Fundamentals of Hotel

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3 By the same authors
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5 S. Medlik
6 Britain – Workshop or Service Centre to the World?
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The British Hotel and Catering Industry Dictionary
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9 of Travel, Tourism and Hospitality Europeans on
1011 Holiday
1 Higher Education and Research in Tourism in Western Europe
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Historical Development of Tourism (with A.J. Burkart) Holiday
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4 Surveys Examined
5 The Management of Tourism (with A.J. Burkart eds)
6 Managing Tourism (ed.)
7 A Manual of Hotel Reception (with J.R.S. Beavis)
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Paying Guests
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20111 Profile of the Hotel and Catering Industry (with D.W. Airey)
1 Tourism and Productivity
2 Tourism Employment in Wales
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Tourism: Past, Present and Future (with A.J. Burkart)
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5 Trends in Tourism: World Experience and England’s Prospects
6 Trends in World Tourism
7 Understanding Tourism
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Your Manpower (with J. Denton)
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30111 H. Ingram
1 Developing Hospitality Properties and Facilities (with J. Ransley eds)
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Operational Techniques for the Hospitality Industry (with N. Johns and
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D. Lee-Ross)
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5 Strategic Management (with R.Teare)
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7 The Business of Hotels
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9 Fourth Edition
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40 OXFORD AUCKLAND BOSTON JOHANNESBURG MELBOURNE NEW DELHI
41111
1111 Butterworth-Heinemann
2 Linacre House, Jordan Hill, Oxford OX2 8DP
225 Wildwood Avenue, Woburn, MA 01801-2041
3 A division of Reed Educational and Professional Publishing Ltd
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5
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7 First published 1980
8 Reprinted 1985, 1986, 1987 (twice)
Second edition 1989
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Reprinted 1990, 1991, 1993
1011 Third edition 1994
1 Reprinted 1995, 1996, 1997, 1998, 1999, 2000
2 Fourth edition 2000
3111 © S. Medlik 1980, 1989, 1994
4 © S. Medlik and H. Ingram 2000
5
All rights reserved. No part of this publication may be reproduced in any
6 material form (including photocopying or storing in any medium by
7 electronic means and whether or not transiently or incidentally to some
8 other use of this publication) without the written permission of the
copyright holder except in accordance with the provisions of the
9 Copyright, Designs and Patents Act 1988 or under the terms of a licence
20111 issued by the Copyright Licensing Agency Ltd, 90 Tottenham Court Road,
1 London, England W1P 0LP. Applications for the copyright holder’s
written permission to reproduce any part of this publication should be
2 addressed to the publishers
3
4 British Library Cataloguing in Publication Data
Medlik, S. (Slavoj), 1928–
5
The business of hotels. – 4th ed.
6 1. Hotel management
7 I. Title II. Ingram, Hadyn
8 647.9´4´068
9 ISBN 0 7506 4115 0
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101111 Contents
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List of Tables ix
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8 List of Figures xi
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Preface to the First Edition xiii
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1 Preface to the Fourth Edition xvii
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PART ITHE CONCEPTS OF HOTELS AND
4 HOSPITALITY 1
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1 Staying Away from Home 3
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7 The Importance of Hotels – Travel and Hotels – Two Centuries of
8 Hotelkeeping – Hotels in the Total Accommodation Market – Hotel
9 Location – Types of Hotels – A Review So Far
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2 Hotel Products and Markets 13
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2 The Hotel as a Total Market Concept – Hotel Facilities and Services
3 as Products – Hotel Accommodation Markets – Hotel Catering Markets
4 – Sources of Hotel Demand – Hotel Market Areas – Hotel Market
5 Segmentation – Buying and Paying for Hotel Services – Hotel
6 Marketing Orientation
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3 Hotel Policies, Philosophies and Strategies 25
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9 Objectives and Policies – General and Sectional Policies – Policy
Formulation, Communication and Review – Hotel Philosophies – Hotel
41111 Plans and Strategies – The Framework of Hotel Management
Contents
1111 PART II THE STRUCTURE OF THE HOTEL

2 INDUSTRY 37
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4 The Small Hotel 39
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5 Products and Markets – Ownership and Finance – Organization and
6 Staffing – Accounting and Control – The Future of the Small Hotel –
7 Consortia
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5 Hotel Groups 50
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1011 Hotel Group Operations – Advantages of Groups – Problems of Groups
1 – Scope for Centralization – A Concentrated Hotel Group: an Illustration
2 – A Dispersed Hotel Group: an Illustration
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6 International Hotel Operations 63
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5 Products – Markets – Ownership and Finance – Organization and
6 General Approach
7
8 PART III THE HOTEL AND ITS FUNCTIONS: GUEST
9 SERVICES 77
20111 7 Rooms and Beds 79
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2 Room Sales – Mail and Other Guest Services – Uniformed Services
3 – Hotel Housekeeping – Organization and Staffing – Accounting and
4 Control
5 8 Food and Drink 89
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7 The Food Cycle – The Beverage Cycle – Hotel Restaurants – Hotel
8 Bars – Room Service – Functions – Food and Beverage Support
9 Services – Organization and Staffing – Accounting and Control
30111 9 Miscellaneous Guest Services 102
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2 Guest Telephones – Guest Laundry – Rentals and Concessions – Other
3 Sources of Income – Accounting and Control
4 PART IV HOTEL SUPPORT SERVICES 111
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6 10 Marketing 113
7 From Production to Sales to Marketing – The Marketing Concept –
8 Special Features of Hotel Marketing – The Marketing Cycle –
9 Marketing Resources – Yield and Quality Management – Hotels in the
40 Total Tourist Product
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tios and Analysis – The Hotel Profit and Loss Statement – Profit and
Loss Ratios and Analysis
– Hotel Operating
11 Property Ownership Profit – Balance Sheet and Profit and Loss
and Management
Relationships
Property Ownership – Property Operation and Maintenance – Facilities
Management – Energy – Hotels and the Environment
12 Finance and Accounts
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PART V PEOPLE AND PROCEDURES 147
13 Hotel Organization 149
Rooms – Food and Beverages – Miscellaneous Guest Services – Hotel
Support Services – The Management Structure – Organization Structure
of a Large Hotel: an Illustration – Accounting and Control – Information
Technology in Hotels
14 Hotel Staffing 163
Determinants of Hotel Staffing – Hotel Products and Staffing –
Organization of the Human Resource Function – Organization of
Training – Functions of the Training Division
15 Performance in Hotels 171
Criteria of Performance – Financial Perspective – Internal Business
Perspective – Innovation and Learning Perspective – Customer
Perspective – Some Ways to Higher Productivity
APPENDICES 183
A Travel and Hotels in the United Kingdom in the 1990s 185
B Travel and Hotels in America in the 1990s 187
C Global Capacity of Hotels and Similar Establishments, 1995 189
D Hotel Occupancies in Selected Countries 1994, 1995, 1996 191
E Leading Hotel Groups World-wide 192
F Leading Hotel Groups in Europe 194
G Leading Hotel Consortia 196
H Horwath International Reports 197
I Select List of Hotel and Related Organizations 199
J Select List of Hotel Periodicals 202
K Suggested Further Reading 205
Select Bibliography 209

Index 214
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1 Accommodation profile of selected European
countries, 1995 8
2 Social grade definitions 21
3 Leading hotel management companies 52
4 Leading hotel franchising companies 53
5 Composition of hotel revenue in main regions 66
6 Composition of hotel revenue in selected European
countries 67
7 Composition of hotel markets in main regions 67
8 Advance reservations in hotels in main regions 68
9 Method of payment for hotel services in main regions 68
10 Charge/credit card hotel sales in main regions 69
11 Room sales as a ratio of hotel revenue in main regions 80
12 Rooms payroll and related expenses ratios to sales in
Europe and Africa 86
13 Room sales, expenses and profit ratios in selected
European countries 86
14 Room occupancies and average rates in selected European
countries 87
15 Double occupancies in selected cities and regions 88
16 Food and beverage sales as a ratio of hotel revenue in
main regions 90
17 Food and beverage payroll and related expenses ratios
to sales in Europe and Africa 99
18 Food and beverage sales, expenses and profit ratios in
selected European countries 100
19 Miscellaneous sales and income as a ratio of hotel
revenue in selected regions 104
Tables
1111 20 Telecommunications income, expenses and profit ratios in

2 hotels in selected European countries 109
3 21 Guest services offered by hotels in main regions 118
4 22 Use of promotional tools by hotels in main regions 120
5 23 Marketing expenses as a ratio of hotel sales in main
6 regions 121
7 24 Marketing expenses as a ratio of hotel sales in selected
8 European countries 122
9 25 Room occupancies, discounts and yield in selected cities 124
1011 26 Property operation and maintenance costs as a ratio of
1 hotel sales in main regions 130
2 27 Property operation and maintenance expenses as a ratio
3111 of hotel sales in selected European countries 130
4 28 Energy costs as a ratio of hotel sales in selected areas of
5 Europe 132
6 29 Energy costs as a ratio of hotel sales in selected countries
7 and regions 132
8 30 Balance sheet as at 31 December 0000 136
9 31 Profit and loss summary operating statement for the year to
20111 31 December 0000 139
1 32 Profit and loss summary operating statement for the year to
2 31 December 0000 showing profit levels 141
3 33 Ratios of costs, expenses and profit margins to departmental
4 sales and to hotel revenue 142
5 34 Hotel operating profit as a ratio of hotel sales in main
6 regions 143
7 35 Hotel operating profit as a ratio of hotel sales in selected
8 countries 144
9 36 Administrative and general expenses as a ratio of hotel
30111 sales in main regions 160
1 37 Administrative and general expenses as a ratio of hotel
2 sales in selected European countries 161
3 38 Schedule of human resource responsibilities in a group
4 of hotels 167
5 39 Schedule of training responsibilities in a group of hotels 169
6 40 Employees per room in hotels in selected European cities 175
7 41 Employees per room in hotels in selected African and
8 Middle Eastern cities 175
9 42 Sales and payroll in hotels in main regions 176
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Figures
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4 1 Three phases of travel 5
5 2 The hotel as a market concept 14
6 3 Principal parties in the hotel business 27
7 4 Organization chart of a small hotel 44
8 5 Leading European hotel groups by country of head office 51
9 6 Organization chart of a concentrated hotel group 60
20111 7 Organization chart of a dispersed hotel group 61
8 World’s leading hotel groups by extent of international
2 coverage 64
9 Organization chart of Marriott International Lodging, June
4 1999 73
5 10 Organization chart of Le Méridien Hotels & Resorts, June 1999 74
6 11 The food cycle 91
7 12 Food and beverage ratios in European hotels, 1997 100
8 13 Miscellaneous sales and income in hotels, 1997 103
9 14 The marketing cycle 120
30111 15 Marketing expenses in hotels, 1997 122
1 16 Property operation and maintenance costs in hotels, 1997 131
2 17 Hotel operating profit, 1997 144
3 18 Organization chart of a large hotel 159
19 Organization of the human resource function of a group
5 of hotels 166
6 20 Organization of the training function in a group of hotels 168
7 21 The hotel as a systems model 172
8 22 Kaplan and Norton’s (1992) balanced scorecard 173
9 23 Forte Hotels comment slip, 1999 178
24 Extract from a guest satisfaction survey from Marriott Hotels,
41111 1999 179
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7 Preface to the First Edition
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1
1
2
3 In business and management literature some authors have approached their
4 subject through the study of work, notably Frederick Winslow Taylor and the
5 Gilbreths. Others, for example, Henri Fayol and Peter Drucker, did so through
6 the analysis of managerial experience. The third and most recent influence has
7 been writers such as Frederick Herzberg and Douglas McGregor who brought
8 knowledge to bear from behavioural sciences on management thought. There are
9 few examples of these three schools in the literature of hotel management.
20111 Hotels have been seen by most as a rather specialized type of business.
1 They attracted many successful entrepreneurs and managers, but both have
2 been too busy making a success of their hotels to write about them. The
3 academics and consultants concerned with hotels rarely took on the task of
4 explaining the hotel business to a wider public other than lecturing about it,
5 writing articles in the press or reports for their clients.
6
7 The large and growing volume of books on hotels appears to have taken several
8 distinct directions. There are books devoted to the skills and techniques of particular
9 hotel activities such as hotel reception, housekeeping, food and drink service and
30111 especially food preparation. Others are concerned with accounting, marketing,
1 personnel management, maintenance and other specialist functions of the hotel. There
2 are also several economic and historical studies of the industry. Most of these and the
3 few dealing more or less comprehensively with the hotel as a whole almost invariably
4 embrace catering activities outside hotels, rather than concentrating on hotels. Indeed
5 few books on hotel management have been published anywhere since Lucius
6 Boomer’s classic Hotel Management* first
7
*Boomer, L. (1925) Hotel Management – Principles and Practice, Harper &
8 Brothers, New York and London. In this author’s view subsequent revised editions in
9 1931 and 1938 did not match what the President of the Hotel Waldorf Astoria
40 Corporation, New York, wrote himself for the first edition.
41111
Preface to the First Edition
1111 appeared more than fifty years ago. In the same period only limited progress has
2 been made in the translation of business and management theory from manufac-
3 turing to service industries generally and to hotels in particular. This is particu-
4 larly striking in view of the growth of hotels and of education and training for
5 hotel management in the intervening decades.
6
An hotel is a business with its own products and markets, technology and
7
methods, which does not lend itself to easy analysis. It offers several distinct
8
products in varying combinations for sale to many markets. It combines
9
production and sale under one roof. It is in close and intimate contact with
1011
its customers who consume hotel products at the point of sale. It has a high
1
capital to sales ratio, yet it tends to be labour-intensive. Therefore, in many
2
respects a meaningful treatment of hotel activity calls for recognition and
3111
explanation of these and other realities, rather than an adaptation of general
4
theories to the hotel business.
5
6 This book has no ambitions to replace general business and management
7 reading for the hotelier nor to include between two covers all that enters into
8 the business of hotelkeeping. It is an attempt to fill a gap felt for some time
9 by students, teachers and practitioners, for a book describing the hotel as a
20111 business. In this the approach has been to provide a simple and reasonably
1 comprehensive outline rather than a detailed treatment of some or all aspects
2 of the hotel business in depth. Suggestions for further reading on particular
3 aspects are made for each of the fifteen chapters of the book; material used
4 in writing it and other relevant literature is listed in the bibliography.
5
The supporting reading suggested for use as an extension of this book and
6
the bibliography are confined to one hundred sources, in the main to those
7
available as separate publications, and, with some exceptions, published in
8
Britain. Much more reading material related to each chapter of the book is
9
available in the form of articles in journals, papers presented at conferences,
30111
and in what has been published otherwise in one form or another both in
1
Britain and elsewhere. It is suggested that teachers are in the best position
2
to produce their own collateral reading lists with the desired focus and
3
emphasis for their own courses and students. Likewise, those in other coun-
4
tries can decide whether to draw on the suggested further reading and
5
bibliography included in this book, or to substitute material known to them,
6
or perhaps adopt a combination of the two approaches.
7
8 For the student and teacher of hotel management the whole book and each
9 of its chapters is, therefore, intended to provide a framework, within which
the hotel business may be examined in such depth as may be required by
41111 particular courses, with or without the use of other supporting material. For
xiv
1111 the practitioner – the owner, director or manager – the book may help to
2 organize and formalize what they have learnt in a less systematic way by
3 experience and also perhaps contribute to a more balanced view of their
4 business. Newcomers to the hotel business and others with a professional
5 interest in understanding it should find the book a suitable introduction to its
6 working.
7 The specialist reader will soon note that often only one chapter is devoted
8 to his or her own field, for example, to marketing, finance and accounts, and
9 to staffing, although on closer examination it becomes apparent that neither
10111 these three topics nor others are confined to particular chapters. In fact, if any
1
aspects tend to dominate the text, they are markets, money and people, in the
1
belief that hotels have to pay particular attention to them in order to ensure
2
sustained viability, within the total framework of their operations.
3
4
5 Most readers will discover what will seem to them important omissions.
6 Legal considerations, which increasingly affect the hotel business, are largely
7 omitted, because they differ from one country to another and because they
8 are adequately documented elsewhere. Technical considerations receive scant
9 attention for similar reasons, and because their applicability also varies
20111 greatly according to the size and type of business, for meaningful treatment
1 here. Other aspects, of significance only to a small minority of hotel
2 operations, are also neglected.
3 Many people have influenced the writing of this book and its contents, and
4 sometimes that influence goes back for many years. The first was John Fuller,
5 then Head of Department at Battersea Polytechnic, who was responsible for my
6 entry into the hotel business, for making it possible for me to get to know it, and
7 to become fascinated by it in the 1950s. The second was A.H. Jones of
8 Grosvenor House, who directed that hotel for nearly thirty years, the last ten of
9 which coincided with the first ten years of my professional involvement with
30111 hotels, and who was among the first in Britain to typify the role of an hotel-man
1 as a businessman and a leader in his industry. The third was Dean Howard B.
2 Meek, founder of the Cornell University School of Hotel Administration, who
3 had a greater impact on future generations of hotelmen than most, and in the
4 process also on hotel management education and training. The fourth was Lord
5 Crowther, who as chairman of Trust Houses brought his many skills to bear on a
6 large corporate hotel organization and on its role in the industry and in the
7 economy in the 1960s and early 1970s. Last, but not least, I am indebted to Dr
8 D.M.A. Leggett, first Vice-Chancellor of the University of Surrey, who made it
9 possible, though his help and encouragement, for hotel management studies to
40 become established in a university.
41111
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1111 In my day-to-day work I benefited a great deal from discussion and some-
2 times joint authorship with several of my colleagues at the University of
3 Surrey: John Beavis in hotel reception, John Burkart and Victor Middleton
4 in marketing, Roger Doswell in hotel planning; Philip Nailon in several direc-
5 tions.
6
Three lesser-known books influenced this one in particular: G. Campbell-
7
Smith’s Marketing of the Meal Experience,* through its translation of the
8
marketing concept; D.A. Fearn’s The Practice of General Management –
9
†
1011 Catering Applications, through some of the thoughts on management
expressed in it; and L.S. Fenton and N.A. Fowler and their contributors’
1
‡
2 Hotel Accounts and their Audit, through the ideas it provided on the approach
and structure of this book.
3111
4 Several people read through drafts of chapters and commented on them,
5 in particular Michael Nightingale and Geoff Parkinson, as well as others who
6 prefer not to be named.
7
As an author I cannot claim that any of those mentioned would agree
8
completely with what appears in these pages, and wish to stress that any
9
shortcomings in this volume are entirely my own. But I remain very much
20111
indebted to all those whose influence I have acknowledged and also to others
1
whose contribution may have gone unrecorded.
2
Guildford 1978 S. Medlik
3
4 *University of Surrey, 1967.
†
5 Macdonald, 1971.
‡
6 The Institute of Chartered Accountants in England and Wales, 1978.
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Preface to the
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9 Fourth Edition
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3 The first edition of this book was written in the late 1970s. Since it was first
4 published in 1980, it has gone into two more editions and has been reprinted
5 a number of times.
6 The third edition represented a departure from the first two, following a
7 publisher’s survey of lecturers known to use the book in their teaching and a
8 similar number of ‘non-users’, seeking their comments. What respondents liked
9 most about the book was reinforced and their multiple suggestions for
20111 improvement were incorporated. Statistics and other information were updated
1 and extended to portray the hotel business world-wide in the early 1990s.
2
3 This fourth edition was prepared with Hadyn Ingram, lecturer at the
4 University of Surrey and a practising hotelier, who undertook most of the
5 revision. It owes much to his influence. Whilst the five parts and 15 chap-ters
6 have been retained, their sequence has changed from hotel concepts and the
7 hotel industry structure to the hotel and its functions – guest services, support
8 activities, people and procedures, as shown in the diagram below.
9 Within this structure a major aim has been to show the hotel business in
30111 the late 1990s and most statistics refer to those years. All but a few of the
1 tables of the third edition have been updated or replaced by new ones. Charts,
2 diagrams and shaded entries highlight significant data, concepts, compar-
3 isons, quotes and extracts from various sources. The main text is
4 supplemented by 11 appendices.
5
6 Suggestions for further reading for each chapter and the list of books are
7 again confined to 100 sources mainly published in the United Kingdom, but
8 have been completely revised to reflect a major output of new titles in the
9 1990s.
40
41111
Preface to the Fourth Edition
1111
2 The concepts
of hotels and
3 hospitality
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8 The structure of the
9 hotel industry
1011
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4 The hotel and
5 its functions
6
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9
Guest Support People and
20111 services services procedures
1
2
3 We wish to record our appreciation to those who in one way and another
4 influenced our thinking about hotels and this book, and to express the hope
5 that the new edition may serve the needs of students, teachers and practi-
6 tioners as well as the earlier editions appear to have done. We are also
7 indebted to Horwath International and to Pannell Kerr Forster for the data
8 provided in their reports and to the following organizations and individuals
9 who helped in various ways:
30111
Accor Group (Gilles Honegger)
1
Forte Hotels (Margaret Erstad) and White Hart Hotel, Salisbury
2
Horwath International (Martin Gerty)
3
Hotels
4
Marriott Hotels
5
Pannell Kerr Forster Management Consultants (Jenny Burns)
6
Royal Garden Hotel, London (Graham Bamford)
7
TRI Hospitality Consulting (Trevor Ward)
8
Whitbread Hotels (Alan Parker and Jane Neil)
9
40 Guildford 1999 S. Medlik
41111 H. Ingram
xviii
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Staying Away
1
3
from Home
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7 For the greater part of each year most people live
8 at home. Although they may go to work, shop-
9 ping, visiting friends and relatives, and take part
20111 in other social and leisure activities, their homes
1 are where they normally return each day and
2 where they spend the night. But many of them
3 also increasingly stay away from home, on busi-
4 ness or on holiday or for other reasons, through-
5 out the year. Many of them stay in hotels.
6
Walking through a town, there are the shops,
7
offices, workshops, restaurants, and a whole host
8
of other places of work, entertainment and recre-
9
ation. On a drive through the country can be
30111
seen factories, farms, petrol stations. Without
1
going too far in the town or in the country, one
2
building emerges sooner or later from the rest –
3
an hotel.
4
5 The people one meets in the town and in the
6 country may be residents or visitors. The places
7 they frequent often serve primarily the needs of
8 the resident population, but in many areas to
9 which visitors go in large numbers, many of the
40 facilities and amenities are provided mainly for
41111 visitors. One of them invariably owes its origin
The Business of Hotels
1111 to visitors – the hotel. To a greater or lesser extent, hotel restaurants, bars
2 and other hotel facilities may also serve the local population, but the primary
3 function of an hotel is to accommodate those away from home and to supply
4 them with their basic needs.
5
It is the basic function of the hotel, which makes it quite distinct from
6
other types of business, and to which its other functions are supplementary.
7
Where others provide accommodation, meals and refreshments for those away
8
from home – such as hospitals or boarding schools, or hostels – their primary
9
purpose – whether treatment or education or something else – is different.
1011
Also in practice it is not difficult to draw a line between the provision of
1
accommodation by hotels and the letting of accommodation on a tenancy
2
basis, but more difficult between hotels and guest houses and similar estab-
3111
lishments, which share the basic function of the hotel. However, it is sufficient
4
for our purposes to describe an hotel as an establishment providing for reward
5
accommodation, food and drink for travellers and temporary residents, and
6
usually also meals and refreshments and sometimes other facilities for
7
other users.
8
9
20111 The Importance of Hotels
1
Hotels play an important role in most countries by providing facilities for
2
the transaction of business, for meetings and conferences, for recreation
3
and entertainment. In that sense hotels are as essential to economies and
4
societies as are adequate transport, communication and retail distribution
5
systems for various goods and services. Through their facilities hotels
6
contribute to the total output of goods and services, which makes up the
7
material well-being of nations and communities.
8
9 In many areas hotels are important attractions for visitors who bring to
30111 them spending power and who tend to spend at a higher rate than they
1 do when they are at home. Through visitor spending hotels thus often
2 contribute significantly to local economies both directly, and indirectly
3 through the subsequent diffusion of the visitor expenditure to other recipi-
4 ents in the community.
5
In areas receiving foreign visitors, hotels are often important foreign
6
currency earners and in this way may contribute significantly to their coun-
7
tries’ balance of payments. In countries with limited export possibilities,
8
hotels may be one of the few sources of foreign currency earnings.
9
40 Hotels are important employers of labour. Thousands of jobs are provided
41111 by hotels in the many occupations that make up the hotel industries in most
4
Staying Away from Home
1111 countries; many others in the industry are self-employed and proprietors of
smaller hotels. The role of hotels as employers is particularly important in
areas with few alternative sources of employment, where they contribute to
regional development.
5
Hotels are also important outlets for the products of other industries. In
6
the building and modernization of hotels business is provided for the construc-
7
tion industry and related trades. Equipment, furniture and furnishings are
8
supplied to hotels by a wide range of manufacturers. Food, drink and other
9
consumables are among the most significant daily hotel purchases from farmers,
101111
fishermen, food and drink suppliers, and from gas, electricity and water
1
companies. In addition to those engaged directly in hotels, much indirect
2
employment is, therefore, generated by hotels for those employed in industries
3
supplying them.
4
Last but not least, hotels are an important source of amenities for local
residents. Their restaurants, bars and other facilities often attract much local
custom and many hotels have become social centres of their communities.
9
Travel and Hotels
20111
Staying away from home is a function of travel and three main phases may
be distinguished in the development of travel in the northern hemisphere
(Figure 1).
4
Until about the middle of the nineteenth century most journeys were under-
5
taken for business and vocational reasons, by road, by people travelling mainly
6
in their own countries. The volume of travel was relatively small, confined
7
to a small fraction of the population in any country, and most of those who
8
9
30111
1
2
3
4
5
6
7
8
9
40
41111 Figure 1 Three phases of travel
5
1111 did travel, did so by coach. Inns and similar hostelries along the highways
2 and in the principal towns provided the means of accommodation well into
3 the nineteenth century.
4
Between about 1850 and about 1950 a growing proportion of travellers
5
went away from home for other than business reasons, and holidays came
6
gradually to represent an important reason for a journey. For a hundred years
7
or so, the railway and the steamship dominated passenger transportation, and
8
the new means of transport gave an impetus to travel between countries and
9
between continents. Although the first hotels date from the eighteenth century,
1011
their growth on any scale occurred only in the nineteenth century, when
1
first the railway and later the steamship created sufficiently large markets to
2
make the larger hotel possible. Hotels together with guest houses and boarding
3111
houses dominated the accommodation market in this period.
4
5 By about the middle of the twentieth century in most developed countries
6 of the world (a little earlier in North America and a little later in Europe) a
7 whole cycle was completed and most traffic returned to the road, with the
8 motor car increasingly providing the main means of passenger transporta-
9 tion. Almost concurrently, the aircraft took over unmistakably both from the
20111 railways and from shipping as the principal means of long-distance passenger
1 transport. On many routes holiday traffic came to match and often greatly
2 exceed other traffic. A growing volume of travel away from home became
3 international. Hotels entered into competition with new forms of accommo-
4 dation – holiday centres and holiday villages in Europe, motels in North
5 America, and various self-catering facilities for those on holiday.
6
7
8 Two Centuries of Hotelkeeping
9 Hotels are some two hundred years old. The word ‘hotel’ itself came into
30111 use in England with the introduction in London, after 1760, of the kind of
1 establishment then common in Paris, called an ‘hôtel garni’ or a large house,
2 in which apartments were let by the day, week or month. Its appearance
3 signified a departure from the customary method of accommodating guests
4 in inns and similar hostelries, into something more luxurious and even osten-
5 tatious. Hotels with managers, receptionists and uniformed staff arrived
6 generally only at the beginning of the nineteenth century and until the middle
7 of that century their development was relatively slow. The absence of good
8 inns in Scotland to some extent accelerated the arrival of the hotel there; by
9 the end of the eighteenth century, Edinburgh, for example, had several hotels
where the traveller could get elegant and comfortable rooms. Hotels are also
41111known to have made much progress in other parts of Europe in the closing
6
1111 years of the eighteenth and early years of the nineteenth century, where at
that time originated the idea of a resort hotel.
3
In North America early accommodation for travellers followed a similar
4
pattern as in England, with most inns originating in converted houses, but
5
by the turn of the eighteenth century several cities on the eastern seaboard
6
had purpose-built hotels and in the first half of the nineteenth century hotel
7
building spread across America to the Pacific Coast. The evolution from
8
innkeeping to hotelkeeping, therefore, proceeded almost in parallel in the
9
Old and in the New Worlds and the rise of the hotel industries on both sides
101111
of the Atlantic had probably more in common than is generally recognized.
1
What America might have lacked in history and tradition, it more than made
2
up in pioneering spirit, in intense rivalry between cities and entrepreneurs,
3
and in the sheer size and growth of the travel market.
4
In the nineteenth century, hotels became firmly established not only as
centres of commercial hospitality for travellers, but often also as important
social centres of their communities. Their building, management and operation
became specialized activities, with their own styles and methods. The twentieth
century brought about growing specialization and increased sophistication in
20111the hotel industries of most countries, as well as their growth and expansion.
But the growth and the diversity of hotel operations have been also matched
by the growth and diversity of competition in the total accommodation market.
3
What happened to travel and hotels in the United Kingdom and the United
4
States in the 1990s is described in Appendices A and B.
5
6
Hotels in the Total Accommodation Market
8
In any country the demand for accommodation away from home is gener-
9
ated by residents travelling in their own country and by foreign visitors. In
30111
developed countries most travel tends to be by the residents for leisure
1
purposes. In developing countries most travel by residents is on business,
2
but these countries also often receive many leisure visitors from abroad.
3
Information about accommodation facilities in individual countries essen-
tially reflects the designations used for them by the countries concerned
and the coverage of various types in the available statistics. Only very broad
inter-country comparisons are possible. One source is the annual report of
the Tourism Committee of the Organisation for Economic Co-operation
and Development (OECD), which distinguishes between beds available in
hotels and similar establishments, and in what is described as supplementary
41111accommodation.
7
1111 Table 1 Accommodation profile of selected European countries, 1995

