1. Identify influences affecting the hotel industry over the years.

2. Explain how lodging properties can be classified.

3. Discuss the advantages of operating independent and chain companies.

4. Compare the company-owned, franchise licensed and management contract forms of

chain owner-ship.

5. Identify the eight ‘Ps’ of hospitality marketing.

• Lodging continually changes to accommodate its guests.

• The lodging industry is influenced by political stability, technological

improvements in transportation and changing social conditions.

• since the industry depends on the ability of its guests to travel from their homes
to lodging facilities, changing method of transportation have always had a direct
impact on the lodging component of the hospitality network.
• As stagecoach(horse drawn carriage) routes were established in 1960s, coaching inns
were developed where travelers were fed and lodge overnight and tired horse were
exchanged for rested ones.

• ‘Public Houses’- private homes that were opened to feed and house guest.

• The invention of the railroad in 1825 brought more changes in lodging choices. New
inns, taverns and restaurants flourished close to railway station.

• ‘The hotelier’- the keeper, owner or manager of the property.

• The introduction of commercial jets changed the nature of travel. New resort were
built in places easily accessible by air.
• The healthy economy at the beginning of the twentieth century ushered in The
Golden Age of hotels. Lodging industry flourished and large hotels were constructed.

• Great Depression, a time when banks failed, unemployment skyrocketed and travel
sharply decreased.

• Economic boom in 1980’s helped fuel extensive hotel development as tax incentives
were given to investors and expectation of higher demand.

• ‘The Occupancy Rate’ is a percentage derived by dividing the total number of rooms
occupied during a given time period (night, week, year) by the total number of rooms
available for occupancy during that time period. This ratio of guests to rooms helps
analysts trck the overall health of the industry.
• The necessity for classifying hotels came about when hotels began to differ from one
another enough to appeal to different groups of people.

• As room supply increased, hotels were appealing to conventioneers, business groups

and special-interest groups.

• Descriptive hotel classifications helped potential guests locate suitable lodging.

• Old system of hotel classifications are midpriced, economy, business, extended stay,
all suite and upscale.

• As lodging classification became more complex, facilities were then grouped according
to size, amenities offered, price, type of guest and type of hotel.
 Hotels • Varying greatly in style and service. Most hotels share a similar structure.
• Guest rooms usually have a bed, bath, telephone and television.
• Most often located in or near business district, travel destinations and
airports. Usually have recreation facilities, business center, restaurant and
bars.
Motels • Motels offered fewer amenities and were less expensive to build and operate
than downtown hotels.
• Lower rates, basic accommodations, roadway locations, lack of central
lobby, free parking and less formal service than hotels.
All-Suite • all-suite hotels rent only suites, often combining living space with kitchen
Hotels facilities or a bedroom section with an attached parlor.

Convention • Provide meting and banquet facilities for large groups.

Hotels • Large lobbies to accommodate group arrivals, high percentage of double
occupancy and emphasize more in food and beverage service.

Other • Hostels – inexpensive rooms and community kitchen privileges.

Lodging • Bed & Breakfast – personal service and charming location, include breakfast
rate.
Types
• Private homes – open for overnight guest
• Residential hotels – cater for long term guests.
• Lodges – provides accommodations and housekeeping for those interested
in specific activities such as hunting and skiing.

*Table 4.1 lists samples of descriptive labels

 Luxury • Descendants of the grand hotels, featuring expensive, lavishly
Hotels And decorated public area and the highest levels of customer service.
• Offer finest cuisine, full range of amenities, well trained and efficient
Resort staffs.
• Have the ability to perpetuate an exclusive image by charging high
rates.
Full- • Offer a wide range of services at lower rates than luxury hotels.
Service • Generally offer clean, well-decorated hotels with meeting and
restaurant facilities, limited room-service menu and a variety of
Properties recreational activities.
Limited- • usual offerings included simple, clean rooms with a telephone,
service swimming pools and an adjacent restaurant. Staffs service other than
housekeeping were limited.
Properties • some all suite hotel fit into this category because of their service and
amenities and small public areas.
Economy • Offering only the basic bed and bath facilities.
Properties • Focus ion ‘more values for the dollar’
Luxury Properties with actual room rates above the 85th
percentile in their geographic market.

Upscale Properties with actual room rates above the 70th

percentile and below the 85th percentile in their
geographic market.
Midprice Properties with actual room rates above the 40th
percentile and below the 70th percentile in their
geographic market.

Economy Properties with actual room rates above the 20th

percentile and below the 40th percentile in their
geographic market.

Budget Properties with actual room rates below the 20th

percentile in their geographic market.
Old Service Segments New market price segments

Luxury Luxury
75% 75%

Upscale Upscale
70% Full 70%
Service

Midprice Midprice All

40% 40% Service
Types

Economy
Economy
Upper
Limited 20%
50%
Service
Economy
Budget
Moderate

Before August 1993 Effective August 1993

• An individual or company opened a hotel and manage it.
• It will then take the complete responsibility for the hotel’s
success or failure.

