, occupancy, and revenues as they relate to levels of service and types of business affiliation are all means of classifying hotel properties. Figure 1-3 serves as a reference point throughout this discussion.

O V E R V I E W O F T H E H O T E L I N D U S T R Y 13

F I G U R E 1 - 3 Hotel industry overview.

I.Types of hotel properties

a.Hotels

b.Motels

c.All-suites

d.Select-service hotels

e.Extended-stay hotels

II.Market orientation/location

a.Residential

i.Center-city

1.Hotels

2.All-suites

3.Select-service

4.Extended-stay

ii.Suburban

1.All-suites

2.Select-service

3.Extended-stay

b.Commercial

i.Center-city

1.Hotels

2.All-suites

3.Select-service

4.Extended-stay

ii.Suburban

1.Hotels

2.Motels

3.All-suites

4.Select-service

5.Extended-stay

iii.Airport

1.Hotels

2.Motels

3.All-suites

4.Select-service

iv.Highway

1.Motels

2.All-suites

3.Select-service

4.Extended-stay

III.Sales indicators

a.Occupancy

b.Average daily rate (ADR)

c.Yield percentage

d.Revenue per available room (RevPAR)

e.Gross Operating Profit per Available Room (GOPPAR)

f.Revenue per Available Customer (RevPAC)

IV. Levels of service

a.Full-service

b.All-suites

c.Select-service

d.Extended-stay V. Affiliation

a.Chain

i.Franchise

ii.Company-owned

iii.Referral

iv.Management contract

b.Independent