2
3 Hotels and similar Supplementary
4 Ratio of beds establishments a accommodation b
5
6 Austria 57 43
7 Belgium 16 84
Czech Republic 56 44
8 France 28 72
9 Germany 52 48
1011 Hungary 52 48
1 Netherlands 18 82
2 Portugal 43 57
Spain 48 52
3111
Sweden 68 32
4
5
Ratio of nights spent By domestic
6 in all establishments By foreign visitors visitors
7
8 Austria 74 26
9 Belgium 42 58
20111 Czech Republic 41 59
1 France 36 64
Germany 11 89
2
Hungary 61 39
3 Netherlands 32 68
4 Portugal 61 39
5 Spain 60 40
6 Sweden 21 79
7
8 For most countries, hotels and similar establishments include hotels, motels, inns and boarding
houses.
9 Supplementary accommodation includes variously youth hostels, holiday villages, rented rooms,
30111 houses and flats, camping and caravan sites.
1 Source: Based on Organisation for Economic Co-operation and Development, Tourism Policy
and International Tourism in OECD Countries, 1997
2
3
4 The ratio of beds in hotels and similar establishments to beds in supple-
5 mentary accommodation gives an indication of the relative importance of the
6 hotel sector in the total accommodation market of individual countries, as shown
7 in Table 1. In most countries the accommodation profile tends to reflect the
8 relative importance of foreign and domestic users, of leisure and business travel,
9 and of other influences. In many countries hotels and similar establishments
40 appear to be minority providers of accommodation for those away from home.
41111
8
1111
2 According to the World Tourism Organization (WTO), the global
3 capacity of hotels and similar establishments approached 12.7 million
4 rooms in the mid 1990s.
5 Well over one-half of the total European capacity is located in five
6 countries – Italy, Germany, France, Spain and the United Kingdom.
7 United States, Mexico and Canada combined account for more than
8 three-quarters of the rooms in the Americas.
9 China has more than one-quarter and, together with Japan, Thailand
101111 and Australia, more than two-thirds of the capacity of East Asia and
1 the Pacific.
2 The remaining global regions – Africa, Middle East and South Asia
3 – combined have only 6 per cent of the total world capacity.
4 Appendix C
5
6
7
Hotel Location
8
Hotel services are supplied to their buyers direct in person; they are consumed
20111at the point of sale, and they are also produced there. Hotel services must,
therefore, be provided where the demand exists and the market is the domi-
nant influence on hotel location. In fact, location is part of the hotel product.
In turn, location is the key influence on the viability of the business, so
much so that a prominent entrepreneur could have said with conviction and
with much justification that there are only three rules for success in the hotel
business: location, location, location.
7
We have seen earlier that from the early days all accommodation units
8
followed transport modes. Inns and other hostelries were situated along
9
the roads and at destinations, serving transit and terminal traffic. The rapid
30111
spread of railways marked the emergence of railway hotels in the nineteenth
1
century. In the twentieth century motor transport created a new demand
2
for accommodation along the highways and the modern motel and motor
3
hotel have been distinctive responses to the new impetus of the motor car.
4
A similar but less pronounced influence was passenger shipping, which
5
stimulated hotel development in ports, and more recently air transport, which
6
brought about a major growth of hotels in the vicinity of airports and air
7
terminals.
8
Secondly, although this is closely related to transport, many hotels are
located to serve first and foremost holiday markets. In their areas of highest
41111concentration, holiday visitors are accommodated in hotels in localities where
9
1111 the resident population may represent only a small proportion of those present
2 at the time, as is the case in many resorts.
3
The third major influence on hotel location is the location of economic
4
activity, and of industry and commerce in particular. Whilst again not separ-
5
able from transport development, industrial and commercial activities create
6
demand for transit and terminal accommodation in industrial and commer-
7
cial centres, in locations not frequented by holiday visitors.
8
9 Different segments of the travel market give rise to distinctive patterns
1011 of demand for hotel accommodation and often distinctive types of hotels. In
1 business and industrial centres hotels normally achieve their highest occu-
2 pancies on weekdays and in resorts in the main holiday seasons; their facilities
3111 and services reflect the requirements of businessmen and of holiday visitors
4 respectively. Between these clearly defined segments come other towns and
5 areas, such as busy commercial centres with historical or other attractions for
6 visitors, which may achieve a more even weekly and annual pattern of business.
7
8
9 Types of Hotels
20111 The rich variety of hotels can be seen from the many terms in use to denote
1 particular types. Hotels are referred to as luxury, resort, commercial, resi-
2 dential, transit and in many other ways. Each of these terms may give an
3 indication of standard or location, or particular type of guest who makes up
4 most of the market of a particular hotel, but it does not describe adequately
5 its main characteristics. These can be seen only when a combination of terms
6 is applied to an hotel, each of which describes a particular hotel according
7 to certain criteria. It is helpful to appreciate at this stage what the main types
8 of hotels are, by adopting particular criteria for classifying them, without
9 necessarily attaching precise meanings to them.
30111
1 Thus according to location hotels are in cities and in large and small
2 towns, in inland, coastal and mountain resorts, and in the country.
3 According to the actual position of the hotel in its location it may be in
4 the city or town centre or in the suburbs, along the beach of a coastal
5 resort, along the highway.
6 By reference to its relationship with particular means of transport there
7 are motels and motor hotels, railway hotels, airport hotels (the terms also
8 indicating location).
9 According to the purpose of visit and the main reason for their guests’
40 stay, hotels may become known as business hotels, holiday hotels, conven-
41111 tion hotels, tourist hotels.
10
1111 Where there is a pronounced tendency to a short or long duration of

guests’ stay, it may be an important hotel characteristic, so that the hotel
becomes a transit or a residential hotel.
According to the range of its facilities and services an hotel may be open
5 to residents and non-residents, or it may restrict itself to providing
overnight accommodation and at most offering breakfast to its guests, and
be an ‘hôtel garni’ or apartment hotel.
Whether an hotel holds a licence for the sale of alcoholic liquor or not,
is an important dimension in the range of available hotel services, and
101111the distinction between licensed and unlicensed hotels is, therefore, of
relevance in describing an hotel in most countries.
2 There is no universal agreement on how hotels should be described
according to size, but by reference to their room or bed capacities we
normally apply the term small hotel to one with a small amount of sleeping
accommodation, the term large hotel to one with several hundred beds or
bedrooms, and the term medium-sized hotel to one somewhere between
the two, according to the size structure of the hotel industry in a partic-
ular country.
Whatever the criteria used in hotel guides and in classification and grading
20111systems in existence in many countries, normally at least four or five
classes or grades have been found necessary to distinguish adequately in
the standards of hotels and these have found some currency among hotel
users. The extremes of luxury and basic standards, sometimes denoted
4 by five stars and one star respectively are not difficult concepts; the
mid-point on any such scale denotes the average without any particular
claims to merit. The intervening points are then standards above average
7 but falling short of luxury (quality hotels) and standards above basic
(economy).
Last but not least comes the ownership and management. Individually
30111owned independent hotels, which may be managed by the proprietor or
by a salaried manager, have to be distinguished from chain or group hotels,
invariably owned by a company. Independent hotels may belong to an
hotel consortium or cooperative. A company may operate its hotels under
direct management or under a franchise agreement.
5
The above distinctions enable a particular hotel to be described in broad
terms, concisely, comprehensively and meaningfully, for example:
8
Terminus Hotel is a medium-sized, economy, town-centre, unlicensed hotel,
owned and managed by a small company, catering mainly for tourists
41111visiting the historic town and the surrounding countryside.
11
1111 Hotel Excelsior is a large, independent, luxury hotel on the main promenade
2 of the coastal resort, with holiday visitors as its main market.
3 The Crossroads Hotel is a small, licensed, quality transit motor hotel,
4 operated as a franchise, on the outskirts of the city, which serves mainly
5 travelling businessmen and tourists.
6
7
8 A Review So Far
9 In this chapter hotels are described as businesses of commercial hospitality,
1011 which play an important role in many of the economies and societies in which
1 they operate. Three phases are distinguished in the evolution of travel and
2 accommodation away from home and the development of hotels is traced to
3111 their beginnings some two hundred years ago. However, hotels are not the only
4 providers of accommodation and compete with others in the accommodation
5 market. Their location has been determined by developments in transport,
6 holidays and economic activity. These and other influences have given rise to
7 different types of hotels, which can be described in terms of their principal
8 characteristics. In the next chapter they are viewed in terms of their products
9 and markets.
20111
1
2
3
4
5
6
7
8
9
30111
1
2
3
4
5
6
7
8
9
40
41111
12
1111
2
3
4
5 2
6
7
8
9
101111
1
Hotel Products
2
3 and Markets
4
5
6
7 The aim of this chapter1 is to outline the
8 facilities and services provided by hotels, who
9 are the people who use hotels, why they use
20111 hotels, and what influences their choice of
1 particular hotels. In providing answers to these
2 questions, we can formulate a conceptual model
3 of an hotel, which attempts to explain in simple
4 terms how partic-ular hotel products meet the
5 needs of particular hotel markets, and establish a
6 basis for a more detailed examination of the
hotel business in subsequent chapters.
7
8
9
30111 The Hotel as a Total Market Concept
1 From the point of view of its users, an hotel is an
2 institution of commercial hospitality, which
3 offers its facilities and services for sale, individ-
4 ually or in various combinations, and this
5 concept is made up of several elements, as
6 shown in Figure 2.
7
8
9 1
This chapter reflects in particular the work of Roger
40 Doswell as Kobler Research Fellow at the University
41111 of Surrey in the late 1960s.
13
1111 Its location places the hotel geographically in or near a particular city,
2 town or village; within a given area, location denotes accessibility and the
3 convenience this represents, attractiveness of surroundings and the appeal
4 this represents, freedom from noise and other nuisances, or otherwise.
5
Its facilities, which include bedrooms, restaurants, bars, function rooms,
6
meeting rooms and recreation facilities such as tennis courts and swimming
7
pools, represent a repertoire of facilities for the use of its customers, and
8
these may be differentiated in type, size and in other ways.
9
1011 Its service comprises the availability and extent of particular hotel services
1 provided through its facilities; the style and quality of all these in such terms as
2 formality and informality, degree of personal attention, and speed and efficiency.
3111 Its image may be defined as the way in which the hotel portrays itself to
4 people and the way in which it is perceived as portraying itself by them. It is
5 a by-product of its location, facilities and service, but it is enhanced by such
6 factors as its name, appearance, atmosphere; its associations – by who stays
7 there and who eats there; by what it says about itself and what other people
8 say about it.
9
20111 Its price expresses the value given by the hotel through its location, facil-
1 ities, service and image, and the satisfaction derived by its users from these
2 elements of the hotel concept.
3 The individual elements assume greater or lesser importance for different
4 people. One person may regard location as paramount and be prepared to
5
6
7
8
9
30111
1
2
3
4
5
6
7
8
9
40
41111 Figure 2 The hotel as a market concept
14
Hotel Products and Markets
1111 accept basic facilities and service for an overnight stay, ignoring the image,
as long as the price is within a limit to which he or she is willing to go.
3
Another may be more concerned with the image of the hotel, its facilities
4
and service. However, all the five elements are related to each other, and in
5
a situation of choice most hotel users tend either to accept or reject an hotel
6
as a whole, that is the total concept.
7
There are varying degrees of adaptability and flexibility in the total hotel
concept, ranging from the complete fixity of its location to the relative flex-
101111
ibility of price, with facilities, service and image lending themselves to some
adaptation in particular circumstances with time.
An hotel cannot be all things to all people. The market feasibility study
for an individual hotel project must aim at identifying the segment of the
market to be served. The needs of that particular segment must be
served through the entire market package and complete harmony and
congruity must be achieved. An hotel which endeavours to satisfy a
mixture of market segments will encounter difficulties; for example, an
20111 hotel restaurant appealing to and attracting a completely different
market segment to that for accommodation. In cases where an hotel
develops mixed images for its various facilities . . . the total image . . .
will tend to find the lowest level amongst the range of different images.
4 Roger Doswell, Towards an Integrated
5 Approach to Hotel Planning
6
7
8
Hotel Facilities and Services as Products
30111
In the early days of innkeeping, travellers often had to bring their own food
to places where they stayed for the night – a bed for the night was the only
product offered. But soon most establishments extended their hospitality to
providing at least some food and refreshments. Today many apartment hotels,
‘hôtels garnis’ and motels confine their facilities to sleeping accommodation,
with little or no catering provision. But the typical hotel as we know it
today, normally provides not only accommodation, but also food and drink,
and sometimes other facilities and services, and makes them available not
only to its residents but also to non-residents. This is the concept that will be
developed in this chapter and in later parts of this book. Although the range
41111of hotel facilities and services may extend as far as to cater for all or most
15
1111 needs of their customers, however long their stay, and for an hotel to become
2 a self-contained community with its own shops, entertainments and recreation
3 facilities, it is helpful at this stage to describe the hotel concept in a simpler
4 form, by including only the main customer needs typically met by most hotels.
5
The main customer demand in most hotels is for sleeping accommodation,
6
food and drink, and for food and drink for organized groups. These four
7
requirements then relate to accommodation, restaurants, bars and functions, as
8
the principal hotel products.
9
1011 Sleeping accommodation is provided for hotel residents alone. Restaurants
1 and bars meet the requirements of hotel residents and non-residents alike,
2 even though separate facilities may be sometimes provided for them.
3111 Functions are best seen as a separate hotel product bought by organized
4 groups; these groups may be resident in the hotel as, for example, partici-
5 pants in a residential conference, or be non-residents, such as a local club
6 or society, or the group may combine the two.
7
The total hotel concept – of location, facilities, service, image and price –
8
can be, therefore, sub-divided according to the needs of the customer and the
9
particular facilities brought into play to meet them. The cluster of elements of
20111
the total hotel concept is then related to each particular hotel product. Each
1
hotel product contains the elements of the location, facilities, services, image
2
and price, to meet a particular customer need or set of needs. The first approach
3
to the segmentation of the hotel market is, therefore, taken by dividing hotel
4
users according to the products bought. Corresponding to each hotel product
5
there are the buyers of that product who constitute a market for it.
6
7
8
9 Hotel Accommodation Markets
30111 Hotel users who are buyers of overnight accommodation may be classified
1 according to the main purpose of their visit to a particular location into three
2 main categories as holiday, business and other users.
3
Holiday users include a variety of leisure travel as the main reason for
4
their stay in hotels, ranging from short stays in a particular location on the
5
way to somewhere else to weekend and longer stays when the location repre-
6
sents the end of a journey. Their demand for hotel accommodation tends to
7
be resort-oriented, seasonal and sensitive to price because they often pay out
8
of their own pocket.
9
40 Business users are employees and others travelling in the course of their
41111 work, people visiting exhibitions, trade fairs, or coming together as members
16
1111 of professional and commercial organizations for meetings and conferences.

Their demand for hotel accommodation tends to be town- and city-oriented,
non-seasonal and less price-sensitive, except in the case of some event attrac-
tions such as conferences and exhibitions, which may be usefully regarded
as a separate category.
6
Other hotel users comprise visitors to a particular location for a variety
7
of reasons other than holiday or business, e.g. those attending such family
8
occasions as weddings, parents visiting educational institutions, visitors to
9
special events, and common interest groups meeting for other than business
101111
and vocational reasons, relocating families and individuals seeking perma-
1
nent accommodation in an area and staying temporarily in an hotel, people
2
living in an hotel permanently. The characteristics of this type of demand
3
are more varied than those of the first and second group, and it is, there-
4
fore, often desirable to sub-divide it further for practical purposes.
5
Within and between the three main groups, which comprise the total market
for hotel accommodation, there are several distinctions important to indi-
vidual hotels. We have noted already that some hotel users generate demand
for transit and short-stay accommodation, others are terminal visitors with a
20111longer average stay. Also, for example, much business demand is generated
by a relatively small number of travellers who are frequent hotel users; most
holiday and other demand comes from a very large number of people who
use hotels only occasionally. Moreover, business users often book accom-
modation at short notice, whilst holiday and other users tend to do so longer
in advance. And in all three groups some people are individual hotel users,
and others stay in hotels in groups.
7
8
Hotel Catering Markets
30111
Hotel restaurants, bars and function rooms may be conveniently grouped
1
together as its food and beverage or catering facilities, and the meals and
2
refreshments they provide as the hotel food and beverage or catering
3
products. Corresponding to them there are again buyers of these products
4
who constitute the hotel catering markets and who may be classified in various
5
ways. For our purposes there is a basic distinction between the demand
6
exercised by hotel residents, by non-residents and by organized groups.
7
The first category of users of hotel restaurants and bars is related to the
basic function of the hotel in providing overnight sleeping accommodation,
and consists of hotel residents, whom we have classified earlier as holiday,
41111business and other users. Their use of hotel catering facilities tends to be
17
1111 influenced by the reason for their hotel stay and by the terms on which they
2 stay. Breakfast is their common hotel purchase, but otherwise hotel residents
3 may have their meals in their hotel or elsewhere, and they are more likely
4 to be hotel restaurant or bar customers in the evenings than at midday.
5
The second category are non-residents, individually or in small groups,
6
when eating out. They may, in fact, be staying at other hotels or accommo-
7
dation establishments or with friends or relatives or be day visitors to the
8
area, for holiday, business or other reasons. Alternatively they are local resi-
9
dents, for whom the hotel restaurants and bars represent outlets for meals
1011
and refreshments, as a leisure activity or as part of their business activities.
1
This category tends to represent important hotel users at midday as well as
2
in the evenings, particularly at weekends.
3111
4 The third category of users of hotel catering facilities are organized groups
5 who make advance arrangements for functions at the hotel, which may call
6 for separate facilities and organizational arrangements. They include local
7 clubs, societies, business and professional groups, as well as participants in
8 meetings and conferences originating from outside the area.
9
Hotel catering products represent a greater diversity than its accommoda-
20111
tion products and it is often correspondingly more difficult to classify them
1
and the markets for them in practice. Moreover, hotels are not alone in
2
supplying them. In the market for meals and refreshments for individuals
3
and groups an hotel competes not only with other hotels, but also with restaur-
4
ants outside hotels, pubs and clubs, to name but a few other types of outlet.
5
Therefore, catering in hotels is a separate hotel function, with its own objec-
6
tives, policies and strategies, and with its own organization.
7
8
9
30111 Sources of Hotel Demand
1 For most people the use of hotels represents what is known as derived demand
2 because few stay or eat in an hotel for its own sake; their primary reasons
3 for doing so lie in their reasons for visiting an area or for spending their
4 time there in particular ways. When describing hotel accommodation and
5 catering markets we have seen that hotel users have different degrees of
6 freedom and choice as to whether they buy hotel services or not. Some have
7 few or no alternatives; for them only hotels provide the facilities and services
8 which they require in a particular area in pursuit of their business, vocational
9 and other interests; the incidence of their hotel usage arises to a great extent
from their working circumstances. For many others the use of hotels is a
41111matter of choice; they do so in their pursuit of leisure and recreation; for
18
1111 them hotel usage involves a discretionary use of their time and money. This
2 distinction helps us identify the demand-generating sources for hotels in a
3 given area, which are of three main types – institutional, recreational and
4 transit.
5
6 Institutional sources include industrial and commercial enterprises, educa-
tional institutions, government establishments and other organizations in the
7
private and public sector, whose activities are involved in the economic life
8
of the community and in its administration. These institutions generate
9
demand for hotels through their own visitors and their other requirements for
10111
1 hotel facilities and services.
1 Recreational sources include historical, scenic and other site attractions
2 and event attractions, which generate demand for hotels from tourists; local
3 events and activities in the social and cultural life of the community, which
4 generate demand from clubs, societies and other organizations; happenings of
5 significance to individuals and families.
6
7 The third source of demand stems from individuals and groups with no
8 intrinsic reason for spending time in a particular locality, other than being on
9 the way somewhere else and the need to break a journey. This source of
20111 demand is closely related to particular forms of transport, it expresses itself
1 on highways, at ports and at airports, and may be described as transit.
2 It will be readily apparent that this view of demand-generating sources for
3 hotels is closely related to several aspects of the hotel business considered
4 earlier – for example, to the three-fold classification of the hotel accommo-
5 dation market into holiday, business and other users; to the three main
6 influences on hotel location – travel, holidays and economic activity; and to
7 the types of hotel distinguished in Chapter 1. By adopting in each case a
8 somewhat different viewpoint, it is possible to highlight the interdependence
9 between the location, markets and products of hotels.
30111
1
2 Hotel Market Areas
3
4 We can define an hotel market in several ways – by reference to the people
5 who buy hotel services, as a network of dealings between the hotel and its
6 users, or as an area which an hotel serves. In the first two approaches hotel
7 users may come from within the area, from various parts of the country and
8 from abroad; we then refer to the local, domestic and foreign markets, and
9 subdivide them in appropriate ways. In the third approach described below
40 we view the hotel market area as a physical area served by the hotel.
41111
19
1111 For hotel accommodation it is necessary to identify all the institutional