• Complete control over every • Confront the most difficult financial

aspect of their business. (selecting challenges
equipment and hotel policy.) • Limited advertising and sales
•Unusual bond with the community. budget
- First hand knowledge •High risk (system failure and
- Community support incorrect implementation)
- discounts from supplier
• Operating freedom (freedom to
implement own ideas and new
policies.)
1. Company owned and operated
2. Franchise – licensed
3. Management contract.

• Strong national brand identity by • The need to establish brand

the hotel image. loyalty among potential guests and
to diversify property offering.
•Connected to chain’s centralized
reservation system. • Strong competition (beyond and
within the chain.)
•Greater access to capital & bulk
purchasing power.

•Excess to the common expertise of

the company.
• Parent-owned and operated by the brand name.
• Chains remain independent, which are not bond in any management contract or franchising
agreement.

• Franchise agreements are contracts in which the franchisor or the brand owner grants the
franchisee or buyer the right to use the franchisor’s name and proven method of operating
business
• Franchisee will build the hotel and buy the equipment needed and pay several fees such
as franchise fee, royalty fees and etc.
•Franchisor provides standard operating system, training programs, centralized reservation
system and advertising cooperation.

• The owner maintains financial responsibility for the property itself.

•The management company is responsible for operating the property (with the owner money)
fees will be paid to the management company.
• Fee based is determine by gross operating revenue
• Incentive fees is based on gross operating profit.
• Marketing is the process of planning the hotel's concept (type of facility, service offered
and location) what rates to charge, and how to reach potential customers, all in a way that
satisfies individual and organizational objectives.
• Fierce competition, growing market complexity and guest sophistication have all
heightened the importance of successful marketing.
• The hotel marketing department conducts research to stay current with the needs and
desires of potential guests, and to plan and implement ways to meet those needs.

• Is a smaller, identifiable group with common characteristics.

• These segments can be defined using any set of characteristics, such as those found in
geographic, or psychographic information.
• Often, information from different sources is combined. (eg: geographic area and financial
status.)
Advantages of Segmentation Disadvantages of Segmentation
• A clearer understanding of guest • Many travelers may not want, need
needs helps the marketer select or be able to distinguish between
appropriate marketing methods. lodging concepts.
Which allows the company to get • Can be a time-and money-
‘get the most bang for its buck’ consuming endeavor.
• A clearer guest image also helps • The final results are not always
keep management costs at the particularly useful, and some
most efficient level, since hotel companies may find themselves
design and operations depend on appealing to a nonviable segmen.
who the potential guests.
• Segmentation also allows
companies to place more than one
brand on a single reservation
system. They are able to do this by
highlighting the differences
between each of their brands’
service offerings and facilities.
• Generally, two marketing plans are used. A short-term plan determines the marketing
strategies for a year or less; a long-term plan covers five years or more.

• strategies outlined in a plan include budgeting and time schedules for each goal, market
analysis and the company's’ intended image or market place.

• The process of marketing services is different from processes used marketing goods. In
goods-producing industries, the product is tangible (eg: clothes, furniture, etc)

• The hospitality product is largely intangible. The product is the service guest receives
from the hospitality firm and its staff.

• The successful marketer uses a variety of methods to promote the lodging industry
including direct or personal sales, advertising, public relations, promotions and packaging.
Elements are categorized into the eight Ps of marketing. Each element may be used alone or
as a part of a mix. Generally in a mix, one element is given priority.

Product •The product in hotel industry is the service, ambiance, facilities

and amenities.
•Product marketing is being used in hotel industry as this type of
add appeals to the guest who is looking for specific amenities.
People •Either the guests or the staffs is being used in the marketing
methods.
•An example might be an advertisement featuring a chef holding
an apple pie and the caption ‘just like mom used to make’
Packaging •Is define as offering more than one product or service together, to
the consumer for one total price.
•Example: ‘weekend gateway package’ , ‘Honey-moon Package’

Programming •Tailor-made offerings for groups sharing a special interest.

•Examples are hotels developing special activities, events, and
short term educational programs.
Place •The success of place marketing depends. Of course upon the
desirability of its location. Hotels located at popular destination
sites such as Cameron Highland and Pulau Sipadan, will use
the popularity of the site to attract guests

Partnership •Partnership requires the cooperative efforts of several industry

groups. Examples are Realrewards and Bonuslink partnership
with hotels and restaurants
Price •Budget hotel often use a combination of price and location
elements in their marketing mix. Inexpensive yet clean and
comfortable lodging located along travel routes appeals to
many people on a long trip.

Promotion •Promotions are activities, that may include special events,

offers, exhibits or discounts.
•Promotions make use of advertising, sales, and public
relations
• Positioning is the process of establishing a distinctive place in the
market (and in the minds of potential guests.

•With constantly changing industry conditions, positioning is not a one-

time event; repositioning is also necessary to keep properties operating
a the highest potential.