Chapter Four

4. Characteristics and Features of Hotel Business

4.1 Features of Hotel Industry

Different from other sectors, the hospitality industry is unique in its nature which tends to
be service-oriented and has a strong emphasis on human exchange in the service delivery
processes. A summary of key characteristics relating to the hospitality industry are listed
below:-

1) Product-Service Mix

Think about your experience of being a customer in a restaurant or a customer in a hotel.

What else, apart from the food in restaurants and the facilities in hotel rooms, do you
think can make your hospitality experience more enjoyable and satisfied?

In the hospitality industry, customers rarely consume pure products but a mixture of
products and services. For example, one who dines in a restaurant will not only pay for
the food and drinks but the services provided by the servers. The bill has covered both
tangible and intangible experience.

Tangible features- for example, a steak as the main course, a glass of house wine, well
groomed service staff and decoration of the restaurant.

Intangible features- for example, a comfortable dining atmosphere or the friendly

attitude of staff.

A successful hospitality business does not only count on its products and services, but
also how they are delivered. The qualities of staff and the way they deliver the service are
often more important than the tangible products in making a hospitality experience
satisfactory or unsatisfactory. Hence, the two features can contribute to the total
experience in the service delivery process.

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As products and other tangible features can be easily imitated by competitors, hospitality
operations which aimed for high-ended customers and ‘superior’ quality gradually spend
more and more resources in enhancing the service standard as a strategy of
differentiation.

2) Two-way Communication

In order to achieve service excellences in the hospitality industry, two-way

communication is one critical factor which requires the involvement and participation of
both customers and service staff in the service delivery process. Through interactions
with customers, important messages about their needs and expectations can be received
by service staff for their immediate actions to create customer satisfaction. Interactions
between internal staff or inter-departments is also critical since total experiences of
customers in using any lodging or food and beverage services usually involve team work
and exchange of information within the organization.

3) Relationship Building

The hospitality industry highly depends on repeated customers for survival. Building long
term relationship with customers can benefit the organizations for generating stable
revenues regardless of the instability of seasons and at the same time, developing brand
reputations through positive word-of-mouth of the repeated customers. In order to
develop brand loyalty, different methods are currently applied by the lodging and food
service sectors, such as membership programs which give privileges and incentives to
frequent customers. However, top management of organizations do believe that the
informal ways of building “friendship” between front-line staff and customers through
high degree of personal attention and customization can win the loyalty of customers in
long run.

4) Diversity in Culture

As hospitality are closely related to tourism industry, it is not surprising that people
involved in this sector, no matter customers or staff are experiencing a diversity in culture

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through interacting with others. Staff who work in a hospitality organization always have
interactions with customers from different regions, or to work and corporate with other
colleagues who may have different backgrounds or cultures. Due to their differences in
religious beliefs and values, some conflicts and misunderstandings can be easily
occurred. Therefore, staff should be open-minded, and come up with solutions together in
resolving problems in their duties.

Such a cultural diversity implicates that local staff should generally understand different
cultures so flexible services can be provided to customers based on their national cultures
and harmony in cooperation with colleagues from different nationalities can be achieved.

5) Labor Intensive

Since the hospitality industry is service-oriented in it’s’ nature, it requires a huge supply
of labors to create a memorable experience for the customers. This characteristic is
especially true for those enterprises which target for high-ended customers. For example,
staff-to-guest ratios are high in fine dining restaurants and 5-star hotels which aimed at
providing one-on-one services to their customers. Although the advancement in
technology do contribute to the replacement of some simple tasks in the whole service
process, customers who concern the element of ‘care’ generally expect high degree of
human contacts and personalized services in their consumption experiences. It explains
why the industry is always in high demand for labor and is willing to spent time and
resources in training and recruiting potential candidates to join the workforce of the
hospitality industry.

4.2 Hotel Guests and Products

In general hotel guests can be classified according to;-

Trip purpose – Pleasure or Business travelers

Numbers – Independent or Group travelers

Origin – Local or overseas travelers

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 1. Purpose of visit

Pleasure travelers (known as tourists) are peoples who travel of pleasure (sightseeing or
entertainment). Their arrival are highly seasonal and attracted by special festivals, sports
or other cultural events. Pleasure travelers are generally price sensitive, their seasonal
income is an important factor in determining their particular needs. Pleasure travelers
may include:

Business travelers: are peoples who travel for the sole purpose of conducting business.
These type of travelers are the larger source of demanding accommodation. This demand
exist all the year round with the exception of public holiday, but can also decrease during
summer holiday months. Business travelers often require accommodation at short notice
and for this reason, they prefer to establish close ties with a particular hotel so they can
use the accommodation service on a regular basis and not be inconvenienced by lengthy
reservation process.

2. Numbers

Independent travelers: an independent is someone who travels alone, for either business
or pleasure purposes. Whatever the purpose, the guest travels independently and for this
reason unlike groups a set time table is not normally followed.