2 and recreational sources of demand, which may be served by a particular
3 hotel. The area drawn in this way round the hotel may extend from its imme-
4 diate vicinity to a radius of several miles or more. How far it does extend
5 depends on the geographical distribution of the demand-generating sources,
6 the mode of transport used by the hotel users of each source, and the avail-
7 ability of other facilities in the area. The head office of a large firm, a
8 university, an historic castle and a town which is a festival centre, may be all
9 within a market area of an hotel, if the hotel is reasonably accessible from
1011 these points, and if its location at least matches the location of other hotels.
1 The market area may coincide for a number of hotels within close proximity
2 of each other, which offer a similar concept in terms of facilities, service,
3111 image and price. On the periphery the market area for an hotel may overlap
4 with the market areas of other hotels some distance away. At periods of peak
5 demand it may extend further than at times of low demand. For transit the
6 accommodation market area is related to the journeys undertaken through the
7 area – their origin and destination, the method of transportation, the time of
8 day, the time of year and other circumstances of the journeys.
9
For hotel catering services the market area depends on market density – the
20111
availability of spending power within an area, as well as on the accessibility of
1
the hotel to the different sources of demand, and on the availability of other
2
catering services in the area. In this there is a close analogy with the concept of a
3
catchment area for other retail outlets, as far as the resident population is
4
concerned. How far do people go from where they live to do their shopping? The
5
distance may vary according to the purchase they are to make. Similarly there
6
may be a smaller market area for hotel lunches than for hotel dinners and
7
functions, because close proximity to the hotel may be a more important
8
consideration for a midday meal than for an evening out.
9
30111
1
2 Hotel Market Segmentation
3 The market for hotel products may be divided into several components or
4 segments and this enables individual hotels to identify their actual and poten-
5 tial users according to various criteria. Segmentation then provides a basis
6 for the marketing of hotel products, for paying close attention to the require-
7 ments of different users, and for monitoring the performance in the markets
8 chosen by an hotel.
9
40 Earlier in this chapter we divided hotel users, according to the product
41111 bought by them, into buyers of accommodation, food, drink and functions.
20
1111 We divided the accommodation market, according to the reasons for the
users’ stay, into holiday, business and other users, and the hotel catering
market into hotel residents, non-residents and functions. According to the
origin of demand, we also identified institutional, recreational and transit
sources of demand. Another basis for segmentation is the needs of hotel
users and the means they have to pay for their satisfaction, by dividing them
according to their socio-economic characteristics. Socio-economic classifi-
cations seek to group people according to their occupation and employment
status. For example, the British Joint Industry Committee for National
101111 Readership Surveys (JICNARS) defines social grades as shown in Table 2.
2
Table 2 Social grade definitions
3
4
Social grade Social status Head of household’s occupation
5
6
A Upper middle class Higher managerial, administrative or
7
professional
8
9 B Middle class Intermediate managerial, administrative
or professional
20111
1 C1 Lower middle class Supervisory or clerical, and junior
2 managerial, administrative or professional
3 C2 Skilled working class Skilled manual workers
4
D Working class Semi- and unskilled manual workers
5
E Those at the lowest State pensioners or widows (no other
6 level of subsistence earner), casual or lowest grade workers
7
8
Source: Joint Industry Committee for National Readership Surveys, 1970
9
30111
The grades may be applied to hotel users and to the grades of hotels postu-
lated in Chapter 1. Social grade A might be expected to stay in luxury and
quality hotels, B in medium hotels, C in economy hotels. However, this is
an oversimplification, because the same people may interchange between
segments according to the circumstances in which they find themselves. A
businessman on an expense account may stay in a quality hotel, but travel-
ling for pleasure with his family he may stay in a lower grade hotel. Moreover,
the incidence of hotel usage among D and E groups is minimal. Nevertheless,
segmentation by socio-economic criteria is an important approach to market
segmentation. For some purposes, age, family composition, life cycle stage
41111or other criteria may be more appropriate.
21
1111 A concomitant of market segmentation is product branding, with a view to

2 differentiating an hotel from others in the minds of buyers, long established
3 in other consumer industries. Some hotel groups have focused on branded seg-
4 ments distinguished by levels of service; examples include Holiday Inn upmar-
5 ket Crowne Plaza, core brand Holiday Inn and limited service Garden Court.
6 Other brands have been created by grouping similar operations, such as Forte
7 Posthouses, Whitbread Travel Inns and Accor’s Novotel brands.
8
9
1011 Branding: Attempts by hotel companies to create and deliver new
1 products to the customer. Often thought of as levels of service such as
2 budget, economy, luxury and business class hotels. Each product is
3111 associated with specific products and services to differentiate it from
4 the competition. Brands are available in several of these segments as
5 well.
6
Core business management: The recognition of doing one or a few
7
things well underpins this method. Firms have divested themselves
8
of peripheral business units in order to concentrate on the core
9
business of hotel management.
20111
Michael Olsen, Into the New Millennium
1
2
3
4
5 Buying and Paying for Hotel Services
6
It is important to understand how a buying decision is made, who makes it
7
and who pays for the hotel services bought.
8
9 The buying decision itself may be basically of two kinds – deliberate or
30111 impulsive. Before embarking on journeys, business people may ask secre-
1 taries to reserve hotel rooms in the towns they are to visit for specified nights.
2 A family may arrive at their choice of holiday hotel after a scrutiny of hotel
3 guides. A society may make several enquiries before choosing the venue for
4 their annual dinner dance. These are deliberate buying decisions made with
5 some advance planning and with advance reservations. A tourist looking for
6 somewhere to stay when travelling by car, or on arrival at the railway station
7 or airport, is likely to make an impulse decision, in much the same way as
8 a couple walking through the streets of a town and ‘discovering’ a restaurant
9 which appears to be to their liking. Purchases of hotel products are both
deliberate and impulse purchases and most hotels respond to both, although
41111different operational policies and procedures normally apply to each.
22
1111 Many people make their own arrangements for travelling and for staying
in hotels. However, many hotel bookings are made by people who do it for
others: the personal assistant for the boss, the travel agent for the client, the
business travel department of a large company for its employees. In these
circumstances it is important to know who the buying agent is and where
that person is located, if the knowledge derived from the analysis of the hotel
demand-generating sources is to be applied to bringing about sales. Most
hotels can no longer hope to fill their beds, restaurants and bars by simply
waiting for the guest.
101111
According to the source of payment for hotel services, hotel users are also
1
of two basic kinds – those who pay themselves and those whose hotel bills
2
are covered or reimbursed for them. Most leisure use of hotels represents
3
personal expenditure out of disposable incomes, the bulk of business use of
4
hotels in the wide sense is paid for directly or indirectly by third parties –
5
employers and other agencies on behalf of the guest. Although many busi-
6
ness users have no fixed limits as to the charges they incur in hotels, many
7
tend to observe what they and their organizations regard as acceptable. The
8
understanding of these practices is important to hotels too. The decision on
9
the market segments to be catered for is closely related to decisions on
20111
pricing and we have seen that price is an integral element of each hotel’s
1
total concept.
2
3
4
Hotel Marketing Orientation
5
Hotels serve people and their success depends on how well they serve them
in places where they wish to be served. This is only a way of stating in the
simplest of terms the application to hotel operations of the marketing concept,
which is concerned with the consumer as a starting point in the conduct of
30111 business.
1
The marketing concept is beginning to be understood by hoteliers. Although
2
some continue to regard sales and marketing as synonymous, most hotels no
3
longer operate in the seller’s market and even massive sales effort is not
4
likely to generate a sustained high volume of business, if consumer needs
5
are not genuinely met in the planning, design and subsequent operation of
6
an hotel.
7
The basic hotel concept outlined at the beginning of this chapter stresses
the view of the hotel, as it is seen by the hotel user rather than the hotel
operator, as a business to meet the needs of hotel users. Some of these needs
41111are basic and physical, such as sleeping in clean beds or eating wholesome
23
1111 meals; others, such as those met by the image of the hotel, are acquired
2 needs, which reflect what a person aims to be as an individual. A successful
3 hotel must seek to meet both sets of needs.
4
So that an hotel can meet the needs of hotel users, individual hotel services
5
have to be seen as hotel products sold to particular markets. An hotel cannot
6
be all things to all people. Each hotel has to achieve a match between its
7
particular products and particular market segments, i.e. groups of people with
8
more or less similar characteristics and requirements for hotel services. In
9
this there is a difference between the hotel accommodation and catering prod-
1011
ucts, in that each may to some extent cater for different markets. But this
1
difference only reinforces the need for harmony in the total hotel concept.
2
In order to achieve the match between hotel products and markets, there is
3111
a need for a careful analysis of the sources of demand for hotel services in
4
the market area served by the hotel and an understanding of how hotel
5
services are bought and paid for.
6
7 From this model of an hotel a translation can be made to particular oper-
8 ations. This takes the form of hotel policies, philosophies and strategies,
9 which are discussed in the next chapter. The role and scope of the marketing
20111 function in hotels is considered in Chapter 10.
1
2
3 It appears that the point of interaction with the information highway
4 will move into the marketing domain. Marketing managers will have
5 to know how to buy and sell their way onto the information highway.
6 They will be required to recognize, interact with, and use the
7 resources of those who own or manage the information systems dri-
8 ving its evolution.
9 Michael Olsen, Into the New Millennium
30111
1
2
3
4
5
6
7
8
9
40
41111
24
1111
2
3
4
5 3
6
7
8
9
101111
1
Hotel Policies,
2
3 Philosophies
4
5 and Strategies
6
7
8
9
20111
1
2 ‘I am an owner of the leading hotel in a
3 provincial town, which has been in my
4 family for three generations. We cater for
5 businessmen staying in the town, local
6 business and professional people using
7 our restaurant and bar, and various
8 societies and other organizations holding
9 functions in our banqueting room. We are
30111 well known for the quality of what we
1 provide, our prices reflect this, and our
2 main objective is to maintain and
3 enhance our position and profitability
4 against increasing competition, especially
5 for lunch and dinner business. We aim to
6 retain the loyalty of our customers
7 through personal service, our staff by
8 being the best hotel employer in the
9 town, and our suppliers by giving them a
40 fair deal.’
41111
25
1111
2 ‘We are in business to provide a chain of economy motels for low-
3 spending tourists, business people with modest allowances, and other
4 travellers with limited budgets, who look for basic facilities at low
5 prices. To achieve profitability in this market, our motels are only in
6 locations where we can achieve high occupancies in most parts of the
7 year and throughout most weeks of the year – where a high level of
8 demand is generated by a combination of tourist, business and other
9 traffic. They are located outside town centres where land values are
1011 low, they are purpose built for maximum efficiency, and they provide
1 simple standards of facilities with minimum service. Through this type
2 of operation we are aiming to meet a real market need with a high and
3111 stable volume of demand, and to provide manifestly good value for
4 money with low operating costs, while generating a high level of profit
5 for our company.’
6
7
8
9 ‘Our company operates quality resort hotels with good road and rail
20111 access from London and the Home Counties, and specializes in long-
1 holiday visitors in the summer and smaller conferences at other times
2 of the year. We have grown to our present size by acquiring suitable
3 properties in the locations we have chosen, modernizing them, and
4 promoting them vigorously in our markets We intend to continue
5 growing in this way, financing further growth significantly from our
6 own resources, as we have done from the outset. In doing this, we shall
7 aim to give our guests hotels meeting their particular requirements,
8 provide our employees and the resorts in which we operate with year-
9 round employment, and earn for our shareholders a return at least
30111 comparable to what they could obtain in similar types of business.’
1
2
3
4
5 Objectives and Policies
6
7 The three statements provide in varying degrees of formality and precise-
8 ness examples of how three different operators see themselves in the hotel
9 business. They say who is involved in the business as owner (a sole trader in
40 one case and a company in the other two); where it operates (location) and
41111 what facilities and services (products) it supplies; who are its main
26
Hotel Policies, Philosophies and Strategies
1111 customers (markets). Beyond this there are further indications of what the
2 businesses are striving to achieve (profitability, growth, customer and
employee satisfaction, and in some cases also other aims). The statements
also include some mention of the rationale of the approach adopted and of
the means employed to achieve what they set out to do. These are some
answers to the question ‘What is the purpose of our hotel business?’ and
represent broad objectives of the three firms.
8
In seeking to explain why thousands earn their living by owning and oper-
9
ating hotels, it is tempting to say that they do it to earn a profit. But this is
101111
an oversimplification. From the point of view of the community and of hotel
1
customers, the purpose of an hotel is to provide certain facilities and services
2
to its users. From the point of view of its employees an hotel is a source of
3
employment. From the point of view of its owners an hotel provides a return
4
on their investment. These are very disparate purposes, and viewing them in
5
this way recognizes that there is not one but at least three main parties to
6
the hotel business, each with one or more primary objectives.
7
8 Expressed in purely financial terms, customers may have a particular
interest in low prices, employees in high wages, owners in high profits. But
20111each party has a wider concern in its participation in the hotel business.
Hotel customers, for example, are also concerned with the quality of facil-
ities and services, hotel employees with working conditions, hotel owners
with the security of their investment and with other satisfactions they may
derive from their role.
30111
41111
27
Part
1111
2
3
II
4
5
6
7
8
9
101111
1
2
The Structure of
3
4 the Hotel Industry
5
6
7
8
9
20111
1
2
3
4
5
6
7
8
9
30111
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3
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5
6
7
8
9
40
41111
1111
2
3
4
5
6
7
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9
1011
1
2
3111
4
5
6
7
8
9
20111
1
2
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6
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30111
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41111
1111
2
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5 4
6
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9
101111
1
The Small Hotel
2
3
4
5 Whether measured by the scale of investment,
6 turnover, number of rooms or beds, numbers
7 employed, or by other criteria, in most countries
8 a large proportion of hotels are small businesses.
9 In this chapter small hotels are described with a
20111 view to providing a simple profile of their main
1 distinguishing characteristics.
2
Hotel ownership offers considerable attractions
3
to people willing to invest money, time and effort
4
in building up a business. It offers economic
5 independence in a business that provides a means
6 of livelihood in an activity full of human interest
7 and it offers scope for individual flair. As with
8 other small-unit industries, such as agriculture,
9 building and retailing, there are good chances of
30111 setting up one’s own business in the hotel industry.
1 Since many individuals enter the industry with
2 modest capital and to a great extent use their own
3 financial resources, they tend to do so on a small
4 scale and their hotels remain small.
5
6 The nature of the hotel business also helps to
7 explain the importance of the small hotel, because
8 it is concerned with providing personal services. Its
9 size is limited by the size of the market and by the
40 extent of competition. Many markets for hotel
41111 services are small and many small markets
1111 are served by more than one hotel. Moreover, size is not a requirement of
2 a viable hotel operation, as it is in some other industries.
3
Most hotels provide more than one product – rooms, meals and refresh-
4
ments and sometimes also other services – and they do so in various
5
combinations. It is, therefore, less than satisfactory to define a small hotel
6
for our purposes in terms of a particular room or bed capacity. Such other
7
criteria, as a given level of investment or sales, mean different things in rela-
8
tion to hotels of different standards and price levels, and their values change
9
with time. In this chapter the small hotel is, therefore, seen as an establish-
1011
ment which is owner-managed through the personal involvement of the
1
proprietor in the day-to-day conduct of the business. This is not the case
2
with all small hotels, but the concept has certain meaningful characteristics
3111
as regards ownership and management of the hotel generally, and its financing,
4
organization, staffing and control in particular.
5
6 A small hotel defined in this way often has more than minimal capital
7 invested in it, employs non-family labour and is perceived as a business by
8 its owners. This distinguishes the small hotel discussed here from, for
9 example, a private household providing some holiday accommodation, or a
20111 bed and breakfast establishment letting a few bedrooms, without differenti-
1 ating too sharply between the small hotel and the larger guest house.
2
3
4 Products and Markets
5
Independent owner-managed hotels have commonly up to twenty or thirty
6
rooms and less than twice that number of beds, a restaurant or a dining
7
room, and a bar, and sometimes also offer a few other guest facilities and
8
services. Their main distinguishing features are the range and scale of the
9
facilities and services.
30111
1 Rooms may, but need not necessarily, represent the largest single source
2 of hotel revenue. Some small hotels have relatively extensive restaurant and
3 bar facilities in relation to their room capacity, when they serve local resi-
4 dents and others as well as hotel residents. But in many small hotels these
5 facilities are often used primarily by hotel residents, with restricted meal
6 times and fixed meal charges; hotel residents’ bars then usually take the form
7 of lounge bars. Telephone, newspapers and guest laundry are the main and
8 often the only services provided by small hotels, in addition to sleeping
9 accommodation, food and drink. If the hotel caters at all for functions, they
are likely to be small meetings, parties and such family occasions as wedding
41111receptions.
40
The Small Hotel
1111 The products of the small hotel relate to its markets, which are likely to be
more specialized in a large city with a variety of hotels than in a small town
where the hotel may be one of only a few small hotels or the only hotel serving
the town. Because of its size, the users of small hotels are individuals and
families rather than groups, and few small hotels can accommodate such
organized groups as coach tours, which require a minimum room capacity,
although some may cater for their meals and refreshments. Like all hotels, if
it is open to non-residents, in its catering markets the small hotel is usually in
competition not only with other hotels, but also with restaurants, pubs and
101111 clubs, and other types of outlet for meals and refreshments.
1
There is an important difference in the way large and small hotels seek to
2
match their markets and products. Large hotel operators increasingly assess their
3
markets, formulate operations to meet apparent market needs, and set out to
4
sell their hotel products to identified market segments by employing promotion
5
on a large scale. Small hotels tend to approach their markets less formally and
6
more intuitively from their detailed knowledge of their guests’ requirements,
7
based on their close contact with them. They tend to adjust their services
8
more readily to the known preferences of their guests and to rely for selling
9
their products more on personal recommendation and repeat visits than on
20111
systematic promotion. However, this is a broad generalization: large successful
1
hotels do, of course, pay a great deal of attention to the reactions of their guests
2
and even small hotels can rarely be successful without active promotion.
3
4
5
Small hotels are not just smaller versions of large hotels. They are
6
fundamentally different and are often ‘families’ first and businesses
7
second.
8
The survival of small hotels located in disadvantaged areas has more
9
to do with the way the business partners organise their work and
30111
non-work activities than the use of marketing skills.
1
Andy Lowe in Hospitality Management, Vol. 7, No. 3
2
3
4
5
Ownership and Finance
6
Traditionally, the small hotel has been owned by an individual or a family,
and the common legal form of ownership has been an unincorporated firm,
a sole trader or sometimes a partnership, but increasingly it is a private
company in order to obtain the advantages of limited liability. Although some
41111small hotels are owned by those with other business interests, more often
41
1111 than not the establishment as a place of business, and the firm as a unit of
2 ownership and ultimate control, which raises capital and employs and
3 organizes productive resources, coincide.
4
We will see in Chapter 12 that hotels require short-term, medium-term and
5
long-term finance for particular purposes. The dependence of the small hotel
6
on one individual, the owner/manager, and the type of security avail-able for
7
a loan, are among the factors that have tended to mitigate against the
8 availability of external finance from lending institutions. It is common for
9 small hotels to provide most of the finance of all three types from retained
1011 profits and from personal savings, sometimes drawn from the realization of
1 other assets, and the main external sources are bank overdrafts and loans.
2 This applies not only to short-term requirements, but also to much fixed
3111 capital expenditure. Much longer-term finance is drawn from private sources
4 and from the financial involvement in the business of private individuals
5 who are prepared to lend. Some may become ‘sleeping’ partners or even
6 direc-tors of private companies, usually confining their participation to their
7 financial stake, and leaving the day-to-day conduct of the business to the
8 owner/manager, who is often the principal owner of the business. Small
9 hotels, therefore, tend to have a high proportion of ‘equity’ capital,
20111 contributed by one or more individuals, and a low proportion of loan capital,
1 contributed by a limited number of sources open to them.
2
3 Income to owners of small hotels, unlike that of large ones, accrues in four
4 different ways. In addition to the appreciation of land and buildings and annual
5 profits, the two sources common to both, many owner/managers and their
6 families derive a significant income in kind, because they live on the premises, as
7 well as any salaries they may pay themselves. It is often diffi-cult to differentiate
8 clearly between profit as return on investment and the emoluments of the owners
9 in the form of cash and non-cash benefits, which they derive as a reward for
30111 managing the hotel. However, there is much to be said for attempting this at least
1 annually, in order to assess the profitability of the business meaningfully. Using
purely financial criteria, the true compar-ison is what the capital invested in the
2
hotel could earn if invested elsewhere, and what the owners themselves could
3
earn elsewhere for a comparable effort.
4
5
6 Organization and Staffing
7
8 In large hotels ownership and management are normally separate functions,
9 both conceptually and in practice. The business is owned by shareholders.
40 The top management is entrusted by them to directors who in turn dele-gate
41111 the day-to-day conduct of the business to operational management.
42
The Small Hotel
1111 A managing director may provide a link between the top and operational
2 management, and according to the size of the business there may be several
3 levels of operational management. The operation is divided into departments,
4 in which employees perform more or less distinct tasks, and there may be
5 line managers as well as specialists.
6
7 In the small hotel the owner/manager is an entrepreneur who normally
combines not only ownership and management but often also the functions of
8
top and operational management in one person. Whatever the legal form of
9
ownership, it is this person who undertakes the investment and the financing
10111
1 of the hotel, decides the objectives and the policies, and is respon-sible for
1 planning, direction, organization, staffing and control.
2 The owner/manager may turn outside for advice and help – and usually does
3 – on accounts and finance, architecture and design, business promotion, law,
4 maintenance of equipment and services, and on other matters, but he or she
5 tends to be to a great extent their own marketer, buyer, human resource man-
6 ager, as well as the one who organizes and coordinates the hotel facilities and
7 services generally, and who represents the hotel to the outside world.
8
9 The scale of operation has two main implications for its organization and
20111 staffing: limited departmentalization and the likelihood that it can be super-
1 vised without, or with no more than one, intervening level. This may be
2 illustrated with an organization chart of a small hotel with some twenty
3 employees shown in Figure 4.
4
In this hotel two people assist the owner in the office and the others have
5
specific but quite wide ‘departmental’ responsibilities. The office is the nerve
6
centre of the hotel, in which are brought together all the central functions of
7 the hotel, including accounts, purchasing, sales promotion and general
8 administration The general assistant has a part in all these directions, as well
9 as in assisting the owner with the overall coordination of the business, but
30111 does not have a direct authority over those involved in the six main opera-
1 tional areas. Although each of these has a person in charge, because of their
2 size, these areas represent sections rather than departments in the normal
3 sense of the word.
4
5 It is possible to see in this illustration how the division of work may be
6 reduced still further in a small hotel, so that the owner may actually super-
7 vise all employees directly. One office may deal with wages, suppliers’
8 invoices and most other clerical tasks, as well as with the reception of guests,
9 their accounts and related guest services; food and drink may be served by
40 the same waiters. The majority of employees may be interchangeable:
41111
43
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8
7
6
5
4
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40
3111
1011
1111
41111
30111
20111
Owner/Manager
Secretary/ General
Administrative Assistant
Assistant
Head
Housekeeper Head Porter Receptionist Head Barperson Head Waiter Chef
Room staff Porters Receptionists Bar staff Waiters Cooks
Figure 4 Organization chart of a

small hotel
The Small Hotel
1111 a bookkeeper/receptionist may assist in the bar and the dining room; a porter
may attend to guests and their cars and luggage and also serve drinks in the
lounge; a waitress may divide her working day between the bar, dining room
and the servicing of guest rooms. Such arrangements not only provide flex-
ibility in the deployment of staff and reduce idle time, but may also improve
staff job satisfaction through a variety of work. On the other hand, to imitate
the large hotel by providing a wide range of services and a departmental
structure can destroy the particular advantages the small hotel enjoys, without
corresponding benefits.
101111
From the management viewpoint a small hotel operation calls for a breadth
1
of knowledge and skills, which are rarely combined to a high degree in the
2
same person. It reduces the ability of managers to delegate, so that they are
3
engaged almost continuously in the business and so that they perform duties
4
undertaken by employees in larger hotels. The small hotel can avoid rigid
5
departmental demarcations, but it can make only limited progress towards
6
specialization, which, if utilized to the full, is conducive to a high degree of
7
expertise and a high output per employee. In view of these factors, a small
8
hotel may provide much personal satisfaction for its owners and often also
9
for those employed in it, but it can be expected to create little innovation in
20111
terms of hotel organization and staffing.
1
2
3
Size has obvious implications for the design of structure. Size is not
4
a simple variable, and it can be measured in different ways. The most
5
common indication of size is usually the number of bedrooms, perhaps
6
associated with the number of staff employed. In other cases, however,
7
different factors such as the range of facilities . . . In a very small hotel,
8
for example, with only six bedrooms and run by a husband and wife
9
with some family help, there is little need for a formal structure. But
30111
with increasing size and complexity of operations, a hotel may be
1
divided into distinct departments with defined tasks and responsibilities,
2
more formalised relationship, and greater use of rules and standardised
3
procedures.
4
Laurie Mullins, Hospitality Management
5
6
7
8
Accounting and Control
9
Most hotels, however small, keep some accounts, in order to have a record
41111of their transactions with their guests and suppliers, and in order to satisfy
45
1111 certain legal requirements. But for their control small hotels tend to rely on
2 the personal involvement and supervision of the proprietor, rather than on
3 detailed accounting and statistical records. A simplified approach to accounts
4 is adequate and also cost-effective.
5
Three main basic accounting records satisfy most requirements of most
6
small hotels:
7
8
A receipts and payments book records all cash transactions. In the course
9
of business sales accounts and invoices are filed separately and only
1011
recorded in the book after payment has been received or made. At the
1
end of the period unrecorded transactions such as outstanding sales
2
accounts, unpaid invoices, prepayments and accruals are taken into account
3111
in preparing final accounts.
4
A visitor’s tabular ledger with individual accounts for all resident guests
5
may be extended to include separate accounts for functions, as well as
6
for total cash and credit sales in the restaurant and bar to customers using
7
these facilities without taking up sleeping accommodation. In this way
8
the tabular ledger represents an analysed daily summary of all business
9
done.
20111
A wages book, which includes all employee and related payments, provides
1
a comprehensive record of all payroll transactions.
2
3
The proprietors of a small hotel tend to view each hotel product or depart-
4
ment as an integral part of the whole and are more concerned with the overall
5
profitability of the hotel than with the relative profitability of its parts.
6
However, different hotel services generate different profit margins, and even
7
a simple breakdown of revenue and expenditure can provide a helpful analysis
8
of performance and especially to:
9
30111
indicate the relative profitability of the different parts;
1
establish a basis for monitoring and comparison;
2
enable an assessment to be made of the effect of any changes introduced
3
in operation.
4
5 If the basic records are kept in an analysed form, the input data for a
6 meaningful analysis of results are available without much additional effort.
7 It is, therefore, quite easy even for small hotels to produce informative
8 accounts, and to do so more than once a year, from the basic records outlined
9 above. They are helped in this by the relatively small total volume of trans-
actions, many of which are on a cash basis. What is realistic in most small
41111hotels, may be summarized as follows:
46
The Small Hotel
1111 It is normally adequate to analyse income and certain expenses under

no more than four headings: rooms, food, liquor and miscellaneous. The
last category is residuary and covers what may be analysed into several
separate minor operated departments in a large hotel, but is unlikely to
be very significant in a small hotel.
An extended visitors’ ledger can provide analysed details of all revenue.
Cost of sales data for food and beverages can be derived from an analysed
receipts and payments book and adjusted for changes in stock levels, to
give the gross profit. (Because room sales do not involve the sale of goods,
101111there is no cost of sales for rooms, and miscellaneous sales are not likely
to be significant.)
2 Each employee is allocated to the department in which he or she is
primarily employed, or an employee’s payroll cost may be divided between
the departments to which they contribute. The balance of profit after the
deduction of cost of sales and payroll costs from sales is the net margin.
6
Although in a large hotel the analysis is taken further by deducting from
7
the net margin those other expenses that can be allocated to a department,
8
in order to arrive at the departmental operating profit it is not necessary to
9
proceed beyond the net margin in a small hotel, because this stage tends to
20111
account for between a half and two-thirds of the total costs of most hotels
1
and gives a good indication of the profitability of individual hotel facilities
2
and services. The analysed results produced in this way can then be compared
3
periodically with the budget, with figures for the previous year, or with figures
4
for the previous period, prepared on the same basis, to monitor the perfor-
5
mance of the hotel.
6
7
8
For economic reasons apparently hotels became bigger and bigger. Once
9
the developers had paid for the site and the infrastructure it became
30111
economic sense to add as many rooms as possible. It did not, however,
1
necessarily make behavioural sense from a guest’s point of view and
2
the developers of large hotels lost sight of the human need of being
3
‘loved and wanted’. As we have all heard before, ‘in x hotel you feel
4
like a number’. This complete ignoring of the needs of guests by devel-
5
opers did, in fact, severely set back the standards of hotelkeeping . . .
6
But what should be the hotel design of the future? Already in the US
7
there is a movement from the massive chain hotels of the sixties and
8
seventies to smaller more personal hotels.
9
Peter Venison, Managing Hotels
40
41111
47
1111
The Future of the Small Hotel
2
3 Small business faces particular problems in competition with large firms in
4 most industries, and the small hotel business is no exception. Its scope for
5 expansion is limited because it can marshal only limited investment capital
6 from its own cash flow and from external sources. Its resources allow busi-
7 ness promotion only on a limited scale and it has to rely for most of its sales
8 on individuals rather than groups. It represents a small buyer in the market
9 and cannot buy in bulk. It may lack management skills, cannot afford to
1011 employ specialists, and offers limited career prospects for employees. Its
1 volume of business is too small to secure a high degree of efficiency in its
2 operations, and the limited range of its products makes it vulnerable to
3111 external pressures. In other words the small hotel is denied the advantages of
4 size, described in the next chapter in connection with hotel groups.
5
6 But the small hotel has few management problems of the large hotel and it
7 often enjoys certain advantages because it is small. The owner/manager can
8 market the hotel with a personal touch and individuality, and to generate a
9 substantial volume of repeat business. He or she is also able to manage the
20111 hotel as an individual and to generate a personal loyalty in their employees.
1 The future of the small hotel, therefore, lies in concentrating on what it
2 can do best and what it alone can do, on the high-quality, individual and
3 personal approach to hotelkeeping, in which the guests and employees find
4 an alternative to the large unit and the large company, and which many of
5 them may prefer. But the small hotel may also need to adapt some of the
6 advantages of the big one to its needs through cooperative action, and by
7 drawing on the assistance which is available to it. Three particular
8 approaches have been prominent in some countries:
9
30111 One popular approach is the formation of hotel consortia or cooperatives
1 of independent hotels and there are two main types: one is a local group
2 of independent competing hotels in a town or district. When mutual trust
3 and confidence has been established among several hotels, this has led to
4 group marketing, purchasing and other forms of cooperation, securing
5 significant economies for the participants. The other type is a consortium
6 of independent non-competing hotels widely distributed geographically.
7 Their emphasis has been on marketing touring holidays by car and coach
8 and on referral business, but also on common strategies in other direc-
9 tions. To be effective most consortia have set up central offices with full-
40 time staff; these and their activities are financed by members’ subscrip-
41111 tions. (See section on consortia below.)
48
The Small Hotel
1111 2. The other main development has been the creation of advisory services
for small hotels by national hotel associations and by tourist boards. The
service organized as a small team of consultants to give practical advice
and guidance to small hotel operators performs a similar role for the indi-
5 vidual hotel as a management services department does in a large
organization for its units or departments.
7 3. Small hotels can also benefit, more than large ones, from inter-hotel
comparison surveys, which enable them to compare or benchmark their
own performance with other hotels with similar characteristics, and to
101111identify particular operating weaknesses. Evidence from several countries
with established surveys indicates that they have been a major stimulus
to a critical approach to the examination of hotel operations and to improve-
ments in efficiency.
4
5
Consortia
7
It has been demonstrated above that consortia can provide the small hotel
8
with greater visibility and the ability to market its product offering to a wider
9
consumer base. Appendix G shows that, among the leading international
20111
consortia, REZsolutions lead the field with 1 500 000 rooms and 7 700 hotels
1
worldwide. The dominance of REZsolutions has been achieved through its
2
technological ability, to the extent that they are able to lease their technology
3
to other consortia, especially those which specialize in luxury hotels. As with
4
international hotel groups (Appendix E), the leading consortia of the world
5
are dominated by USA-based organizations, which account for ten of the
6
twenty-five, more than one-half of the hotels, and almost three-quarters of
7
the rooms, shown in Appendix G. Although most hotel consortia are based
8
in Europe, which account for more than one-half of the total, they are on
9
the whole smaller than their American counterparts.
30111
1
2
REZsolutions Inc. is the largest hotel consortium world-wide.
3
Supranational Hotels is the largest hotel consortium based in Europe.
4
Flag Choice Hotels Group is the largest hotel consortium outside
5
Europe and North America.
6
7
8
9
40
41111
49
1111
2
3
8
5
4
5
6
7
9
1011
Hotel Groups
1
2
3111
4
5
The traditional pattern of an hotel industry made
6
up of small and individually owned hotels has
7
been changing in many countries for many years
8
and has come to resemble more closely that of
9
other industries, with a number of companies
20111
enlarging their share of the market, the remainder
1
being shared by a large number of smaller firms.
2
The independently owned hotel may still be the
3
dominant firm in the industry, but the growth of
4
the industry has been increasingly associated with
5
hotel groups. The increase in the size of hotel
6
firms has come about by firms building or
7
acquiring hotels in different locations and placing
8
them under central management. The hotels may
9
be grouped within a restricted geographical area
30111
or distributed widely within a country or even
1
between countries.
2
3 Appendix E shows that the world’s 50 leading
4 hotel groups account for more than four million
5 rooms and 30 000 hotels. The leading player is the
6 Cendant Corporation of New Jersey, USA, which
7 can achieve huge economies of scale with its
8 property management systems and with more
9 than 500 000 rooms under franchise. Although
40 Cendant commands the most rooms of any group,
41111 its operations are mostly based in the USA, with
Hotel Groups
1111 fewer than 100 of its 6000 hotels outside North America. Nevertheless, US-based
2 hotel groups dominate the world’s leading groups, with 30 of the total of 50, and
3 with more than 80 per cent of the hotels and of the room stock. However,
4 although hotel groups in the USA operate the vast majority of rooms in the top
5 groups, they do not necessarily expand beyond the home country.
6
Appendix F shows the 50 leading hotel groups with a head office in
7
Europe, with a total approaching one million rooms in 7500 hotels. Nearly
8
one-third of the total room capacity was provided by the leading European
9
group, Accor, which operates market-segmented brands such as Sofitel,
10111
Novotel, Formule 1 and Ibis in 72 countries world-wide.
1
1 Although in the list of 50 the six hotel groups based in France operate most
2 of the hotel rooms, Figure 5 shows that by country of head office more
3 groups were based in Spain (11), England (10) and Germany (9).
4
5
6 Spain 11
7
8 England 10
9 Germany 9
20111
1 France 6
2 Sweden 3
3
Finland 2
4
5 Switzerland 2
6
Greece 1
7
8 Hungary 1
9
Italy 1
30111
1 Netherlands 1
2
Norway 1
3
4 Scotland 1
5
Poland 1
6
7
0 2 4 6 8 10 12
8
9 Figure 5 Leading European hotel groups by country of head office (based
40 on Hotels, July 1999)
41111
51
1111
Hotel Group Operations
2
3 The hotel groups normally operate hotels owned by them or leased by them
4 from their owners to whom they pay a rental. Sometimes they manage hotels
5 as agents for the owners under management contracts, which provide for the
6 payment of expenses, management fees and/or the sharing of profits. The
7 groups may also operate under franchise agreements, which allow one party
8 (the franchisee) to sell a product designed, supplied and controlled by the
9 other party (the franchisor), in return for a fee or a share of profits; in this
1011 arrangement an hotel group may be in the role of a franchisor or in the role
1 of a multiple franchisee. What favours North America when ranking hotel
2 companies is to a great extent the fact that much rapid company growth
3111 occurs through management contracts and franchising, in both of which US
4 brands dominate, as shown in Tables 3 and 4.
5
The main purpose of this chapter is to describe the advantages and the
6
problems of hotel groups, the main issues facing them, and their approach to
7
group operation. Hotel group operations under management contracts and
8
under franchise agreements have much in common with any group opera-
9 tion, but both are based on particular agreements between the parties and
20111 introduce elements specific to the relationship between them, which are quite
1 distinctive. This chapter is primarily concerned with hotel group operations
2 of hotels owned or leased by the group. Readers with a particular interest in
3 management contracts and franchises are referred to texts on these busi-ness
4 relationships listed in the suggested further reading for this chapter.
5
6 Table 3 Leading hotel management companies
7
8 Managed Total %
9 Company hotels hotels managed
30111
1 Marriott International 870 1 686 52
2 Société du Louvre 550 601 92
3 Accor 368 2 666 14
Tharaldson Enterprises 288 288 100
4
Promus Hotel Corporation 277 1 337 21
5 Red Roof Inns 256 295 87
6 Bass Hotels & Resorts 216 2 738 8
7 Sol Meliá 196 246 80
8 Starwood Hotels & Restaurants 194 694 28
9 Hyatt Hotels/Hyatt International 183 186 98
40
41111 Source: Based on Hotels, July 1999
52
Hotel Groups
1111 Table 4 Leading hotel franchising companies

2
3 Franchised Total %
4 Company hotels hotels franchised
5
6 Cendant Corporation 5 978 5 978 100
Choice Hotels International 3 670 3 670 100
7 Bass Hotels & Resorts 2 438 2 738 89
8 Promus Hotel Corporation 998 1 337 75
9 Marriott International 753 1 686 45
10111 Carlson Hospitality Worldwide 532 548 97
1 Accor 458 2 666 17
1 Hotels & Compagnie 326 326 100
Starwood Hotels & Resorts Worldwide 280 694 40
2
US Franchise Systems 227 227 100
3
4
Source: Based on Hotels, July 1999
5
6
7
8
9 Accor is the largest hotel group based in Europe.
20111 The Cendant Corporation is the largest hotel group based in the
1 Americas.
2 Prince Hotels is the largest hotel group based in the Pacific Rim.
3 (Appendix E)
4
5
6 Advantages of Groups
7
8 The nature of the hotel business and the limits of many hotel markets provide
9 the main explanations for the growth of hotel companies through groups. The
30111 advantages that may accrue to hotel groups are the resulting advantages of
1 size, known as economies of scale. Some of these, e.g. the technical
2 economies, may apply also to individual hotels, if they are large enough, but
3 their full realization is open particularly to groups of hotels. Groups extend
4 the size to which an hotel firm may grow, economies of scale tend to accom-
5 pany groups for a long time before pronounced managerial disadvantages set
6 in, and some of the economies, such as those of risk-spreading, are open only
7 to groups. Because economies of scale are available to groups rather than to
8 single hotels, generally a higher profitability is attainable by a group than
9 could be generated by the sum total of its hotels operated independently. The
40 advantages of hotel groups may be summarized as follows.
41111
53
1111 One of the main financial economies is the ability of the group to marshal
2 capital resources from its own cash flow and from external sources. A group
3 may be able to borrow from lending institutions and to do so on favourable
4 terms because it is big and because its hotels provide a good security to its
5 lenders. This is of particular value in financing growth by adding further
6 hotels to the group, in modernizing hotels, and in covering the initial period
7 of operation of new hotels before they become profitable. A group can also
8 deploy its financial resources to advantage by balancing the working capital
9 requirements of its hotels over a period of time and thereby alleviating the
1011 strain on individual units caused by seasonality and other fluctuations in
1 revenue and in expenditure.
2
3111 Because of its size a group can enjoy marketing economies. It can create a
4 group image in the market, which may extend to a common name, facil-ities
5 and standards throughout the group, and it can engage in promoting its hotels
6 together. Individual hotels may to a greater or lesser extent specialize and
7 provide facilities and services complementary to the other hotels, such as
8 conferences. Public relations, advertising and sales promotion can be
undertaken with an impact for the whole group. Each hotel within the group
9
can promote other hotels and generate business by onward reservations.
20111
1 An hotel group has open to it economies of buying because it can buy in
2 bulk and negotiate advantageous prices and terms with its suppliers of a wide
3 range of goods and services on behalf of the whole group. A large group can
4 also benefit from central testing of products and from experi-menting with
5 different products in its hotels before their use is extended to the whole
6 group.
7
8 Management costs need not keep pace with an increase in the volume of
9 business and an hotel group can enjoy managerial economies. It can attract
30111 high-quality staff through the prospects it can offer within the group and the
1 availability of training schemes, and benefit from an interchange of staff
2 between its hotels. It can also provide centralized services to its hotels and in
3 these it can employ specialists with the time and skills to exploit the
4 advantages of group operation in such areas as finance, personnel,
5 purchasing and marketing.
6
7 Various technical economies may arise with size in individual large hotels but
8 also in groups, particularly when the hotels are concentrated geograph-ically
9 within a limited area. The volume of business may then make it possible to
40 concentrate such operating facilities as central food production, maintenance and
41111 laundry, when reductions in unit costs may be achieved as compared
54
Hotel Groups
1111 with providing the facilities in individual hotels or buying the services from
outside firms.
3
Last but not least, there may be economies of risk-spreading, which enable
4
groups to reduce risk by product and geographical diversification. Hotels that
5
cater primarily for business and for holiday markets tend to have different
6
seasons; some may specialize in functions and others in conferences. A
7
decline in demand for a particular hotel may be offset by a high volume of
8
business in another hotel, and thus even out the fluctuations for the group
9
as a whole, as we have seen above when considering the financial advan-
101111
tages of groups.
1
It can be seen that the advantages of scale that may accrue to hotel groups
arise from several sources: from the weight the group has in markets (whether
it is in its markets with customers or suppliers, or in the markets for produc-
5 tive resources, in particular capital and labour); from providing certain
services to its hotels; and from operating them as a group. These sources of
economies are complementary. But before considering how they may be
exploited and what issues they raise, it is necessary to consider the prob-
lems hotel groups may experience.
20111
1
2
Problems of Groups
3
The hotel group shares several main problems with any large organization,
especially problems of communications, control and costs.
6
In order to operate as a group, the centre has to communicate policies,
7
procedures and other matters to individual hotels, which in turn have to
8
communicate information, requests and other matters to the centre. In a
9
closely integrated group individual hotels also have to keep in contact with
30111
each other. Unless smooth lines of communication are established and main-
1
tained, this can militate against the effectiveness of group operation and the
2
attainment of the advantages. Action may be delayed and result in a loss of
3
revenue or additional costs, in time and effort wasted in clearing up misun-
4
derstandings, and in antagonism that may be generated.
5
Whatever the degree of central direction and monitoring of individual units,
there is a need for some control to be exercised over the conduct of the
hotels, to ensure group decisions being carried out and the accountability of
individual hotels for their performance. Unless a clear and effective control
mechanism exists, hotels may act against the interests of the group and affect
41111its performance as a whole. However, a complex control mechanism may
55
1111
2 As a hotel group expands there are opportunities for more make or
3 buy decisions to be taken. Some of the functions and goods which are
4 bought in by different hotels could be more economically provided by
5 internal suppliers. For example, an estates department for a group of
6 hotels could employ not only general maintenance personnel but also
7 a designer, electrician, plumber and carpenter. It must be said, however,
8 that in the 1990s, groups of hotels are tending to look at ways of
9 outsourcing skills rather than taking on more specialists.
1011 Chin J., Barney W. and O’Sullivan H.
1 Hotels: Financial Management and Reporting:
2 An Industry Accounting and Auditing Guide
3111
4
5
6 The main problems encountered in group operations are where the links
7 between the individual hotels and the head office break down. This
8 may be caused by differences in management style and culture between
9 the individual hotel and the group as a whole or it may be through a
20111 misunderstanding between the centre and the hotel about a specific
1 point. This misunderstanding can sometimes be converted into outright
2 hostility on the part of the managers and staff in the hotels towards
3 the group management personnel.
7
8
9
30111 Expanding your hotel business may enable you to benefit from
1 economies of scale and spread risk. Many economies of scale open to
2 a hotel company come through providing services from a central source.
3 These functions typically include marketing, purchasing and accounts.
4 In order for these benefits to be achieved it is important that you
5 are sure that communication links between the centre and each hotel
6 location are clear and relationships are good.
40
41111
56
Hotel Groups
1111 generate disproportionate costs and affect the initiative and performance of
the hotels as well as of the whole group.
3
A group operation gives rise to its own costs, through the need for commu-
4
nication and control, and through the provision of central services to hotels.
5
If the advantages of group operation are to be realized, it is clear that these
6
additional costs have to be outweighed by the benefits which they bring
7
about, if the group is to produce higher profitability than the individual hotels
8
would if operated independently.
9
101111 In addition to the quality of the group management, the extent of the above
problems depends on three main factors: the number of the hotels in the group,
the geographical dispersal of the hotels, and the extent to which the various
aspects of the group operation are centralized. The less of each, the less likeli-
hood of these problems being serious. But the smaller the group and the less
centralization, the less also is the prospect of the advantages of group operation
being realized. The problems arising from the number of hotels and their
dispersal may be to some extent overcome by a district or regional structure, but
this in itself generates costs. The problems due to centralization can be overcome
only by a careful evaluation of the advantages and drawbacks of alternative
20111approaches, by management of high quality, or – by decentralization.
Scope for Centralization

4
A group management may adopt a mainly passive ownership role. At its
5
extreme this means the appointment of local managers who are expected to
6
achieve results by their own initiative, with a minimum of central direction,
7
support and supervision. In these circumstances the performance of the group
8
is made up of the more or less independent actions of individual hotels, with
9
a loose monitoring by the owners directly or through a group manager, a
30111
managing director, or even a company secretary, with little or no staff of
1
their own. Outside specialists, such as professional stocktakers, may be
2
employed, and the company auditors may perform two roles – that of accoun-
3
tants preparing the accounts of the group and that of auditors verifying the
4
view of the business presented by the accounts; their work may include, in
5
greater or lesser depth, an operational audit.
6
However, in order to obtain the advantages of group operation, a more
positive group management approach is necessary. The group management
has to formulate the objectives, policy and operational guidelines, evolve
strategies and plan on behalf of the group; it has to direct and coordinate
41111the separate units, and it has to control them financially and in other ways.
57
1111 The economies of scale do not accrue to the group automatically. Common
2 ownership may bring about certain financial advantages, but to realize most
3 or all the advantages, decisions have to be taken on which functions of the
4 group to centralize and on the extent of centralization of each. The major
5 issue for an hotel group is, therefore, how much to centralize, and the prin-
6 cipal functions that offer scope for centralization are:
7
8 accounting and finance;
9 human resource services;
1011 purchasing;
1 sales and marketing;
2 technical services.
3111
As we have seen, these are the areas in which the main economies of
4
scale lie, and the main influencing factors are the number of hotels and their
5
geographical distribution. Different degrees of centralization are possible in
6
each function: even when centralization is effected, each function has to be
7
divided between the centre and the hotels; how much each does and the rela-
8
tionship between the two are of crucial importance.
9
20111 However decentralized the group approach may be to accounting and
1 control, such aspects as the preparation of the final accounts for the group
2 (even if only as a consolidation of the accounts of individual hotels), capital
3 accounts, cash management and detailed analysis of the financial perfor-
4 mance of each hotel, are normally central functions. Beyond these more
5 obvious areas, the main possibilities for centralization arise, depending on
6 circumstances, in accounting for purchases (particularly where purchasing is
7 centralized), payroll (for some or all employees), and credit sales accounts
8 (particularly with such large hotel users as business firms, tour operators and
9 travel agents), stocktaking and internal audit.
30111
At a modest level a centralized human resource function is concerned with
1
staffing levels, salary and wage structure, and with employee records. It
2
normally deals with recruitment, selection and placement, sometimes for all
3
employees, sometimes only with particular grades and categories, and others
4
are recruited and engaged locally. When the human resource function is
5
more extensive and highly developed, it may cover all conditions of employ-
6
ment, training and welfare, and also employee consultation, negotiation and
7
industrial relations generally.
8
9 As substantial economies may be achieved by centralized purchasing, few
group hotels buy all or most of their supplies directly from any supplier they
41111 choose. The centralized purchasing function may be concerned with a varying
58
Hotel Groups
1111 range of supplies and essentially take one of three basic forms or a combi-
nation of the three. In some instances, when the hotels are located in a limited
area, supplies are bought for central stores, from which they are distributed
to hotels. In the absence of central stores, orders may be placed centrally
against requisitions by hotels and delivered directly to hotels. The third form
6 is the placing of orders by individual hotels against centrally negotiated
contracts, with nominated suppliers who deliver directly to the hotels.
8
A wide scope for a group approach exists in sales and marketing, where
9
all or some of publicity, advertising and direct sales promotion may be central-
101111
ized, to project the desired image of the group and to generate sales,
1
particularly from large hotel users. When the group is large enough, it can
2
undertake its own market research or commission it from a specialized agency,
3
package its own products and operate a centralized reservation service.
4
Individual local promotion and a centralized approach are normally combined
5
by most groups as being complementary directions aimed at somewhat distinct
6
markets.
7
There are several other operations, which may be carried out by individual
hotels, or obtained from specialist suppliers, or provided to hotels in a group
20111as a central facility, if their volume is large enough and if the hotels are
close enough to be served centrally. These were earlier referred to as offering
scope for technical economies and can be located in one hotel serving others
or separately, e.g. various technical services.
4
5
6
A Concentrated Hotel Group: an Illustration
7
The aspects discussed in this chapter are illustrated first with an example of
an hotel group which operates 18 London hotels with a total of 3500 rooms,
3011126 restaurants, 28 bars and almost 100 function rooms in these hotels, and
which has some 3500 employees. The largest hotels have several hundred
rooms and employ several hundred people, the smallest hotels have less than
a hundred rooms and less than a hundred employees. The simplified orga-
nization chart of the company is shown in Figure 6.
5
In this example the central functions of the group below board level and
6
above the level of an individual hotel, comprise 165 employees – more than
7
100 accounted for by a large Estates Department, which employs directly a
8
wide range of maintenance staff.
9
Each general manager is concerned with certain central functions as well
41111as with individual hotel operations through an assistant general manager.
59
Board of
Directors
Managing
Director
Joint General Joint General