Group travelers: a group booking tends to seen as a booking in which five or more
people travel together, or when 10 or more rooms are pre-booked. The booking is
normally done through a travel agent and is paid in full to the travel agent before group
embarks on the tour.

3. Origin

Travelers may generally be divided in to local and foreign (international) travelers. This
means that any hotel resident whose permanent address is in the same country as the

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hotel is deemed to be a local traveler. Anyone whose home is in another country will be
classified as a foreign or overseas traveler.

1. Leisure Travelers

They are individuals who travel to engage in leisure activities, outdoor recreation,
relaxation, visiting friends and relatives or attending sports or cultural events.

2. Corporate Business Travelers

They are individuals whose frequent bookings are usually made by enterprises with
reduced room rates. Business travelers travel to conduct business, attend business
meetings or workshops, and engage in selling or purchasing products.

3. Free Independent Travelers (FITs)

They are sometimes referred to as "foreign independent travelers ". FITs are international
tourists who purchase their own accommodation and make their own travel arrangements.

4. Group Inclusive Tours (GITs)

Tourists who travel together on package tours with accommodation and sometimes meals
which are booked through travel agents. Group tourists tend to spend less and budget
their spending allowance.

5. Domestic Tourists

They are local residents who stay at a hotel for special occasions and functions.

6. Conference Participants

Individuals who travel to attend conference and whose accommodation is usually

reserved by himself/herself, his/her enterprise or a conference organizer before their
arrival.

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7. Very Important Persons (VIPs)

Very important persons may include celebrities, frequent-stay guests, guests in expensive
rooms, guests with security risks and top executives from enterprises.

8. Incognito

They are guests who stay in a hotel with concealing identities so as to avoid notice and
formal attention

4.2.1 Hotel Products and Services

As mentioned before the sales of room is one of the main product to be provided by a
hotel; it is also very often the principal source of hotel revenue. It must be noted, however
that the accommodation product consists of more than a room with bed a guest
purchasing accommodation also receives other facilities and benefits, such as ambience,
décor and security. While all hotels provide accommodation service for their guests, the
type of facilities and benefits associated with that service can often differ greatly, even
within the same hotel. The accommodation product, therefore doesn’t only consist of a
guest-room but also the additional facilities and services which are applicable to that
room, for example, sea-view, mini bar, in-house movies and room service. All these
service and facilities may be included in the accommodation product of a hotel.

Room

To cater for the different needs of their customers, hotels usually provide a variety of
accommodation products. In other words, hotel offers different guest rooms for sale,
which may have different room size, décor, views, facilities and services. Guest-rooms
can be classified in a number of way, for example i.e. according to the number of beds in
the room, other are the decor, the room size and views.

Number and sizes of beds per Room

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Guest room cab be classified according to the number and size of beds in the room. These
are commonly known as:

 Single Rooms: room with single bed.

 Twin Rooms: room with two single beds.
 Double Rooms: rooms with one double size bed.
 Suite Rooms: room with two distinct areas, one for sleeping and lounge area
(dinning). Usually have king-size double bed.

The type of rooms according to numbers and size of beds in the room are illustrated
below:

Types of bed Sizes of the bed Number of beds in Number of people per room
the room
Single 39” x 75” 1 Designed for one person only
Twin 39” x 75” 2 Designed for two persons
Double 54” x 75” 1 Designed for two persons
King 78” x 80” 1 Designed for two persons
Queen 60” x 80” 1 Designed for two persons

Other Related Products and Services

It is assumed that a guest who pays a room charge is not only provided with the right to
stay in a guest room but to use other related products and services. Following shows
some common examples of products and services which can be included in the room rate.

Wake-up call service;

Safe deposit box;
Free internet and Wi-Fi access;
Room cleaning service;
Turn down service;
Swimming pool;
Gymnasium;
Valet parking;

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 Free shuttle service;
Bell service;
In-room complimentary food and beverage items (e.g. tea and coffee bags);
Express check-in service;
Free access to executive lounge;
Complimentary newspapers; or
Welcome drinks at bars or lobby lounge, etc.

Now a day’s hotels provide a wide variety of services for their customer according to the
size and service level of the hotel. Those product and services are listed below;

 Bar  Car parking

 Restaurants  Shopping
 Coffee shop  Game zone (for Kids)
 Room service  Travel agency
 Pastry shop  Tour packages
 Laundry  Banquet hall
 Swimming pool  Fitness center
 Health club  Business lounge with secretarial
 Beauty parlor service
 Foreign exchange counter

4.1 Environment of Hotel Business

Organizations are open, living and complex systems and have to interact with the
environment continuously and successfully to survive. Today, organization continue their
lives in a very complex business environment. The business environment directly or
indirectly impels the organization and has a decisive impact on the life and death of
organization. Organizational theorist emphasize that the ability of an organization to
adapt to changing environmental circumstances is a key factor in order to maintain
viability and greater autonomy, to survive and prosper.