Manager Manager
Human Properties
Public Relations Purchasing Secretary and
Sales Manager Resources and Estates
Manager Manager Accountant
Manager Manager
Assistant
General Manager
Operations
Hotel Managers
(18)
Hotel Assistant
Figure 6 Organization chart of a Managers (32)
concentrated hotel group
Hotel Groups
1111
Board of
2 Directors
3
4
5
6 Hotels Controller
7
8
9
Human
10111 Administration
Resources
1
1
2
3 Finance Purchasing Personnel Training
4
5
6
General
7
8
9
Technical
20111 Marketing
Services
1
2
3
4 Public Relations Agency Sales Buildings Engineering
5
6
7 Sales Promotion
8
9
30111
1
Western Region Southern Region Northern Region
2
3
4 Figure 7 Organization chart of a dispersed hotel group
5
6
7
8
9
40
41111
61
1111 Each hotel has a manager and, according to size, between one and three
2 assistant managers. All central functions are linked with the responsibilities
3 of particular managers and assistant managers in the hotels.
4
The arrangements vary as between individual hotels. Normally the manager
5
retains personal responsibility for public relations and for estate functions,
6
in liaison with the corresponding central departments, and in all but the
7
largest hotels also for one or more other functions, in addition to the general
8
management of the hotel. Each assistant manager has also one or more func-
9
tional responsibilities in addition to assisting the hotel manager generally: in
1011
the large hotels with more than one assistant manager, one may be respon-
1
sible for sales, one for personnel and one for accounts and purchasing; in
2
the smaller hotels with one assistant manager, all the specialist functions are
3111
divided between the manager and the assistant. The personnel function is
4
normally the main or the only responsibility of an assistant manager. This
5
arrangement provides for a direct relationship between each central depart-
6
ment and a designated individual in each hotel.
7
8
9
20111 A Dispersed Hotel Group: an Illustration
1 Figure 7 represents an outline organization chart of a group of more than
2 30 hotels distributed widely over most of England and Wales, with a head
3 office in the Midlands. The hotels range in size from about 50 to about 120
4 rooms, all of them have a restaurant and a bar, several have more than one
5 restaurant and more than one bar, and all hotels cater for small functions.
6 The group employs some 2000 people.
7
There are two distinctive features of this organization structure: central
8
departments are grouped into four, bringing together related functions, and
9
the hotels are grouped into three regions, with 10–12 hotels in each region.
30111
The hotels controller, who reports to the Board of Directors, thus has seven
1
senior executives who report to him directly, four in respect of specialist
2
central departments and three in respect of hotel operations.
3
4 Because of the wide geographical dispersal of the units, the central depart-
5 ments provide broad policy guidelines and such support services to individual
6 hotel managers as they may require. The regional controllers are concerned
7 with the enforcement of agreed targets and standards and with their moni-
8 toring. But within these limits, individual managers are allowed relatively
9 wide discretion in the operation of their hotels.
40
41111
62
1111
2
3
8
6
4
5
6
7
9
101111
International Hotel
1
3
Operations
2
4
5
6
7 With the growth of international travel and of
8 hotel industries in the less developed countries
9 of the world, there has been a major growth in
20111 international hotel operations. In the broad sense,
1 the term describes hotel groups that operate in
2 more than one country, but it is possible to distin-
3 guish between two main types. One is represented
4 by what are essentially national companies with
5 a head office in a particular country, which
6 engage to a great extent in hotel operations in
7 that country and in other countries. The other
8 type is multinational companies established by
9 airlines and other interests, which operate hotels
30111 in different countries, and in whose case the loca-
1 tion of the head office may not be of particular
2 significance. The British owned group Forte
3 Hotels (Granada Group), with its head office in
4 London, exemplifies the first type. Another
5 British owned company, Bass Hotels and Resorts,
6 with its head office in Atlanta, USA, and pres-
7 ence in 95 countries represents the second type.
8 Most of its hotel capacity consists of two major
9 acquisitions – Holiday Hospitality Corporation
40 (Holiday Inn) and Intercontinental Hotels and
41111 Resorts – in the 1990s.
1111
2 Bass Hotels & Resorts 95
3
Best Western International 76
4
5 Accor 72
6 Starwood Hotels & Resorts Worldwide 70
7
Carlson Hospitality Worldwide 54
8
9 Hilton International 53
1011 Marriott International 53
1
Forte Hotels 50
2
3111 Choice Hotels International 36
4 Club Méditerranée SA 35
5
6 Hyatt Hotels/Hyatt International 34
7 Sol Meliá 24
8
Four Seasons Hotels Inc. 18
9
20111 Nikko Hotels International 16
1 Romantik Hotels 16
2
3 0 10 20 30 40 50 60 70 80 90 100
4
5 Figure 8 World’s leading hotel groups by extent of international
6 coverage (based on Hotels, July 1999)
7
8
For the first type, which may be described as a national company, inter-
9
national operations offer scope for expansion outside their initial sphere of
30111
operations, often on more favourable terms than in their own countries, and for
1
further exploitation of economies of scale, particularly in finance, marketing and
2
risk-spreading through geographical diversification. Multi-national companies
3 seek similar advantages. When airlines participate in international hotel
4 operations they bring together the two main components of the travel product –
5 transportation and accommodation – thereby diversi-fying their products, as well
6 as often seeking to safeguard their main business, the transportation of
7 passengers, by providing accommodation at destinations to which they take their
8 passengers. Early examples included Trans World Airlines (Hilton International)
9 and Pan American World Airways (Inter-Continental Hotels); they were
40 followed by others, including Aer Lingus
41111
64
International Hotel Operations
1111 (Copthorne Hotels), Air France (Méridien Hotels), Japan Airlines (Nikko
Hotels International), Swissair (Swissôtel).
3
To less developed countries international hotel companies bring manage-
4
ment skills and expertise not available locally and help in opening up
5
international markets. For developed countries international hotel operations
6
offer opportunities for the export of skills and expertise, as well as of various
7
goods and services.
8
Leading international hotel groups appear in Appendix E, where the 50
101111 largest account for more than 4 million rooms in 30 000 hotels. Figure 8
shows the companies with the most extensive geographical coverage, i.e those
that operate in most countries.
3
Companies engaged in international hotel operations face the basic prob-
4
lems of any hotel group – communications, control and costs – discussed in
5
Chapter 5, and these are accentuated by distance, different languages and
6
different currencies involved. There are also other problems specific to them,
7
which are discussed later in this chapter.
8
In this chapter international hotel operations are described in terms of their
20111 distinctive characteristics and approach, with illustrations from Horwath
International reports in the late 1990s. Other variations international hotel
companies may expect between regions and countries are shown in other
chapters in tables based on the same source. Although the reports are not
specifically concerned with international groups, they draw to a great extent
on data of hotels of such groups, and provide meaningful illustrations of
differences between global regions and countries.
7
8
9 The Cendant Corporation is the leading international hotel group
30111 with most rooms and hotels, all of them franchised.
1 Bass Hotels & Resorts has hotels in more countries than any other
2 group.
3 Marriott International is the leading hotel management company.
4 (Appendix E)
5
6
7
8
Products
9
An indication of the relative importance of hotel products may be obtained
41111by comparing the composition of hotel revenue in different regions and
65
1111 Table 5 Composition of hotel revenue in main regionsa

2
3 Food and Other
4 Roomsb beveragec Telecommunications d incomee
5 (%) (%) (%) (%)
6
7 Total world 56.1 35.8 2.3 5.8
Africa and the Middle East 50.8 35.5 5.7 8.0
8
Asia 51.6 37.3 2.4 8.7
9 Australia and New Zealand 60.1 34.0 2.7 3.2
1011 Europe 49.5 43.4 1.6 5.5
1 North America 65.3 27.3 2.5 4.9
2 South America 59.1 28.3 4.2 8.4
3111
a
4 All figures are arithmetic means.
Guest room revenue derived from the letting of guest rooms net of local taxes and breakfast.
5 Food and beverage revenue is derived from the sale of food (including coffee, tea and soft
6 drinks), beverages (including beer, wine and liquors) and other income such as meeting room
rentals and cover or service charges.
7 Telecommunications revenue is derived from guest use of telephone, facsimile and telex and
8 service charges.
Other income represents income from rentals of space for business purposes and income
9 generated from sources not included elsewhere but excluding investment income.
20111 Source: Based on Worldwide Hotel Industry, 1998
1
2
3
4 countries, as shown in Tables 5 and 6. Rooms represent the single most
5 important hotel product in all regions and countries except in Ireland, and in
6 most of them rooms, food and beverages account for around 90 per cent or
7 more of the total revenue. Variations in the shares of particular products in
8 the total revenue reflect several influences: the range of products offered,
9 relative prices of the products, and market and operating conditions of hotels
30111 in different regions and countries.
1
2 Markets
3
4 Table 7 suggests major variations in the extent to which hotels in different
5 regions rely on business, holiday and other markets. In interpreting these
6 figures it is important to bear in mind that they relate mainly to large first
7 class hotels. But for international companies engaged in these markets, the
figures provide a simple market segmentation, which is important both in
8
their product formulation and promotion.
9
40
41111
66
1111 Table 6 Composition of hotel revenue in selected European countriesa

2
3 Food and Other
4 Roomsb beveragec Telecommunicationsd incomee
5 (%) (%) (%) (%)
6
7 Austria 53.3 39.4 2.2 5.1
France 64.0 30.1 2.0 3.9
8
Germany 50.7 40.0 2.2 7.1
9 Ireland 36.0 58.4 1.2 4.4
10111 Norway 47.8 45.2 0.6 6.4
1 Portugal 56.6 32.4 2.0 9.0
1 Switzerland 49.4 44.6 2.3 3.7
2 United Kingdom 48.4 44.1 1.9 5.6
3
All figures are arithmetic means.
4 Guest room revenue derived from the letting of guest rooms net of local taxes and breakfast.
5 Food and beverage revenue is derived from the sale of food (including coffee, tea and soft
drinks), beverages (including beer, wine and liquors) and other income such as meeting room
6 rentals and cover or service charges.
7 Telecommunications revenue is derived from guest use of telephone, facsimile and telex and
service charges.
8 Other income represents income from rentals of space for business purposes and income from
9 sources not included elsewhere but excluding investment income.
1
2
3
4 Table 7 Composition of hotel markets in main regionsa
5
6 GO BT T/L TG MP AC Other
7 (%) (%) (%) (%) (%) (%) (%)
8
9 Total world 2.2 28.5 34.1 17.7 10.1 2.7 4.7
30111 Africa and the Middle East 4.6 39.5 19.5 18.6 3.6 8.1 6.1
1 Asia 2.1 35.7 27.8 17.9 5.9 2.7 7.9
Australia and New Zealand 4.8 34.3 24.3 16.4 8.7 7.4 4.1
2
Europe 1.0 26.1 37.6 18.6 11.2 1.8 3.7
3 North America 5.0 21.3 42.9 10.7 11.8 2.6 5.7
4 South America 2.1 45.2 20.5 12.0 11.5 4.4 4.3
5
7 GO, government officials; BT, business travellers; T/L, tourists/leisure; TG, tour groups; MP,
meeting participants; AC, airline crew.
8
Source: Based on Worldwide Hotel Industry, 1998
9
40
41111
67
1111 Table 8 Advance reservations in hotels in main regionsa

2
3 DI ORS IRS TA TO HR TC WS/I
4 (%) (%) (%) (%) (%) (%) (%) (%)
5
6 Total world 35.1 14.0 5.3 19.8 18.1 4.3 2.0 1.4
7 Africa and the Middle East 31.8 12.2 7.2 23.6 16.5 4.2 2.7 1.8
Asia 31.0 14.4 4.9 26.5 13.9 4.8 2.2 2.3
8
Australia and New Zealand 38.9 12.7 5.4 20.9 14.6 4.2 2.9 0.4
9 Europe 38.8 10.8 5.8 18.7 19.0 3.7 1.7 1.5
1011 North America 29.5 23.6 4.1 17.3 16.9 7.0 0.7 0.9
1 South America 31.9 23.8 4.5 17.1 11.6 5.2 3.9 2.0
2
3111 a
4 DI, direct enquiry; ORS, own reservation system; IRS, independent reservation system; TA,
travel agents; TO, tour operators; HR, hotel representatives; TC, transportation company; WS/I,
5 web site/ Internet.
6
7
8
9 Table 9 Method of payment for hotel services in main regionsa
20111
1 Credit Other E- funds
2 Cash card credit transfer Total
(%) (%) (%) (%) (%)
3
4
All hotels 23.1 38.7 34.3 3.9 100.0
5 Africa and the Middle East 20.9 32.7 43.7 2.7 100.0
6 Asia 24.4 42.0 30.7 2.9 100.0
7 Australia and New Zealand 21.7 41.0 35.2 2.1 100.0
8 Europe 24.3 36.1 34.2 5.4 100.0
9 North America b 21.2 52.4 24.8 1.6 100.0
Latin America/Caribbean 21.9 36.8 40.5 0.8 100.0
30111
1
a
Excluding USA.
4
5
The great majority of hotel users reserve their accommodation in advance.
6
Table 8 shows how the reservations are made in different regions and
7
countries. The operations of international groups account for a high propor-
8
tion of reservations made through own reservations systems and through
9
travel agents and tour operators, both of particular importance in the
40
marketing of international hotels.
41111
68
1111 Table 10 Charge/credit card hotel sales in main regionsa

2
3 Mastercard/
4 Amex Diners Eurocard Visa Other Total
5 (%) (%) (%) (%) (%) (%)
6
7 All hotels 25.4 10.5 23.2 37.6 3.3 100.0
Africa and the Middle East 31.8 5.9 18.5 40.5 3.3 100.0
8
Asia 28.3 6.6 17.7 39.4 8.0 100.0
9 Australia and New Zealand 32.6 17.7 17.6 27.3 4.8 100.0
10111 Europe 21.7 12.6 26.3 37.5 1.9 100.0
1 North America b 30.1 3.9 22.6 40.0 3.4 100.0
1 Latin America/Caribbean 29.6 10.0 21.4 36.0 3.0 100.0
2
3 All figures based on arithmetic means and show the percentage of revenue represented by each
card.
4 Excluding USA.
6
7
As shown in Table 9, only a minority of hotel guests settle their accounts
8
in cash; credit cards and other forms of credit predominate world-wide.
9
Credit cards account for the highest proportion of payments in hotels in
20111
North America, other forms of credit in Africa and the Middle East and in
1
South America.
2
3 Table 10 shows that four charge/credit cards – American Express, Diners
4 Club, Mastercard/Eurocard, Visa – account for the bulk of card sales world-
5 wide. With the exception of Australia and New Zealand, Visa predominates
6 in all regions.
7
8
9 . . . we see the world as divided into three holiday ‘lakes’: the
30111 Mediterranean, the Caribbean, and the South China Sea. The major
1 markets for tourism are to be found above and below these ‘lakes’.
2 They are Western Europe, North America, and Japan/Australia. The
3 orientation of movements in the current phase is vertical – mainly from
4 the north to south. There will also be a second phase, though we have
5 no means of determining the precise moment when it will start –
6 perhaps towards the turn of the century. This phase will witness major
7 lateral movements of tourists from East to West and vice versa.
8 Gilbert Trigano, Club Méditerranée, in
9 Tourism Management, Vol. 2, No. 2
40
41111
69
1111
Ownership and Finance
2
3 Many if not most major hotels are not owned by the hotel operator;
4 commonly a separate company is established to own each hotel. Typically
5 each owning company has a major equity investor but there may be also one
6 or more minority equity investors and they may include the hotel operating
7 company. The owning company may seek additional equity investors, if
8 required, grants and soft loans from governments and development agencies,
9 and complete the project financing by raising loans from banks and other
1011 commercial sources of finance.
1
2 The owning company makes an agreement with the hotel operating
3111 company, which may be for:
4
5 a joint venture (when the operator is a full partner in the joint ownership
6 of the hotel with a joint participation in the financial outcome);
7 a lease (when the operator takes temporary possession of the hotel for a
8 specified period of time for rent payment);
9 a management contract (when the operator who may or may not be also
20111 an investor manages the hotel for an agreed remuneration);
1 a franchise (which could mean that the operator takes a franchise from a
2 franchisor).
3
4 Various forms of funding by local interests in the country of operation are
5 combined with external ‘national’ and ‘international’ financing. ‘National’
6 financing of international hotel operations from sources outside the country
7 of operation takes four main forms:
8
9 Operating companies with a head office in a particular country enter into
30111 arrangements in other countries, which may include capital investment as
1 explained above. Examples include:
2
3 from the United Kingdom, Forte Hotels (Méridien) and Hilton Inter-
4 national;
5 from the USA, Marriott International (Marriott, Courtyard, Ramada,
6 Renaissance, Ritz Carlton, Fairfield Inn and Residence Inn), Hyatt
7 Hotels, Bass Hotels and Resorts (Crowne Plaza, Inter-Continental,
8 Holiday Inns, Staybridge Suites and Forum), Starwood Hotels &
9 Resorts (Sheraton, Westin and Four Points), Carlson Hospitality
40 (Radisson), Choice Hotels International (Clarion, Comfort,
41111 Rodeway Inns, Econolodge and Mainstay Suites);
70
1111 from France, Accor (Sofitel, Novotel, Formule 1, Mercure, Etap,

2 Coralia, Parthenon, Motel 6 and Red Roof Inns), Club Méditerranée
3 and Société du Louvre;
4 from Spain, Sol Meliá and Occidental Hotels;
5 from Japan, JAL Hotels (Nikko), Prince Hotels and Tokyu Hotel
6 Group (Pan Pacific Hotels);
7 from Hong Kong, Shangri-La Hotels and Resorts;
8 from Germany, LTI International Hotels;
9 from Canada, Four Seasons (Four Seasons and Regent).
10111
Private institutions such as commercial banks in Europe, North America
1
and the Far East invest in hotels abroad. Examples include Barclays and
1
HSBC Group from the UK; Goldman Sachs, JP Morgan, Chase
2
Manhattan and Bankers Trust from the USA; Société Générale and
3
Paribas from France; Deutsche Bank from Germany; Bank of Tokyo-
4
Mitsubishi and Nomura from Japan. Funding by private institutions may
5
be covered by a lender government’s export credit guarantee.
6
Suppliers of goods and services, particularly construction companies, may
7
participate in, or arrange, equity or loan finance for projects abroad in
8
order to secure a substantial contract.
9
Public and semi-public institutions are entrusted by governments to make
20111
grants and extend credit, usually to developing countries, where the bene-
1
ficiaries are normally governments but may also be private firms. The
2
Commonwealth Development Corporation channels overseas aid from the
3
UK overseas aid budget to developing countries for a wide range of
4 tourism-related projects including hotels. In France, the Caisse Centrale
5 de Coopération Economique, a public development bank, allocates part of
6 French overseas aid to various developments including hotels. In
7 Germany, Deutsche Finanzierungsgesellschaft für Beteiligungen in
8 Entwicklungsländern is involved in financing hotels in association with
9 companies from the European Community.
30111
1 ‘International’ financing of hotel operations takes place through:
2
3 Multinational companies, which tend to set up separate companies in
4 different countries and acquire a part interest in them. Inter-governmental
5 organizations, such as the World Bank Group and some regional
6 development banks, which lend to developing countries. In Europe, in
7 addition to the European Investment Bank, an institution of the European
8 Community, the European Bank for Reconstruction and Development set
9 up in 1990 assists the emerging democracies of Central and Eastern
40 Europe in their transition to market economies.
41111
71
1111 The experience of several countries during the recession of the early l990s
2 emphasizes the need for funding to be supportable by trading profits, as past
3 lending against over-inflated capital values resulted in many hotels being
4 unable to service their debts.
5
6
7
Organization and General Approach
8
9 Each hotel in a particular country operates in its own environment with its
1011 own markets and market conditions, operating conditions, customs and prac-
1 tices; against the background of the country’s economic, political and social
2 systems; with its own licensing, labour, tax and other laws. These environ-
3111 ments may be very different from each other and also from the environment
4 of the head office wherever it may be situated. The problems of an inter-
5 national hotel group are, therefore, potentially and in practice, generated by
6 three sets of factors: by group operation, by differences between countries,
7 and by the need to cope with the differences in the interests of the group as a
8 whole.
9
20111 An hotel group which operates hotels within one country has a choice as
1 to the extent of centralization to adopt, as discussed in Chapter 5. The laws
2 of particular countries may impose limits on the extent of centralization of an
3 international hotel group, quite apart from considerations of communi-
4 cations, control and costs set by distance, language and currencies.
5 Different countries may impose different conditions on the funding of hotel
6 projects, import and export of capital, and the remittance of profits. In many
7 countries expatriate employees may be required in the more senior positions but
8 such employment may be regulated by the governments concerned. The import
9 of supplies of goods and services may be subject to foreign exchange regulations.
30111 Budgets and accounts may have to be prepared and reported in local currencies
1 and converted into a common currency for the group. Further problems arise
2 from such happenings as fluctuations in exchange rates. These considerations
3 imply that a high degree of decentralization is normally required to operate an
4 international hotel company successfully. One group of senior executives usually
5 assumes responsibility for the central functions and another group has territorial
6 operational responsibilities, but some central functions may be to a greater or
7 lesser extent delegated to a regional level.
8
9 Two charts illustrate the approach of leading international hotel oper-ators
40 (Figures 9 and 10) whose recent data are included in Appendices E and F.
41111
72
9
8
7
6
5
4
3
2
1
9
8
7
6
5
4
3
2
1
9
8
7
6
5
4
3
2
1
9
8
7
6
5
4
3
2
40
1111
41111
30111
20111
101111
International Senior Vice
Senior Vice Vice
President
Senior Vice President International Senior Vice Vice President
Director Security President UK/ International
President Asia/ Caribbean/ Regional Staff President International
& Middle East/ Operational
Pacific/Australia Bermuda/Latin (Shared) Central Europe Finance
Loss Prevention Africa America Accounting

International Vice President Vice President Vice President
Vice President Vice President International
Director International Strategic
International International Brands &
Revenue Human Planning &
Engineering Training Operations
Management Resources Operations Marketing
Figure 9 Organization Chart of Marriott International Lodging, June 1999

9
8
7
6
5
4
3
2
1
9
8
7
6
5
4
3
2
1
9
8
7
6
5
4
2
1
9
8
7
6
5
4
3
2
40
3111
1011
1111
41111
30111
20111
Manag
ing Director
Finance Marketing Food & Human Director of IT Revenue Vice President

Director Director Beverage Resources Operations Director Development Technical
Director Director Support Manager Services
Regional Regional Regional Regional Regional Regional

MD Europe MD Africa MD MD Asia MD Director
Middle East Americas UK/Ireland
Figure 10 Organization Chart of Le Méridien Hotels & Resorts, June 1999

1111 Marriott International is a leading world-wide hospitality company whose

heritage can be traced back to a small root beer stand opened in Washington,
DC by J Willard Marriott in 1927. In 1998 Marriott International was launched
as a public company which has some 1700 units. The company operates and
franchises a broad portfolio of lodging brands around the world, with 328 300
rooms and timeshare villas worldwide. Figure 9 shows the organization
7 of the Marriott International Lodging structure under the President and
Managing Director, responsible for units in 53 countries. Hotel General
Managers report to their regional Senior Vice Presidents, and are supported
101111 by functional international staff shared by the regions.
1
In 1996, Forte Plc was acquired by Granada plc in a bitterly fought takeover
2
battle. Each of the main brands (Le Méridien Hotels, Heritage Hotel,
3
Posthouses and Travelodge Hotels) is headed by a Managing Director who
4
reports to the Forte Chief Executive. Figure 10 shows how the Le Méridien
5
Managing Director is supported by a team of regional Managing Directors,
6
as well as directors for such functions as finance, marketing, food and
7
beverage and information technology.
8
9
20111
1
2
3
4
5
6
7
8
9
30111
1
2
3
4
5
6
7
8
9
40
41111
75
Part
1111
2
3
III
4
5
6
7
8
9
10111
1
1
The Hotel and
2
3 its Functions:
4
5
6
Guest Services
7
8
9
20111
1
2
3
4
5
6
7
8
9
30111
1
2
3
4
5
6
7
8
9
40
41111
1111
2
3
4
5
6
7
8
9
1011
1
2
3111
4
5
6
7
8
9
20111
1
2
3
4
5
6
7
8
9
30111
1
2
3
4
5
6
7
8
9
40
41111
1111
2
3
8
7
4
5
6
7
9
101111
Rooms and Beds
1
2
3
4
5
The primary function of an hotel is to accom-
6
modate those away from home, and sleeping
7
accommodation is the most distinctive hotel
8
product. In most hotels room sales are the largest
9
single source of hotel revenue and in many, more
20111
sales are generated by rooms than by all the other
1
services combined. Room sales are invariably
2
also the most profitable source of hotel revenue,
3
which yield the highest profit margins and
4
contribute the main share of the hotel operating
5
profit. Hotels contributing to annual reports of
6
Horwath International earned on average the
7
proportions of their total revenue shown in Table
8
11 from room sales in the late 1990s.
9
30111 Three main hotel activities are earning the
1 room revenue: hotel reception, uniformed serv-
2 ices and housekeeping. Each of them may
3 contribute also to a greater or lesser extent to
4 other hotel activities, but their main functions
5 arise from the requirements of staying guests and
6 they provide the principal hotel services for them.
7 It is, therefore, convenient to view hotel recep-
8 tion, uniformed services and housekeeping
9 together as components of the hotel accommo-
40 dation function. In this chapter each is examined
41111 in terms of its role in meeting the requirements
1111 Table 11 Room sales as a ratio of hotel revenue in main regions a

2
3 1995 1996 1997
4 (%) (%) (%)
5
6 Total world 57.4 59.2 56.1
7 Africa and the Middle East 49.3 58.8 50.8
Asia 53.8 57.3 51.6
8
Australia and New Zealand 58.4b 59.1b 60.1
9 Europe 50.3 50.9 49.5
1011 North America 65.6 66.6 65.3
1 Latin America/Caribbean 57.2 58.8 c 59.1 d
2
3111 a
Excludes New Zealand.
4 Latin America only.
5 South America.
Rooms revenue is derived from the letting of guest rooms net of local taxes and breakfast.
6
7 Source: Based on Worldwide Hotel Industry, 1996, 1997, 1998
8
9
of hotel guests, their organization and staffing, and accounting and control.
20111
This is followed by a similar approach to food and drink and to other hotel
1
services in subsequent chapters.
2
3 The three basic components of the accommodation function are present in
4 most hotels and are normally organized in separate departments. But their
5 organization and staffing often differ in hotels of different sizes, types and
6 standards. In smaller hotels only a few people may be engaged in each and
7 cover a wide range of duties; as the hotel increases in size, each activity may
8 be subdivided into separate departments or sections, in which those engaged
9 in them perform more specialized tasks.
30111
A transit city hotel with a short average length of stay calls for a some-
1
what different approach from that of a resort hotel, which accommodates
2 guests for longer and often such regular periods as one or two weeks. There
3 is also a relationship between prices, the range and quality of facilities and
4 services provided, and the way they are organized. For all these and other
5 reasons it is possible to describe the hotel activities related to the accom-
6 modation of guests only in broad and general terms.
7
8
9
40
41111
80
Rooms and Beds
1111
Room Sales
2
A large proportion of hotel guests reserve their rooms from a few hours to
several weeks or months before they actually arrive at the hotel. They might
do so in person, by telephone, facsimile or e-mail, by letter, through travel
agents, and in a growing number of cases through central reservations systems.
Hotel reservations create a multitude of contractual relationships between
the hotel and its guests, which begin at the time each reservation is made
and continue until the departure of the guests or until their accounts are
101111 settled after their stay. Advance reservations are an important responsibility
on the part of the hotel, both in the legal and in the business sense, and call
for a system that enables room reservations to be converted into room revenue.
3
When guests arrive in hotels, they are asked to register by providing the
4
receptionist with certain particulars about themselves. The hotel register, in
5
which the particulars are entered, has two main functions. One is to satisfy
6
the law, which makes the registration of hotel guests a legal requirement in
7
most countries. The second function is to provide an internal record of guests,
8
from which data are obtained for other hotel records.
20111
In most hotels room allocations of accommodation reserved in advance
are made before the guests’ arrival and only guests registering without a
previous reservation are allocated rooms on arrival, but in some hotels all
room allocations are made only when guests arrive. The registration and
room allocation are then the starting point for guests’ stay and a signal for
the opening of their accounts, as well as for notifying uniformed staff, the
housekeeping department, telephonists, and others, of arrivals.
7
Several main records document the room sale in the reception office:
9
30111 reservation form or card standardizes the details of each booking, forms
the top sheet of any documents relating to it, and enables a speedy refer-
ence to any individual case;
reservation diary or daily arrival list records all bookings by date of
arrival and shows all arrivals for a particular day at a glance;
reservation chart provides a visual record of all reservations for a period
and shows at a glance rooms reserved and those remaining to be sold;
hotel register records all arrivals as they occur and gives details of all
current and past guests;
reception or room status board shows all rooms by room number and floor
and gives the current and projected status of all rooms on a particular
41111day, with details of occupation;
81
1111 guest index lists all current guests in alphabetical order with their room
2 numbers and provides an additional quick point of reference in larger
3 hotels.
4
5
6 Mail and Other Guest Services
7
A combined key and mail rack is a standard feature of most hotel reception
8
offices and reflects two typical responsibilities of the office – room keys and
9
guest mail. Arranged by room number and floor, it corresponds in layout to
1011
the reception or room status board and is complementary to it.
1
2 In the course of a day’s business room keys are issued from the rack to
3111 arriving guests and to residents who call for them; keys are returned to the
4 rack by guests going out of the hotel or departing at the end of their stay.
5 The rack is a point of reference regarding the occupation of rooms and the
6 whereabouts of guests.
7
Mail may arrive for guests before, during and after their stay at the hotel,
8
and may consist of ordinary or registered mail, packets and parcels, cables
9
and telegrams, telex messages, facsimile transmissions, express mail and
20111
personal messages left for guests. Mail awaiting guests’ arrival should be
1
handed to them when they are registering; mail arriving after a guest has
2
left the hotel, should be forwarded. During the guest’s stay speed is the
3
essence of facsimile transmissions, security is the essence of registered mail,
4
bulkiness is the essence of parcels; each calls for standard procedures of
5
their own. But the key and mail rack is the focus; it accommodates much
6
of the mail the guest collects when collecting the room key; it can serve to
7
alert the receptionist to items, such as parcels or registered mail, stored else-
8
where.
9
30111 Three basic aids are, therefore, related and complementary in the provi-
1 sion of key, mail and other guest services:
2
3 guest index shows whether a particular person is resident and that person’s
4 room number;
5 reception or room status board shows who is occupying a particular room;
6 key and mail rack indicates whether the guest is in the hotel and whether
7 there is any mail for that person.
8
9 In many hotels the reception office or a separate section of it also acts as
40 a source of information to guests – about hotel facilities and services, about
41111 the locality, about transport and other matters. In other hotels the keys, mail
82
Rooms and Beds
1111 and information to guests are provided by uniformed staff, and there are
usually good reasons for one or the other arrangement. But who does what
and to whom the guest can turn, should be made clear to the guest in terms
4 of individual needs and requirements rather than in terms of the hotel
5 organization structure, particularly in larger hotels. Such notices as
‘Reception’ and ‘Hall Porter’ have different connotations in different hotels
and are not necessarily self-explanatory even for experienced hotel users.
8 Counters and sections of the front hall of the hotel clearly labelled
‘Registration’, ‘Keys’, ‘Mail’, ‘Information’, ‘Guest Accounts’, and so on,
101111 are more meaningful to guests.
Uniformed Services
4
The second component of the accommodation function is uniformed services,
5
which form an integral part of the front hall functions of the hotel and provide
6
a variety of personal services to guests.
7
8 Servicing arrivals and departures are the most common uniformed
services. The meeting and greeting of arriving guests, their luggage and the
20111parking of their cars, are the first responsibilities, which extend from the
hotel entrance and car park to the hotel bedrooms. On departure, guests,
luggage and transportation are again their primary responsibilities. In an hotel
with a hundred departing guests in the morning, followed by a similar volume
of arrivals in the afternoon and evening, uniformed staff attend in a day’s
business to some two hundred people, handle several hundred pieces of
luggage, park several dozen cars, and arrange several dozen taxis. The guests,
their luggage and their vehicles, therefore, play a major part in the provi-
sion of uniformed services.
9
During the guest’s stay uniformed staff are often the main source of infor-
30111
mation about the hotel and the locality, and the guest’s main source of such
1
arrangements as theatre tickets, tours, car hire and other services. The hall
2
porter’s desk or an enquiry counter in the front hall are then the informa-
3
tion centres of hotels, which contribute much to the range of guest services
4
and to their integration.
5
In some hotels other guest services may be provided by uniformed staff.
Newspapers, as well as other small articles, may be supplied to guests by
uniformed staff who may also act as messengers, lift operators and men’s
cloakroom attendants. In many hotels uniformed staff are the only people on
duty during the night and particularly in smaller hotels maintain a whole
41111range of hotel services provided by other departments in day time: to receive
83
1111 and register late arrivals, to serve light refreshments, to operate the hotel
2 switchboard, to arrange early morning calls, as well as to clean public rooms
3 and to ensure the security of the hotel.
4
The provision of uniformed services varies greatly between hotels of
5
different sizes, types and standards, and their organization tends to be influ-
6
enced by all these factors, as well as by established practices. As mentioned
7
earlier, information to guests may be provided by the reception office or as
8
part of uniformed services or by both. The cleanliness of public rooms may
9
be the responsibility of uniformed staff, the housekeeping department, or
1011
outside contractors. What hotel services are available during the night and
1
by whom they are provided, is another source of variation. These differences
2
are legitimate, as long as they reflect the particular requirements of guests
3111
and the particular circumstances of each hotel, and as long as the respective
4
functions are defined and understood by staff and made clear to guests where
5
they affect them.
6
7
8
9 Hotel Housekeeping
20111 The basic housekeeping function of the hotel is the servicing of guest
1 rooms. In its scope, guest bedrooms may be the sole or main responsibility
2 of the hotel housekeeping department, but it may extend to other areas of
3 the hotel.
4
Normally hotel guests spend at least one-third of their stay in their room.
5
The design, layout, decor, furniture and furnishings of the hotel bedroom are
6
fundamental to meeting their needs and in creating customer satisfaction,
7
and these may be significantly influenced by the housekeeping department.
8
The cleanliness and good order, the linen and other room supplies, and the
9
smooth functioning of the room are the focus of the department. This may
30111
include other guest services, such as early morning teas, guest laundry,
1
baby sitting and other personal services. The main housekeeping records are
2
made up of arrival and departure lists and notifications received from the
3
reception office and the housekeeping department’s own room status report,
4
together with separate records in respect of additional services provided by
5
the department.
6
7 The extension of the housekeeping function outside the hotel bedroom
8 normally includes the cleaning of bedroom floors and may include staircases,
9 public cloakrooms and other public areas of the hotel. However, it is quite
common for such public rooms as hotel lounges to be cleaned by uniformed
41111staff, for the responsibility for the men’s and women’s cloakrooms to be
84
Rooms and Beds
1111 divided between uniformed staff and the housekeeping department, and for
2 restaurants and bars to be cleaned by the staff of those departments. More
3 recently, hotels have been engaging outside contract firms for the cleaning of
4 public rooms.
5
Other housekeeping services often include the provision of first aid to
6
guests and staff, dealing with lost property, and floral arrangements
7
throughout the hotel. When staff accommodation is provided by the hotel, it
8
may be included as part of the head housekeeper’s responsibilities. Although
9
in many countries hotels increasingly use outside laundries and dry cleaning
10111
firms for their requirements, many hotels operate their own dry cleaning and
1
laundry facilities. These ‘in-house’ facilities may be then organized as
1
separate departments of the hotel or as sections of the housekeeping
2
department.
3
4 This outline of the hotel housekeeping function illustrates three organiza-
5 tional approaches. One seeks to integrate a number of related functions
6 within a major housekeeping department. The second assigns certain
7 functions to the housekeeping department and others to other departments of
8 the hotel, largely on the basis of physical areas. The third consists of ‘buying
9 in’ certain services from outside suppliers rather than operating them directly
20111 as hotel facilities. The considerations involved are discussed further in
1 Chapter 13 as part of the examination of the total hotel organization and also
2 in Chapter 9 in connection with minor operated services.
3
4
6 The dimensions and characteristics of each hotel are the main determinants
7 of the organization and staffing of the accommodation function. These are
8 discussed further in the context of overall hotel organization in Chapter 13
9 and hotel staffing in Chapter 14.
30111
1 Differences in labour intensities between regions and countries are illus-
2 trated in tables in this book showing numbers of employees drawn from
3 annual reports of Pannell Kerr Forster International in the late 1990s. Table
4 12 shows that the ratios of rooms payroll and related expenses are low in
5 hotels in Africa and the Middle East compared to hotels in Europe. This
6 reflects differences in the cost of labour and other expenses, as well as sales
7 volumes and prices.
8
9
40
41111
85
Table 12 Rooms payroll and related expenses

1111 ratios a to sales b in Europe and Africa
2
3 1996 1997
4 (%) (%)
5
6 Total Europe 17.5 16.5
7 Northern Europe 17.7 16.5
8 Eastern Europe 8.2 7.9
Southern Europe 18.9 18.0
9
1011 Total Africa 7.0 6.5
1 Northern Africa 6.0 5.4
2 Eastern Africa 7.7 7.4
3111 Southern Africa 10.5 10.6
4 Western Africa 7.6 8.1
5
a
Ratios are based on respective departmental revenues.
7
Source: Pannell Kerr Forster, Europe, Middle East and
8 Africa Trends, 1998
9
20111
1 Table 13 Room sales, expenses and profit ratios in selected European countriesa
2
3 Room Room Departmental
4 sales b expenses c profit
5 (%) (%) (%)
6
7 Austria 100.0 35.1 64.9
France 100.0 33.8 66.2
8
Germany 100.0 32.9 67.1
9 Ireland 100.0 25.7 74.3
30111 Norway 100.0 27.7 72.3
1 Portugal 100.0 32.9 67.1
2 Switzerland 100.0 37.3 62.7
3 United Kingdom 100.0 25.6 74.4
4
a
Guest room revenue derived from the letting of guest rooms net of local taxes and breakfast.
6 Room payroll including salaries and wages and employee benefits of the personnel of the rooms
7 department plus expenses such as contract cleaning, guest transportation, laundry, oper-ating
supplies, reservation fees, travel agent commission and uniforms.
8
9
40
41111
86
Rooms and Beds
1111 Table 14 Room occupancies and average rates

2 in selected European countries a
3
4 Average daily
5 Room rate per
occupancy b room c
6
(%) (US$)
7
8 Austria 65.0 75.84
9 France 73.0 112.00
10111 Germany 59.9 86.49
1 Ireland 66.7 82.46
1 Norway 61.2 97.26
2 Portugal 66.9 74.73
Switzerland 61.1 144.29
3
United Kingdom 71.9 91.90
4
5 a
6 Ratio of total occupied rooms to total available rooms.
Room sales divided by total number of occupied rooms.
7
9
20111
1
Accounting and Control
2
3 The financial performance of the hotel accommodation function is reflected
4 in the rooms department operating statement, which shows the revenue and
5 expenses of the department for a given period resulting in the departmental
6 profit. These figures may then be compared with the budget or with the same
7 period of the previous year. Summary illustrations of ratios calculated from
8 operating statements of hotels contributing to Horwath International reports
9 in the late 1990s are shown in Table 13. These indicate significant differ-
30111 ences between expenses and profit ratios of hotels in different countries and
1 are an indication of factors such as operational efficiency and the cost of
2 labour. These ratios are calculated by most hotels as part of their periodic
3 reporting. On the other hand operating ratios are calculated and monitored
4 more frequently, often daily. Two key operating ratios are illustrated in Table
5 14.
6
Another useful measure of the extent to which room use is maximized is
7
double occupancy, that is the percentage of double or twin bedrooms that are
8
let for double occupancy (as opposed to single occupancy), and these are
9
shown for selected cities in Table 15.
40
41111
87
1111 Table 15 Double occupancies in selected cities and regions a

2
3 %
4
5 Africa and the Middle East
Abu Dhabi (UAE) 23.6
6
Cairo (Egypt) 49.7
7 Casablanca (Morocco) 22.4
8 Johannesburg (South Africa) 30.9
9 Karachi (Pakistan) 14.7
1011 Nairobi (Kenya) 28.1
1 Tel Aviv (Israel) 47.2
2 Europe
3111 Athens (Greece) 48.0
Berlin (Germany) 39.8
4
Brussels (Belgium) 27.6
5 Helsinki (Finland) 28.7
6 London (England) 44.8
7 Paris (France) 48.3
8 Prague (Czech Republic) 46.2
9
20111
Source: Based on Pannell Kerr Forster, City Surveys, 1998
1
2
3
4 The hotel bedroom will be better designed and become more func-
5 tional. In appropriate locations the room will have full office facilities
6 both in the form of furniture and available business equipment. The
7 television will provide a wide range of functions, which will include
8 check-out, the provision of basic information, communication both
9 within and outside the hotel, and a wide range of entertainment.
30111
1 There will be increased emphasis on much improved air purification
2 and ventilation systems. There is already a discernible need for
3 improved lighting in all types of hotel, both in the bedroom and
4 bathroom. The trend towards non-smoking rooms or sections is
5 expected to continue. Better room facilities for the female business
6 traveller will be expected. Horwath and Horwath, Hotels of the Future
7
8
9
40
41111
88
1111
2
3
4
5 8
6
7
8
9
101111
1
Food and Drink
2
3
4
5
The food and drink service is the second major
6
activity of most hotels and in many of them it
7
accounts for a larger proportion of employees
8
than the provision of sleeping accommodation
9
and related services. This is due to two main
20111
factors:
1
2
in contrast to hotel rooms, meals and refresh-
3
ments in hotels may be supplied to non-
4
residents as well as to resident guests and
5
include substantial functions sales;
6
the provision of meals and refreshments is
7
relatively labour intensive.
8
9
Hotels contributing to Horwath International
30111
annual reports earned on average the proportions
1
of total revenue shown in Table 16 from food
2
and beverage sales in the late 1990s.
3
4 The provision of sleeping accommodation is a
5 service activity, in which there is a negligible use
6 of materials, and there is no cost of sales. The
7 provision of meals and refreshments results in
8 composite products made up of commodities and
9 of service, and the use of materials represents the
40 cost of sales. Food and drink enter into meals and
41111 refreshments served in hotels in several
1111 Table 16 Food and beverage sales a as a ratio of hotel revenue in main regions b
2
3 1995 1996 1997
4
5 Total world 32.3 33.2 35.8
7 Asia 32.2 33.4 37.3
Australia 31.7 34.7 34.0 c
8
Europe 40.1 41.9 43.4
9 North America 25.6 26.8 27.3
1011 South America 27.2 28.7 d 28.3 e
1
2 a
Food revenues derived from the sale of food, including coffee, milk, tea and soft drinks.
3111 Beverage revenues derived from the sale of beverages including beer, wine, liquors and ale,
including banquet beverage revenues.
5 Includes New Zealand.
Latin America.
6 South America.
8
9
20111 stages from their purchase by the hotel to their sale in the same or altered
1 form to the hotel customer. These processes are described in this chapter as
2 the food and beverage cycles. According to the size and diversity of the hotel
3 markets there may be more than one restaurant and bar and also food and
4 drink service in rooms and through functions.
5 The hotel food and beverage operation involves a high degree of technical
6 knowledge and skill, which cannot be dealt with adequately in a book
7 dealing with all aspects of the business. The reader is referred to several texts
8 listed in the further reading for this chapter and in the bibliography.
9
30111
1 The Food Cycle
2
3 The food operation of an hotel may be viewed as a cycle, which consists of
4 several stages – purchasing, receiving, storing and issuing, preparing and
5 selling. The stages represent a clear sequence, through which food passes
6 through the hotel from the supplier to the customer, as shown in Figure 11.
7 Purchasing is the beginning of the hotel food cycle. Normally one person
8 has a designated responsibility for food purchases – a purchasing officer in a
9 large hotel, the food and beverage manager or one of the assis-tant managers
40 in a medium-sized hotel; in the smaller hotel purchasing may
41111
90
Food and Drink
1111
2 Purchasing
3
4
5
6
7 Receiving
8
9
101111
1 Storing and
2 Issuing
3
4
5
6 Preparing
7
8
9
20111
1 Selling
2
3
Figure 11 The food cycle
4
5
6
be undertaken by the owner/manager or the chef, or divided between them
as to non-perishable and perishable foods.
9
The purchasing function extends from identifying best sources of supply,
30111
making arrangements with suppliers and placing orders, to close liaison with
1
the kitchen and other user departments regarding requirements, yield and
2
quality, and with the accounts department regarding payment. For foods
3
bought in large enough quantities, purchasing is greatly facilitated by stan-
4
dard purchase specifications, which define quality, size and other features of
5
the required items.
6
Receiving entails ensuring that the hotel is being supplied with food of
the ordered quantity and quality at the agreed price, and its transfer to stores
or directly to the user departments. Receiving takes place by a comparison
of delivery notes against orders and by a physical inspection of the deliv-
41111eries. In large hotels there is often a receiving clerk; otherwise receiving
91
1111 may be the responsibility of the stores assistant; in smaller hotels it may be
2 undertaken by the chef as the principal user.
3
Storing and issuing consists of maintaining an adequate stock of food for
4
the day-to-day requirements of the hotel, without loss through spoilage and
5
pilferage and without capital being tied up unnecessarily through over-
6
stocking, and of issues of food to user departments. According to the size of
7
the hotel and its requirements, food stores may be sub-divided, and there
8
may be one or more stores employees responsible for them.
9
1011 Issues to the kitchen and other user departments are normally made at set
1 times in the day against authorized requisitions. Periodical stocktaking takes
2 place to ascertain the value of stocks held in order to determine the food
3111 costs for a given period and stock values for accounts purposes.
4
Preparing or food production represents the conversion of the purchased
5
foods by chefs and cooks into dishes and meals, and there are four main
6 aspects in this process:
7
8 volume forecasting seeks to predict the number of meals and of partic-ular
9 items of the menu to be served in each outlet of the hotel each day; yields
20111 postulate the quantity obtained from items of food after their prepa-ration
1 and cooking;
2 recipes give the formulae for producing particular dishes, including the
3 quantities and qualities of ingredients and the method of preparation used;
4 portions represent the size or weight of food served to customers.
5
6 These four aspects determine the hotel purchasing and operational require-
7 ments. Standard yields, standard recipes and standard portions can contribute
8 to effective food cost control through budgeted costs for all menu items.
9
Selling is the final stage of the hotel food cycle and consists of the service
30111
of particular foods, dishes and meals by various categories of food service
1
staff to the customer in a restaurant or another hotel facility at particular
2
prices. The main aspects of the selling stage are, therefore, the menu, the
3
form of service and the physical environment and atmosphere in which the
4
sale takes place; these are the three elements of the product, which are
5
reflected in the price.
6
7 The menu is the focus of the food operation and there are two main types:
8
9 table d’hôte menu is a limited choice menu with a single price for any
40 combination of items chosen or with a price determined by the choice of
41111 the main dish;
92
Food and Drink
1111 à la carte menu provides a choice of items, each of which is priced separ-
ately.
3
Three basic levels of service, with variations in each, may be identified
4
as:
5
6
self-service, where the customer orders and collects the food from a counter
7
and takes it to a table where he or she consumes it;
8
counter service, where the customer is presented with the food he or she
9
has ordered and consumes it at the counter;
101111
table service, where the customer is served by a waiter or waitress who
1
takes the order and serves the meal at the table.
2
3
The main aspects which make up the physical environment and atmos-
4
phere of the hotel eating facility are: the shape and size of the room; the
5
design and decor; the type and layout of seating; the lighting, temperature,
6
noise level, cleanliness and comfort; the age, appearance, and dress of the
7
staff and of guests.
8
In practice, the selling stage is the starting point in the planning and imple-
20111mentation of the hotel food operation because the type of customer and his
or her requirements determine the most appropriate type of outlet in terms
of menu, service, environment and atmosphere, and price. This in turn deter-
3 mines the most desirable type of production, storage and purchasing
arrangements.
6
The Beverage Cycle
7
Beverages normally include spirits, wines, beers and minerals, but often
exclude other soft drinks which are then treated in hotels as food. The
30111beverage function may be also viewed in terms of a cycle, which repre-
1 sents a sequence through which drink passes from the supplier to the
customer.
3
In comparison with food, it is for a number of reasons a simpler cycle.
4
Many beverages are purchased in standard measures under brand names from
5
one or a few suppliers. Although the money value of individual items may
6
be high, by and large, beverages are not perishable, and can be handled in
7
the same form in which they have been purchased through the different stages
8
of the beverage cycle from purchase to sales.
9
Receiving is concerned with ensuring that what is delivered has been
41111ordered and vice versa, but because of the form in which beverages are
93
1111 supplied, it is a relatively simple procedure. In contrast to food, all bever-