Meaning of Business Environment

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The term ‘business environment’ connotes external forces, factors and institutions that
are beyond the control of the business and they affect the functioning of a business
enterprise. These include customers, competitors, suppliers, government, and the social,
political, legal and technological factors etc. While some of these factors or forces may
have direct influence over the business firm, others may operate indirectly.

Thus, business environment may be defined as the total surroundings, which have a direct
or indirect bearing on the functioning of business. It may also be defined as the set of
external factors, such as economic factors, social factors, political and legal factors,
demographic factors, and technical factors etc., which are uncontrollable in nature and
affects the business decisions of a firm.

Business environment is located in a place where organizational action occurs

(Whittington, 1998) and defined as the relevant physical and social factors inside and
outside the boundaries of an organization that are taken into consideration during
decisions (Duncan, 1972). It is considered as source of opportunities and treats
(Bourgeois, 1980).

Types of Business Environment

Business environment, in terms of the level of relationship with the business and the
influence status to business, is categorized into two groups, general or macro
environment and specific or micro environment.

General (Macro) Environment

The general or macro environment consists of components such as, government policies,
national and global economic-politic conditions, and trends in social development,
technological developments and the natural environment, which are difficult to control
and have mostly indirect effect on the organizational process, in some case direct. This
environment is more related the future condition of firms.

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  Economic Environment: Economic environment includes all those forces which
have an economic impact on the business. Accordingly, total economic
environment consists of agriculture, industrial production, infrastructure, and
planning, basic economic philosophy, stages of economic development, trade
cycles, money supply, price level and population.
 Political-legal Environment: Business firms are closely related to the
government. The political-legal environment includes the activities or three
political institutions, which usually play a useful role in shaping, directing,
developing and controlling business activities.
 Technological Environment: Technological environment is exercising
considerable influence on business. Technology implies systematic application of
scientific or other organized knowledge to practical tasks or activities. Business
makes it possible for technology to reach the people in proper format.
 Global or International Environment: Global environment play an important
role in shaping business activities with the liberalization and globalization of the
economy.
 Socio-cultural Environment: Social and cultural environment also influences
the business environment indirectly. These includes people’s attitude to work and
wealth, ethical issues, role of family, marriage, religion and education and also
social responsiveness of business. In addition it influences the demand for variety
of gods and the type of employees the industry require.
 Natural Environment: The natural environment is the ultimate source of many
inputs such as, raw materials and energy, which firms use in their productive
activity. It includes minerals, waters, climatic conditions are all highly significant
for various business activities.

Specific (Micro) Environment:

The specific or micro environment is immediate environment surrounding a firm,

includes, suppliers, customers, competitors, new market entries and the like, and directly
affect the organizations activities, process, and decisions. It can be controlled more easily
than macro environment components. In addition it is relevant to the organizations goal

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settings and to the competition conditions that firm have to struggle in and to the factors
that affect the profitability of the company within the industry.

 Suppliers: An important factor in the external micro environment of a firm is

suppliers of its inputs such as raw materials and components. Normally, most
firms do not depend on a simple supplier of input. To reduce risk and uncertainty
business firms prefer to keep multiple suppliers of inputs.
 Customers: The people who buy the product and services are an important part
of external micro environment since sales of a product or service is critical for a
firm’s survival and growth, it is necessary to keep the customers satisfied. A
concern for customers’ satisfaction is essential for the success of a business firms.
Besides, a business firm has to compete with rival firms to attract customers and
thereby increase the demand and market for its product.
 Competitors: Different firms in an industry compete with each other for sale of
their products. This competition may be on the basis of pricing of their products
and also non-price competition through competitive advertising such as
sponsoring some event to promote the sales of different varieties and models of
their products.

Importance of Business Environment

There is a close and continuous interaction between the business and its environment.
This interaction helps in strengthening the business firm and using its resources more
effectively.

I. Determining Opportunities and Threats: The interaction between the business and
its environment would identify opportunities for and threats to the business. It
helps the business enterprises for meeting the challenges successfully.
II. Giving Direction for Growth: The interaction with the environment leads to
opening up new frontiers of growth for the business firms. It enables the business
to identify the areas for growth and expansion of their activities.

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III. Continuous Learning: Environmental analysis makes the task of managers easier
in dealing with business challenges. The managers are motivated to continuously
update their knowledge, understanding and skills to meet the predicted changes in
realm of business.
IV. Meeting Competition: It helps the firms to analyses the competitors’ strategies
and formulate their own strategies accordingly.
V. Identifying Firm’s Strength and Weakness: Business environment helps to
identify the individual strengths and weaknesses in view of the technological and
global developments.

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