2 ages are normally stored before they are distributed to the selling outlets
3 within the hotel. Although some wines may call for different storage condi-
4 tions than other wines and other beverages, generally beverages have less
5 specific storage requirements than food, but the need to avoid tying up capital
6 in unnecessary stock applies equally if not more so. Because of the rela-
7 tively high value of some beverages, frequent stocktaking assumes particular
8 importance.
9
Whereas food preparation and service are usually separate, each beverage-
1011
selling outlet in an hotel combines preparation and sales of beverages, and
1
there is normally a standard unit of sale for each. The only variations are
2
likely to occur with cocktails and other mixed drinks.
3111
4 For all the above reasons beverage control is a simpler matter than food
5 cost control and takes one of two basic forms:
6
7 standard gross profit percentages are applied to minerals, beers, wines and
8 spirits, which are then controlled against these standards;
9 beverages are issued to selling outlets at selling prices, and controlled
20111 against sales.
1
2 With these methods each sales outlet is best treated as a separate cost centre,
3 which can be monitored by adjusting issues for changes in stock levels, and
4 this is normally done on a weekly basis.
5
6
7
8 Hotel Restaurants
9 Each hotel normally has one or more restaurants to serve meals and refresh-
30111 ment to resident guests and usually also to non-residents. The number and
1 type of restaurants is determined by the size and diversity of the markets
2 served by the hotel.
3
One ‘multi-purpose’ restaurant has to satisfy the needs of most smaller
4
hotel operations with limited non-resident markets for lunch and dinner
5
service. The restaurant then tends to offer a table d’hôte menu or combina-
6
tion of table d’hôte and à la carte menus with waiter or waitress service for
7
main meals, drink is usually available with food, and both are served in a
8
semi-formal environment and atmosphere.
9
40 When the market is large enough, the need arises to differentiate first
41111 between those seeking full meals who have enough time available to consume
94
Food and Drink
1111 them, and those requiring light meals and snacks who have limited time and
perhaps also limited means. This differentiation may be introduced by a
combination of table and counter service in the same room or through a
separation of the two markets between two facilities – a more or less formal
restaurant with a broadly based menu open at particular times and an informal
coffee shop facility with a limited menu open more or less continuously. The
two facilities then offer a choice of differentiated products to different people
or to the same people on different occasions. A similar need may be met by
a limited service of food in the bar, which is then complementary to the full
101111 food service in the restaurant.
1
A further differentiation may take place in a large hotel with several
2
restaurants with different menus, service, environment and atmosphere. One
3
or more speciality restaurants, including perhaps a nationality restaurant, a
4
restaurant designed to appeal to businessmen, and one to those seeking
5
leisurely dining with entertainment, may comprise the total repertoire of the
6
hotel food service.
7
Where several restaurants are available in an hotel, it is important to view
them as a totality of the hotel food service from the customer as well as
20111from the hotel point of view. They are seen by the customer as a spectrum
of facilities, from which choice is made according to who the customer is,
and according to the circumstances in which he or she finds themselves at
a particular time. For the hotel the individual restaurants represent more or
less differentiated products designed to meet particular customer needs, and
they are, therefore, complementary in the total food service function of the
hotel. The spectrum of customer choice and of hotel product differentiation
is expressed through the food, service, environment and atmosphere of each
restaurant, through their availability at particular times, and through the prices
charged in each.
30111
1
2
Hotel Bars
3
The size and diversity of the hotel markets are reflected also in the number
and type of hotel bars, the main hotel outlets for the service of drinks. In a
small hotel one bar may serve residents and non-residents, those having just
a drink and those who have a drink before a meal; the same bar may also
supply drink to the restaurant and for functions; food may be served in the
bar in addition to drink. In larger hotels there may be a residents’ bar perhaps
combined with television lounge, a lounge or cocktail or a restaurant bar,
41111and one or more separate bars serving functions.
95
1111 Corresponding to the different types of bar are the three elements of the
2 product – the range of drink available, the form of service, and the envi-
3 ronment and atmosphere, with many possible variations in each. But what
4 has been said about hotel restaurants applies also to hotel bars; where there
5 is more than one outlet, they represent a spectrum of choice for the customer
6 and a range of differentiated products from the point of view of the hotel,
7 which are complementary parts of the total beverage function of the hotel.
8
9
1011 Room Service
1
In many hotels guests have a choice of having a breakfast and often also
2
other meals and drinks served in their room, perhaps by the same staff who
3111
serve in the restaurants and bars, or by the housekeeping staff, or by room
4
(floor) service staff in a large hotel.
5
6 When meals and drinks are supplied to rooms as part of the restaurant
7 and bar service, they can be regarded as extensions of the operations of those
8 departments. But in large hotels room service may be organized as a sepa-
9 rate department, particularly when it operates from separate floor kitchens.
20111 Room service of drinks may also be provided by means of bar units in guest
1 rooms, which are stocked with a selection of alcoholic and non-alcoholic
2 drinks for the use of guests who are charged for the drinks consumed.
3
Room service in hotels may be seen in two ways. For the guest it is an
4
additional hotel service for his or her convenience. For the hotel it is an
5
additional product, which may relieve pressures in the restaurant and bars,
6
and particularly through pre-ordered breakfasts and through room bar units
7
it may contribute to a more efficient food and beverage service.
8
9
30111
1 Functions
2 Banquets, conferences and similar hotel services may be conveniently grouped
3 together as distinct and separate hotel products under the heading of func-
4 tions. Their users may also require sleeping accommodation and other hotel
5 services, but several aspects distinguish functions from other parts of the
6 food and beverage operation of the hotel:
7
8 the customers are organized groups such as clubs, societies and other
9 organizations;
40 the organized groups make arrangements for dates and times, numbers
41111 attending, menus and other requirements for each occasion, in advance;
96
Food and Drink
1111 each occasion can be treated as a separate operation planned and organ-
ized as such;
normally the same agreed menu is served to all participants;
the operation usually takes place in separate rooms and is served by staff
who are distinct from those serving others in restaurants and bars, although
they may be interchangeable between these facilities.
7
8
In smaller hotels functions may be an extension of the activities of the
9
restaurant and bar and the same departments may be responsible for their
101111
execution, although the arrangements are usually made with the organizers
1
by the management and in the larger hotels by the food and beverage manager.
2
In hotels with a large volume of functions there is usually a separate
3
banqueting or functions department.
4
Procedures similar to advance reservations of bedrooms are then intro-
duced to plan and coordinate this activity of the hotel and the main records
include:
8
a function agreement, which summarizes the arrangements for each
20111 function;
a function diary, which lists details of all functions in date order;
a functions chart, which provides a visual record of all functions arranged
for a period ahead.
4
These are supplemented by in-house information and instruction lists, which
are distributed to all concerned in the hotel.
7
Because each function is a separate occasion, with its own price, menu
8
and staffing, it can be closely controlled, especially when food production
9
takes place in a separate kitchen and when the function is provided with its
30111
own bar. The revenue and the direct costs can be ascertained with accuracy.
1
Moreover, the volume of identical meals prepared and served together enables
2
higher profit margins to be achieved from functions than from other food
3
and beverage activities, and functions often represent the second most prof-
4
itable hotel product, after rooms.
5
6
7
Food and Beverage Support Services
8
Two main ‘back-of-the-house’ facilities serve the hotel food and beverage
sales facilities restaurants, bars, room service and functions: the kitchen and
41111 the stores.
97
1111 A major distinction in kitchen facilities in hotels arises from the extent to
2 which they are centralized and serve all the food outlets of the hotel where
3 there is more than one, or whether separate kitchens are provided to serve
4 each restaurant and possibly also room service and functions. The scale and
5 diversity of the food operations are usually the main determining factors, but
6 much depends also on the operating preferences and philosophies of hotel
7 managements.
8
One central kitchen makes for ease of supervision of food production and
9
may also lead to high utilization of equipment and staff. But where meals
1011
are produced for several outlets, it may become more difficult to separate
1
the costs of food production attributable to each and conflicts may arise in the
2
priorities demanded by, say, one or more functions taking place when
3111
the restaurants may also be at peak pressure.
4
5 In large hotels such facilities as baking, butchery and vegetable prepara-
6 tion may be centralized and supply individual kitchens with prepared or
7 partially prepared foods. Alternatively or within the same operation, indi-
8 vidual kitchens serving particular outlets may be supplied from a central
9 kitchen, and take the form of ‘finishing’ kitchens, particularly for outlying
20111 function rooms and for room service.
1
The technical considerations of various food production arrangements, their
2
organization and methods are outside the scope of this book. The reader is
3
advised to consult the numerous texts that deal with the subject, several of
4
which are listed in the suggested further reading for this chapter.
5
6 Food and beverage stores in hotels are of three basic types:
7
8 food stores, usually sub-divided into dry stores, perishable stores, cold
9 rooms and in other ways;
30111 beverage stores or ‘cellar’;
1 linen, china, glass and silver stores.
2
3 But storage arrangements in hotels vary. In some hotels the dry stores are
4 the general stores of the hotel, in which are kept not only non-perishable
5 foods, but also cleaning materials, stationery and guest supplies, and the
6 cellar is often used for storing not only minerals, beers, wines and spirits,
7 but also cigars, cigarettes and tobacco. Sometimes the cellar is confined to
8 wines, which call for special storage conditions, and other drink is stored
9 separately in the dry stores. Restaurant linen may be stored in the house-
keeping department or in the user departments with china, glass and
41111silver.
98
Food and Drink
1111 Table 17 Food and beverage payroll and related expenses

2 ratios a to sales b in Europe and Africa
3
4 1996 1997
5 (%) (%)
6
7 Total Europe 40.2 39.1
Northern Europe 39.3 38.2
8 Eastern Europe 28.6 27.9
9 Southern Europe 47.3 46.0
10111
Total Africa 20.0 19.7
1
Northern Africa 16.7 16.9
1 Eastern Africa 24.7 21.9
2 Southern Africa 34.8 32.3
3 Western Africa 23.5 25.5
4
5 a
Ratios are based on respective departmental revenues.
6
7 Source: Pannell Kerr Forster, Europe, Middle East and Africa Trends, 1998
8
9
1
2 Table 17 shows the relationship between food and beverage payroll and
3 related expenses and sales in hotels in Europe and Africa drawn from Pannell
4 Kerr Forster reports in the late 1990s, which highlight the contrast between
5 the two continents.
6
7 Accounting and Control
8
9 The financial performance of the food and drink facilities in hotels is
30111 reflected in the food and beverage department operating statement, which
1 shows the sales and expenses resulting in the departmental profit. An
2 illustration of ratios from operating statements of hotels contributing to
3 Horwath European reports is shown in Table 18.
4 No particular pattern emerges, but it is clear that food and drink facilities
5 are barely profitable in Portuguese hotels, where they make little contribu-
6 tion to overall hotel profitability (Figure 12).
7
8 As distinct from financial ratios, the main operating ratios used in food and
9 beverage control are daily seat turnover or rate of seat occupancy, average
40 sales per seat or per customer, and similar measures of utilization and output,
41111
99
1111 Table 18 Food and beverage sales, expenses and profit ratios in selected
2 European countries a
3
4 Sales b Expenses c Profit
5 (%) (%) (%)
6
7 Austria 100.0 86.3 13.7
France 100.0 78.2 21.7
8
Germany 100.0 85.3 14.7
9 Ireland 100.0 70.1 29.9
1011 Norway 100.0 78.9 21.1
1 Portugal 100.0 94.8 5.2
2 Switzerland 100.0 84.3 15.7
3111 United Kingdom 100.0 64.5 35.5
4
a
b
Revenue from the sale of food (including coffee, tea, milk and soft drinks) and beverages
6 (including beer, wine, and other liquors).
c
7 Cost of food and drink plus food and beverage payroll including salaries, wages and employee
8 benefits plus items such as china, glassware, silver, linen, contract cleaning, laundry and dry
cleaning, licences, music and entertainment, operating supplies and uniforms.
9
1
2
3
4 100
5 90
6
80
7
8 70
9 60
30111
50
1
2 40
3 30
4
5 20
6 10
7
0
8 UK Ire Fra Nor Switz Ger Aus Port
9
40 Departmental Expenses Departmental Profit
41111 Figure 12 Food and beverage ratios in European hotels, 1997
100
Food and Drink
1111 which are calculated in a similar way as occupancy and rate statistics described
in connection with rooms in the last chapter.
There is a discernible trend towards more leisure eating in most devel-

oped countries. This implies that hotel restaurants will become more
specialised, often offering special themes, and many may seek specific
market niches.
9
101111 Competition will arise, not only from conventional restaurants in the
vicinity, but from specialised themed restaurants which will often be
branded with a high profile, from stores offering high quality prepared
take-away foods, and from home catering.
4
We anticipate that franchising will spread to the hotel restaurant with
5
either the hotel becoming the franchisee or with the restaurant being
6
let to a franchisee. Whether franchised or not, the hotel restaurant may
7
well become a branded product.
8
9 Technological advancements will make it possible for even relatively
20111 modest hotel restaurants to provide high quality cuisine.
1
Improved levels of sanitation and hygiene will be expected in both
2
the restaurant and the kitchen.
3
Horwarth and Horwath, Hotels of the Future
4
5
6
7
8
9
30111
1
2
3
4
5
6
7
8
9
40
41111
101
1111
2
3
4
5 9
6
7
8
9
1011
1
Miscellaneous
2
3111 Guest Services
4
5
6
7
Accommodation, food and drink services are the
8
primary activities of hotels, which generate all or
9
most hotel revenue, account for all or most of their
20111
employees, and represent the principal prod-ucts
1
provided by the major hotel departments. But the
2
present-day hotel guest normally also expects other
3
facilities and services. In addition to a comfortable
4
room, and meals and refresh-ments in a restaurant
5
or bar or in the room, a guest may want to use the
6
telephone or have clothes laundered or dry cleaned.
7
In a large modern hotel a guest may expect to be
8
able to buy newspapers, magazines and souvenirs,
9 have a haircut, obtain theatre tickets, and book an
30111 airline ticket for the next stage of a trip.
1
2
3 The hotel services other than accommodation,
4 food and drink may be provided to the guest by the
5 hotel or by other operators on the hotel premises.
6 The revenue-earning activities provided directly by
7 the hotel are variously described as ancillary or
8 subsidiary revenue-earning, and are grouped for
9 accounting and control purposes in what are known
40 as minor operated depart-ments, to distinguish
41111 them from major operated
Miscellaneous Guest Services
1111 Africa and the

2 Middle East 13.7%
3
4 Latin America/
5 Caribbean 12.6%
6
7
Asia 11.1%
8
9
10111 North America 7.4%
1
1
2 Europe 7.1%
3
4 Australia and
5 New Zealand 5.9%
6
7 Figure 13 Miscellaneous sales and income in hotels, 1997
8
9
20111 departments concerned with rooms, food and beverages. Both are distin-
1 guished from rental and concession arrangements, under which some of these
2 and other services may be provided to guests by outside firms operating in
3 the hotel.
4 Several of these services were referred to in Chapter 7 in connection with
5 the hotel accommodation function, as they are often provided by hotel recep-
6 tion, uniformed staff or the housekeeping department. In this chapter they are
7 described as separate sources of hotel revenue with their own organiza-tional
8 and operating considerations.
9
30111 Hotels contributing to annual reports of Horwath International earned on
1 average the proportions of their total revenue shown in Table 19 from
2 sources other than accommodation, food and drink in the late l990s (and see
3 also Figure 13).
4
5
6 Guest Telephones
7
8 One of the basic requirements of hotel guests is to communicate with the
9 outside world, and telephone services, which include telegrams, and some-
40 times also facsimile, are the most common ancillary services provided by
41111 hotels for their guests.
103
1111 Table 19 Miscellaneous sales and income as a ratio of hotel revenue in

2 selected regions a
3
4 1995 1996 1997
5 (%) (%) (%)
6
7 Total world
Telecommunications b 2.8 2.6 2.3
8
Other income c 5.3 5.1 5.8
9
Africa and the Middle East
1011
1
2
Asia
3111
4
5
Australia and New Zealand
6
Telecommunications b 2.6 d 2.4 d 2.7
7 Other income c 5.1 d 3.9 d 3.2
8
Europe
9 Telecommunications b 2.4 2.1 1.6
20111 Other income c 5.1 5.2 5.5
1
North America
3 Other income c 4.2 4.1 4.9
4 Latin America/Caribbean
6 Other income c 8.1 8.3 8.4
7
8 a
All figures are based on arithmetic means.
Revenues derived from guest use of telephone.
9
Other income includes income from rentals of space for business purposes and income
30111 generated from other sources, excluding investment income.
Australia only.
1
3
4
5 A basic provision is telephones with coin boxes, which are available in
6 public rooms for use by resident guests as well as by non-residents.
7 However, this provision is commonly enhanced by bedroom telephones and
8 there are two main operating methods. One is for all calls to be made through
9 the hotel operator who can ascertain the cost of all outgoing calls with the aid
40 of a meter connected to the main switchboard. The other method enables
41111
104
1111 guests to dial calls from their rooms directly, which are recorded by
2 individual meters for each room at the cashier’s desk so that charges to guest
3 accounts can be computed from meter readings. The hotel telephone room
4 also often provides telegraph, telex and facsimile (fax) services for guests.
5
6 Although the same facilities are also used by the hotel for its own commu-
7 nication purposes, there are clearly costs attributable to guest use. There are
8 fixed costs of the premises, semi-fixed costs of equipment rentals and
staffing, and variable costs of individual calls and messages through the
9
external system. Incoming calls and messages are normally available to
10111
1 guests free, but most hotels seek to recover not only the variable costs of
1 outgoing calls and telex and fax messages, but also some or all of the other
2 costs by a mark-up in the prices charged to guests.
3 The telephone and related services, therefore, have their own revenue and
4 also their own cost of sales, payroll and other direct as well as indirect costs.
5 In smaller hotels guests may be charged only with the basic cost of their
6 telephone calls and other costs may be regarded as part of the room cost. But
7 hotel telephone and rela ted services are regarded by most larger hotels as a
8 revenue-earning activity and as a cost centre, for which the operating result
9 may be periodically computed in the same way as for other activities of the
20111 hotel. If the switchboard operator has also other duties, the payroll cost can
1 be apportioned between the departments concerned and similarly an
2 apportionment can be made for all costs between the guest use and the hotel
3 use of the service.
4
5 Clear policies for this service are desirable. In much the same way as a
6 guest may sometimes make doubtful comparisons between the price of a
7 meal in the hotel restaurant and the cost of its ingredients if the meal were
8 cooked at home, comparisons are made by hotel guests between what they
9 are charged for their telephone calls in hotels and what it would have cost
30111 them from their own home or office. It is, therefore, important that hotels
1 should take steps to explain the basis of their telephone charges to guests.
2
3
4
5 Guest Laundry
6
7 Although the increased use of drip-dry clothing has made many hotel guests
8 less reliant on these services, some guests, particularly those staying in hotels
9 more than a few days and short-term guests away from home for any length
40 of time, often require laundry and valet services in hotels.
41111
105
1111 These guest services are organized in one of three main ways – as an ‘in-
2 house’ facility, or by arrangement with an outside laundry and dry cleaning
3 firm or, in an hotel group, laundry and valeting may be operated as a central
4 facility for its hotels. The same facilities may also be used by the hotel for
5 its own purposes – for bedroom and table linen and for the many other
6 fabrics used throughout the hotel. Whichever of the three arrangements
7 applies, the hotel linen room is usually the focal point of the service. Articles
8 are collected from guests and recorded there before dispatch to the laundry,
9 and returned from there to guests when they have been washed and cleaned
1011 – in many hotels as a same-day service.
1
Although the same facility may be used by guests and by the hotel, each
2
has its own revenue and its own costs. The costs of room linen are part of
3111
the room cost and the costs of table linen are part of the restaurant cost;
4
they are included in the room and meal price respectively. The costs of the
5
guests’ own laundry and dry cleaning are recovered through a separate charge
6
to the guests’ accounts and this normally includes a mark-up on the price
7
charged to the hotel, as a handling charge if an outside firm is used, or as
8
a profit margin to the hotel laundry. For a group laundry it has to be decided
9
whether the profit element accrues to the laundry or to the hotels or whether
20111
it is shared by the two.
1
2 Guest laundry and valeting are regarded by some hotels as a service to
3 their guests, which is required no more than to cover its direct costs, but in
4 most larger hotels they are treated as a revenue-earning activity, for which
5 revenue and costs are monitored, and for which operating results are computed
6 separately. The hotel incurs costs in providing the service and it seems prefer-
7 able that these costs are met by those using the service, rather than through
8 higher prices charged to all guests for their stay.
9
Telephones and laundry have been dealt with here as the two most common
30111
ancillary activities in many hotels. Other facilities and services operated by
1
hotels tend to vary greatly from one hotel to another, both in the extent to
2
which they are provided and in the operating arrangements, and are not,
3
therefore, discussed separately in this chapter.
4
5
6
Rentals and Concessions
7
8 In addition to the hotel trading activities discussed so far, a part of the hotel
9 income may arise from those operated on the hotel premises by others as
tenants or concessionaires. The activities carried on by these other operators
41111may or may not be providing a service to hotel guests, but their distinctive
106
1111 feature is that they are not trading activities of the hotel, which sub-lets parts
of the premises, thus distinguishing them from the hotel-operated activities.
The tenants are, in respect of these activities, in business on their own account
and pay a rent to the hotel.
5
This type of income arises most commonly from flats and apartments let
6
to tenants for residential purposes on a long-term basis; offices let to busi-
7
ness and other organizations for their purposes; shops let to retailers; club
8
rooms let for purposes of a members’ or proprietary club; display rooms and
9
showcases let to others for the display of their wares. From the point of view
101111
of providing services to hotel guests, the most important in the present context
1
are various retailing activities.
2
Hotel services to guests may also be provided by concessionaires who are
given the right to operate on hotel premises with a view to undertaking
services to guests, which would be otherwise operated by the hotel. These
may include some of those which may be provided by tenants, such as
newsagents, hairdressers and souvenir shops, or other services, such as cloak-
rooms.
9
20111 The distinction between direct operation and through rentals and conces-
sions may not be apparent to guests, and in any case may not be material
1
to them, but it is obviously of some significance operationally. There
2
is also a technical legal distinction between rentals and concessions, the
3
former denoting greater independence for the tenant than the licence
4
to use the premises on certain conditions, which is the essence of a
5
concession.
6
Some types of rental have as their main reason earning income from
space which is not required by the hotel for other purposes, or which can
earn higher income in that way than it would in another use. In the present
30111context rentals and concessions are seen as alternative means of providing
services to guests. Direct management of these services by the hotel normally
provides a closer direct control and supervision by the hotel and greater flex-
ibility in operation. However, rentals and concessions relieve the hotel from
operating what is often to the hotel operator an unfamiliar service, which
enables the hotel to concentrate on its primary activities. In recent years
there has been an extension of this approach even to some primary hotel
activities, as for example, when an hotel restaurant is operated by another
organization.
9
40
41111
107
1111
2 Mounting guest expectations will require employees to increase their
3 knowledge of the guest and the hotel. This will continue to force the
4 integration of the currently fragmented management information
5 systems. The challenge will be for each employee either to possess the
6 knowledge necessary to meet the demand, or to be able to search for,
7 obtain and analyze the information required. It can be expected that
8 the management of knowledge will continue to alter the basic nature
9 and structure of the delivery of products and the services as well as
1011 the nature of tasks performed by employees.
2
3111
4
5 Other Sources of Income
6
There are several other sources of income, which may be conveniently
7
included in this chapter, with a view to providing a comprehensive picture
8
of all hotel income, although they do not necessarily arise from the provi-
9
sion of hotel services to guests.
20111
1
Commissions may accrue to the hotel from the providers of car hire
2
and taxi services, theatre and travel agencies, and other suppliers of
3
services to guests, in return for the business generated for them by
4
the hotel.
5
Foreign currency and travellers cheques are normally exchanged by hotels
6
for guests at rates more favourable to the hotel than those offered by
7
banks, to safeguard against fluctuations in rates between their encashment
8
by the hotel and their sale by the hotel to the bank, and sometimes also
9
to include a charge for the service rendered.
30111
Salvage represents revenue derived from the sale by the hotel to dealers
1
of such items as used cooking oil, waste paper and other waste or obso-
2
lete materials.
3
Interest is earned by hotels on bank deposits and other investment of spare
4
funds.
5
Cash discounts are earned by hotels by the payment of creditors’ accounts
6
within the discount period, as distinct from trade discounts, which are
7
8 more properly seen as a deduction from the cost of goods and services
bought.
9
40
41111
108
1111 Table 20 Telecommunications income, expenses and profit ratios in hotels in

2 selected European countries a
3
4 Income b Expenses c Profit
5 (%) (%) (%)
6
7 Austria 100.0 48.8 51.2
France 100.0 77.8 22.2
8 Germany 100.0 38.8 61.2
9 Ireland 100.0 62.9 37.1
10111 Norway 100.0 104.7 –4.7
1 Portugal 100.0 59.3 40.7
1 Switzerland 100.0 71.8 28.2
3
a
Revenue received from guest use of telephone, facsimile and telex facilities.
5 Total costs and expenses incurred in the provision of telephone, facsimile and telex facilities
for guests, including related labour costs.
6
8
9
1 The financial performance of minor operated departments of an hotel is
2 reflected in one or more operating statements, prepared in a similar way as
3 for the major operated departments described in Chapters 7 and 8, and
4 showing departmental revenue, expenses and departmental profit.
5 Departmental ratios from operating statements of hotels contributing to
6 Horwath International annual studies in the late 1990s are shown in Table 20.
7 It indicates that telecommunications contributed little to the hotel operating
8 profit in several countries and were, in fact, a loss-making service in Norway.
9
30111
1
2
3
4
5
6
7
8
9
40
41111
109
1111
2
3
4
5
6
7
8
9
1011
1
2
3111
4
5
6
7
8
9
20111
1
2
3
4
5
6
7
8
9
30111
1
2
3
4
5
6
7
8
9
40
41111
Part
1111
2
3
IV
4
5
6
7
8
9
10111
1
1
Hotel Support
2
3 Services
4
5
6
7
8
9
20111
1
2
3
4
5
6
7
8
9
30111
1
2
3
4
5
6
7
8
9
40
41111
1111
2
3
4
5
6
7
8
9
1011
1
2
3111
4
5
6
7
8
9
20111
1
2
3
4
5
6
7
8
9
30111
1
2
3
4
5
6
7
8
9
40
41111
1111
2
3
8
10
4
5
6
7
9
101111
Marketing
1
2
3
4
5
Several aspects of hotel products, markets and
6
marketing are considered in this book, before and
7
after the reader reaches this chapter devoted to
8
marketing. They provide both an introduction and
9
a follow-up to the discussion of marketing in this
20111
chapter. It is, therefore, appropriate to set this
1
chapter in the context of the various references
2
to aspects of marketing earlier and later in this
3
book, with a view to linking the various parts.
4
5 Chapter 1 relates hotel and travel development,
6 places hotels in the total accommodation mar-
7 ket, and examines influences on hotel location.
8 In Chapter 2 hotel facilities and services are
9 described as hotel products, their users as hotel
30111 markets, and the marketing concept is introduced.
1 In Chapter 3 hotel products and markets enter
2 into the policies, philosophies and strategies of the
3 business. The main hotel products are considered
4 in some detail in Chapters 7–9, and aspects of
5 marketing are referred to later in the context
6 of hotel organization and staffing in Chapters
7 13–15. The products and markets of small
8 hotels, hotel groups and of international hotel
9 operations, and how each of them approaches
40 marketing, receive attention in Chapters 4–6.
41111 Chapter 4 contrasts the products, markets and the
1111 marketing of small and large hotels, and identifies the particular marketing
2 strengths and weaknesses of the small hotel. Chapter 5 highlights market-
3 ing economies among the most important advantages of large-scale hotel
4 operations, and marketing as providing a particular scope for centralization
5 in hotel groups. Chapter 6 suggests that this is also the case where the
6 groups operate internationally, and includes illustrations of the relative impor-
7 tance of particular products and markets for hotels in selected regions and
8 countries.
9
There are several books concerned with various aspects of hotel marketing
1011
and some of those published in Britain are listed as suggested further reading
1
to this chapter. In view of this and the breadth of the subject, this chapter
2
aims to provide a general outline of the role and scope of the marketing
3111
function in hotels rather than to deal with its techniques, and the reader is
4
referred to those texts mainly concerned with marketing for greater detail.
5
6
7
. . . markets vary. Americans may ask you to dine with them at 6 p.m.
8
(or earlier), Britons at 8 p.m., and I have been invited to dinner in
9
Spain at 10 p.m. History, religion and tradition cause marketing differ-
20111
ences. Most sensible people like to sit down and relax over a drink.
1
We ‘crazy’ Britons prefer to stand up when we drink our pints in a
2
pub. On the Continent of Europe good service is a leisurely meal, in
3
America slow service is often considered bad service. Some countries
4
start a meal with coffee, others never have coffee till the end of the
5
meal.
6
Melvyn Greene, Marketing Hotels and
7
Restaurants into the 90s
8
9
30111
1 From Production to Sales to Marketing
2
Several phases may be distinguished in the evolution of consumer markets
3
including markets for hotel services.
4
5 The first phase is characterized by a shortage of available goods and
6 services when demand is in excess of supply. There is no sales problem;
7 what is produced can also be sold; the main problem is to increase output.
8 This gives rise to a seller’s market and a production orientation on the part
9 of the seller, and has been apparent in many hotel markets at particular times:
for example, during the industrialization of most countries, and as recently
41111as the late 1970s and the 1980s in London, Paris, and other capital cities.
114
Marketing
1111 The provision of new capacity, technical progress and increased produc-
tivity lead to the second phase, in which higher real incomes also generate
increasing purchasing power. This has occurred first with goods and then
with various services. A greater supply then exceeds demand and leads to a
buyer’s market and a sales orientation on the part of the seller. It is to this
phase that the introduction of sales offices in hotels may be traced, as falling
occupancies and empty banqueting rooms call for a sales effort.
8
In the third phase a further growth in capacity and output is normally
9
accompanied by a further growth in incomes leading to what has become
101111
known in the developed world as the affluent society. It leads to a realiza-
1
tion of the need for goods and services to be produced to match consumers’
2
needs, giving rise to a buyer’s market and a marketing orientation. Increasingly
3
consumers’ needs become the starting point in the planning, design and provi-
4
sion of goods and services, in hotels and elsewhere, because selling alone
5
may not be enough in itself to secure profitability.
6
Not all hotel markets necessarily undergo these three phases consecutively
or in step with each other. But the basic pattern has been from a seller’s
market and production orientation, through a buyer’s market and sales orien-
20111tation, to a buyer’s market and marketing orientation. The key characteristics
of the three phases have been the growth in output and capacity on the one
hand and the growth of the market on the other hand, accompanied by typical
responses on the part of the producers.
4
5
6
The Marketing Concept
7
The British Chartered Institute of Marketing has defined marketing as follows:
30111Marketing is the management function which organizes and directs

1 all those business activities involved in assessing and converting
customer purchasing power into effective demand for a specific product
or service and in moving the product or service to the final customer
or user so as to achieve the profit target or other objectives set by the
company.
6
In this definition the marketing function is seen not merely as a department
of the business, but as coordinating all aspects of the business, and the role
of marketing not merely in terms of satisfying demand and generating sales,
but including the assessment of consumer demand as a starting point;
41111marketing exists to achieve the overall objectives of the business.
115
1111 In order to understand marketing in its totality, it is helpful to distinguish

2 between the concept and the various tools and techniques. Conceptually,
3 marketing is a philosophy in the conduct of a business. It is based on a belief
4 that sustainable profitability can only be achieved by identifying, anticipating
5 and satisfying customer needs and desires.
6
Marketing is not synonymous with selling. Selling focuses on the needs
7
of the seller, marketing on the needs of the buyer. Selling is preoccupied
8
with the seller’s need to convert his product into cash, marketing with the
9
idea of satisfying the needs of the customer by means of the product. In this
1011
chapter selling is seen as one of several elements of total marketing activity,
1
which is described later on in terms of the marketing cycle (see Figure 14).
2
3111
4
The paradox is that when the marketing concept is observed and carried
5
through in the entire planning process of a new service, the sales effort
6
required in the long run should be minimal. Where great emphasis on
7
sales is required, it usually means that the marketing concept has been
8
disregarded; it is an enormous task to try and sell something which
9
people neither need nor desire. This does not mean that market-
20111
ing replaces sales, but that they are complementary to each other. If
1
marketing establishes what people need, then the sales function demon-
2
strates that their needs can be fulfilled.
3
Roger Doswell, Towards an Integrated Approach
4
to Hotel Planning
5
6
7
8
9 Special Features of Hotel Marketing
30111 Marketing is first and foremost about matching products and markets and in
1 this sense the marketing of hotel services is in principle no different from
2 the marketing of other consumer products. But there are special features of
3 hotel products and markets and hence of hotel marketing.
4
For most users hotel rooms are a means to an end and not an end in itself
5
and the demand for them is what is known as derived demand – the reason
6
for their use may be a business visit or a holiday or something else but rarely
7
the room itself, and the same applies to some extent to other hotel services.
8
9 The availability of the most important hotel product, the hotel room, is
fixed in time and place. In the short term the number of rooms or beds on
41111 offer cannot be significantly changed and location is part of the highly perish-
116
Marketing
1111 able product, which cannot be stored for future sale or follow the customer.
The demand for hotel accommodation and other services fluctuates from day
to day, from week to week, and from one part of the year to another. A waste
occurs when demand falls and there is a definite upper limit to the volume
of business in a period of peak demand.
6
Hotel investment is primarily an investment in land and buildings and inter-
7
ior assets. The bulk of the capital invested in the fixed assets of the hotel,
8
combined with the continuity of hotel activity, gives rise to high fixed costs,
9
which have to be covered irrespective of the volume of business. Three key
101111
factors are, therefore, critical to a successful hotel operation: the right loca-
1
tion, correct capacity and a high level of utilization. All of them imply
2
marketing decisions, first in the conception of the hotel and in its operation
3
subsequently.
4
In the conception of the hotel, marketing can contribute first through a
market feasibility study to assess the demand. A study may identify the best
market opportunity for an hotel, a gap in the market, a location or choice
between alternative locations, for a particular hotel concept; or, given a partic-
ular location, a study can determine the most appropriate hotel concept. The
20111translation of the concept into an operational facility then takes place through
product formulation and development. In the operation of the hotel, marketing
can contribute through a continuous process of market research, product
development, promotion, selling, monitoring and review – the stages of a
marketing cycle which is described later in this chapter.
5
In the planning of a new hotel, there is full scope for adherence to the
6
marketing concept from the outset. In an existing hotel, there is often an
7
important distinction between the short- and long-term marketing tasks. In
8
the short term the marketing task may be to adjust customers’ wants to avail-
9
able facilities and services, but the long-term task is to modify the facilities
30111
and services to the customers’ wants.
1
In the short run, our existing facilities and services are given within narrow
limits. We may research the market to see which market segments are or
could be attracted to them, make such adjustments to our products as are
possible, but the main effort is likely to focus on promotion and selling.
With low occupancies and low utilization of restaurants, bars and function
rooms, in the short run the sales effort becomes dominant. But it is no excuse
for doing just that; it is both necessary and possible to proceed with changing
the products: to establish who our customers could be and what their needs
are (market research), and to formulate and develop products meeting their
41111needs (product formulation and development). This approach ultimately calls
117
1111 Table 21 Guest services offered by hotelsa in main regions

2
3 Africa/ Latin
4 Middle North America/
5 East Asia Australia Europe America Caribbean
(%) (%) (%) (%) (%) (%)
6
7
Air-Mile programmes 70
8
Airport transportation 77 83 56
9 Auto rental 79 69 78
1011 AV equipment 88 86 88 84 90 67
1 Business centre 74 84
2 Concierge services 84 84 91 71 64
Direct call dialling of
3111
international calls 93 94 97 96 87 87
4 Facilities for disabled 86 59 90
5 Facsimile for guest use 91 88 92 89 94 89
6 Frequent guest programmes 74 61 46
7 Health clubs 74
8 Multi-lingual staff 88 79 66 84
Non-smoking rooms 77 80 93 69 97
9
Safety deposit boxes 95 98 95 81 87 90
20111 Sprinklers in public places 84 72 77 43
1 Sprinklers in guest rooms 79 69
2
3 The table includes the ten most offered services for each region.
5
6
7
for less sales effort, which is then designed to demonstrate to people that
8
their needs can be met; it is of particular importance in hotels.
9
30111 Marketed commodities and articles are concrete, physical and capable of
1 measurement; most of them can be inspected and many of them even tried
2 out before purchase. Services are less tangible and hotel services particu-
3 larly so. Hotel services cannot be easily defined and described in terms of
4 clearly measurable products and their qualities. They are often bought indi-
5 vidually or as part of a package, and they may be bought directly by the user
6 or through an intermediary, for example, a travel agent. In hotels, as in other
7 walks of life, it is necessary to make it easy to buy, only more so.
8
Table 21 shows the ten most offered hotel services in the main regions.
9
Direct dialling of international calls, facsimile and safety deposit boxes
40
appear to be most offered services world-wide.
41111
118
Marketing
1111
The Marketing Cycle
2
3 Hotel marketing as defined earlier in this chapter can be regarded as a cycle
4 that begins with an assessment of the existing and potential markets for hotel
5 products (see Figure 14). This activity, known as market research, is
6 concerned with providing management with information about markets and
7 products in such a way as to contribute to systematic decision-making. We
8 have seen earlier that the contribution may be both to the development of
9 new hotel facilities and services and to improving existing ones, by
10111 identifying the customers and their needs in relation to the particular products
1 offered or to be offered by the hotel.
1
The next element of the marketing cycle is product formulation and devel-
2
opment. With adequate information about the market it is possible to identify
3
accurately the particular segments of the market served or to be served by the
4 hotel. The formulation and development of the products to match the
5 identified market segments includes both the range and type of hotel facili-
6 ties and services and pricing. Where this takes place consciously and
7 systematically, it is possible to achieve a high degree of match between prod-
8 ucts and markets, because particular products have been shaped for particular
9 defined markets. Where products are developed without market research, the
20111 market often tends to shape itself to the product.
1
Most new products are brought to the attention of the buyer and existing ones
2
are kept in the buyer’s awareness through promotion. In this a broad distinction
3
may be drawn between three sets of methods. Advertising covers the use of the
4
press, radio and television, films, posters and other paid-space or paid-time
5
media. Public relations include all those efforts other than adver-tising, such as
6
editorial publicity, intended to create and maintain a favourable image of the
7
hotel and its products. Merchandising is point-of-sale promo-tion of particular
8
significance in hotel restaurants and bars through packaging, display and
9
presentation. The above activities are supported by brochures, signs and other
30111
promotional material and activities. Their combination gives the promotional mix
1
of the hotel, which draws on sales records and which provides a stimulus to sales.
2
Table 22 lists a number of promotional tools in use by hotels in main regions and
3
the proportion of hotels in each region using a particular tool. Direct mail, print
4
advertising and promotions are the most commonly used world-wide and also in
5
each region.
6
7 However, marketing achieves the objectives of the hotel only when the
8 room has been booked for the guest, a table reserved in the restaurant, and
9 the function arrangements have been agreed with the organizer. Accomplish-
40 ing sales places selling in the marketing cycle. It may be performed by sales
41111
119
1111 Table 22 Use of promotional tools by hotels in main regionsa

2
3 Africa/ Aust.
4 All Middle and North South
b
5 hotels East Asia NZ Europe America America
(%) (%) (%) (%) (%) (%) (%)
6
7
Direct mail 75 83 89 94 71 76 79
8
Loyalty cards 48 53 58 55 53 36 27
9 Merchandising 40 17 34 47 40 27 45
1011 Outdoor advertising 41 53 55 47 41 39 24
1 Print advertising 92 97 94 97 91 96 87
2 Promotions 83 89 94 91 81 80 76
3111 Radio and TV 44 33 47 75 34 56 53
Telemarketing 34 22 49 52 28 30 50
4 Web site/Internet 57 47 63 49 58 75 51
5
7 Excluding USA.

9
20111
1
staff whose sole concern is direct selling, but in most successful hotels the
2
receptionists, waiters and other staff in direct contact with the customer are
3
also salesmen.
4
5 Monitoring of performance and review constitutes the final element of the
6 marketing cycle. It is concerned with comparisons of actual results with plans
7 and budgets and with evaluating the effectiveness of the marketing effort,
8
9
30111 Market
1 Research
2
3
Monitoring Product
4 and Review Formulation and
5 Development
6
7
8
Selling Promotion
9
40 Figure 14 The marketing cycle
41111
120
Marketing
1111 with a view to providing an informed basis for changes and adjustments in
2 market and product policies and strategies of the hotel.
3
What has been outlined here as the marketing cycle corresponds closely to
4
the marketing mix, which is commonly described in marketing litera-ture in
5
terms of four variables – product, price, promotion, place (the four Ps).
6
7
8
9 Marketing Resources
10111
1 It is of interest to see what resources are devoted by hotels to marketing. An
indication is provided in Tables 23 and 24 for hotels contributing to Horwath
1
reports in the late l990s.
2
3 The particular definition of marketing adopted is based on the Uniform
4 System of Accounts for Hotels, which explains what is covered as follows:
5
6 Costs incurred in connection with the creation and maintenance of the
7 image of the property and the development, promotion and furthering
8 of new business.
9
20111 Marketing includes payroll and other expenses of the relevant activities.
1 Until recently, costs of a reservation system were charged to the marketing
2
3
4 Table 23 Marketinga expenses as a ratio of hotel sales in main regionsb
5
6 Marketing expenses Payroll and related
(total) expenses
7 (%) (%)
8
9 All hotels 4.6 n/a
30111 Africa and the Middle East 3.5 0.9
1 Asia 3.6 1.4
2 Australia and New Zealand 4.9 1.4
3 Europe 3.6 1.1
North America c 5.7 2.2
4
South America 5.8 1.8
5
6 Marketing expenses typically include sales expenses, advertising expenses (print, TV, radio
7 and outdoor), merchandising, public relations and departmental payroll.
8 Excluding USA.
40
41111
121
1111 Table 24 Marketing expensesa as a ratio of hotel sales in selected European

2 countriesb
3
4 1995 1996 1997
5 (%) (%) (%)
6
7 Benelux 4.8 3.9 3.6
Germany 5.0 4.8 4.3
8
Ireland 3.9 3.5 3.3
9 Spain 3.2 3.2 4.4
1011 Switzerland 3.9 3.5 5.0
2
3111 Marketing expenses typically include sales expenses, advertising expenses (print, TV, radio and
outdoor), merchandising, public relations and departmental payroll.
6
7
8
9
20111 Canada 5.8%
1
2 United States 5.7%
3
4
Australia and 4.9%
5 New Zealand
6
7
United Kingdom 2.3%
8
9
30111 Figure 15 Marketing expenses in hotels, 1997
1
2
3
4 department. However, current Horwath reports follow the ninth revised
edition of the Uniform System, which recognizes that these costs are more
5
appropriately charged as a rooms department expense, because the primary
6
purpose of a reservation system is to facilitate the rooms booking function.
7
8
9 As shown in Tables 23 and 24, in the late l990s most hotels contributing to
40 Horwath International reports spent on average between 2 and 6 per cent
41111
122
Marketing
1111 of their total revenue on marketing activities as defined earlier. However,

these figures may underestimate total marketing costs, which, some would
argue, include not only reservation costs and commissions paid to inter-
mediaries, but also the cost of discounts to tour operators and others, in order
to achieve a particular volume of business.
6
7
Yield and Quality Management
8
In recent years, hotels, in common with other types of business, have been
101111 increasingly adopting yield management – the concept and techniques
concerned with the maximization of profit and revenue. As hotels cannot
store their primary product – bedroom accommodation – they must sell it
at the best possible price, because an empty bedroom is an opportunity lost
for ever. Yield management can help in two main ways:
5
rooms inventory management; and
differential pricing structure.
8
The former is concerned with matching different room types to the avail-
20111able demand and the latter concerns obtaining the best price at any particular
time. Rooms yield is calculated according to the following formula:
3 Rooms sold Average achieved room rate

4 –––––––––––––––––––– × –––––––––––––––––––––––
Rooms available for sale Average room rate potential
5
6
Occupancy and discount rates are, therefore, key determinants of yields
7
achieved by hotels. These are illustrated for selected African, Middle Eastern
8
and European cities in the late 1990s in Table 25. It shows that the highest
9
yield is achieved by hotels with high occupancies and low discount rates, as
30111
in London and Tel Aviv; hotels with high occupancies achieved through high
1
discounts show low yields, as in Casablanca and in Karachi. On the whole,
2
hotels in European cities tend to discount rates to fill their rooms less than
3
those in Africa and the Middle East and are, therefore, more successful in
4
maximizing their rooms revenue.
5
Another growing concern of marketing significance on the part of hoteliers
has been the management of quality. The systematic process consists of
several stages: determining the guests’ requirements; designing hotel facili-
ties and services to meet them; operating the hotel in conformity with the
established standards; monitoring the guest satisfaction. Among hotel com-
41111panies, Holiday Inns has pioneered the recognition of the importance of
123
1111 Table 25 Room occupancies, discounts and yield in selected cities

2
3 Occupancy Discount Yield
4 (%) (%) (%)
5
6 Africa and the Middle East
7 Abu Dhabi 63.3 37.5 39.6
Cairo 75.3 53.6 34.9
8 Casablanca 63.7 59.4 25.9
9 Johannesburg 50.0 27.5 36.3
1011 Karachi 69.8 67.6 22.6
1 Nairobi 58.8 55.4 26.2
2 Tel Aviv 67.0 30.1 46.8
3111 Europe
4 Athens 73.0 48.7 37.4
5 Berlin 64.8 41.0 38.2
Brussels 68.3 52.0 32.8
6 Helsinki 65.8 44.0 36.8
7 London 83.3 35.1 54.1
8 Paris 75.1 42.4 43.3
9 Prague 67.8 40.4 40.4
20111
1 Source: Based on Pannell Kerr Forster, City Surveys, 1998
2
3 quality in ensuring guest satisfaction and of its role in marketing. A national
4 series of guidelines to companies on what is required of a quality system is
5 provided by the British Standards Institution in BS 5750. (ISO 9000 is the
6 international equivalent of BS 5750.)
7
8
9 You all know the old ‘rule’ about a new hotel. First year it loses
30111 money. The second year it breaks even, then the third year shows a
1 reason-able profit. The same applies to a lot of marketing effort and
2 cost. If only a one-year viewpoint is taken on marketing results, this
3 seriously inhibits recovery from the present problems, and restricts
4 long-term profit growth. My case is that basically both operating and
5 marketing management must have a marketing strategy looking ahead
6 for two to three years.
7 Melvyn Greene, Marketing Hotels and
8 Restaurants into the 90s
9
40
41111
124
Marketing
1111
Hotels in the Total Tourist Product
2
More often than not hotel accommodation and other hotel products are parts
of a total tourist product, which covers, from the point of view of the tourist,
the whole experience from the time he or she leaves home to the time they
return. Airline seats and hotel beds may be seen as individual products by
their suppliers but, as far as the tourist is concerned, they are only product
components; for the tourist, what he or she buys is a composite product, an
amalgam of attractions, transportation, accommodation, entertainment and
101111 other activities.
1
The amalgam or package the tourist buys is seen most clearly in the case
2
of inclusive tours, where the tour operator or another organizer brings together
3
all the elements of a holiday, which the operator promotes and offers for
4
sale as a single product at one inclusive price. However, all tourists buy
5
packages, whether they use travel agents or not, and whether they buy the
6
various components separately or as an inclusive tour, and this applies to
7
holidays as well as to business trips.
8
This has important implications for hotel marketing, for increasingly hotel
20111beds and other hotel facilities and services cannot be successfully marketed
in isolation. They are supplied by many separate individual operators, each
of whom provides only a part of what the tourist buys and often in rela-
tively small quantities. We have seen earlier that for most hotel users hotel
rooms are a means to an end and not an end in itself; they also normally
need other means to an end, and their concern as consumers is the end rather
than the means. In these circumstances it becomes increasingly important to
realize that all suppliers, including hoteliers, are in the main serving to facil-
itate what is seen by the consumer as part of one overall tourist experience.
It follows that the interests of all suppliers of facilities, including hoteliers,
30111are more effectively served if they recognize their respective roles in and
1 contributions to the total product, and if they organize their respective
marketing efforts accordingly. This is not to say that they need to submerge
their identities and integrate under one control. But it does mean that a great
deal of promotion of independent individual hotels, transport and related
companies may be less effective than coordinated efforts of those concerned
with the promotion of the total tourist products.
7
Three types of coordination are required for effective marketing in travel
8
and tourism, where components of the total product are provided by separate
9
producers:
40
41111
125
1111 at the destination it is the role of the official tourist organization to formu-
2 late and develop tourist products based on the destination and to promote
3 them in appropriate markets;
4 at the generating end it is the role of the tour operator to assemble compo-
5 nent services into packages and to promote them and sell them as single
6 products;
7 it is the role of individual operators to formulate, develop and supply their
8 products as parts of a total tourist product.
9
1011 Just as it is necessary to question whether airlines are really in the busi-
1 ness of selling seats in the air (a transport experience), it is necessary to
2 question whether hotels are really in the business of selling rooms (an accom-
3111 modation experience).
4
5
6 It is becoming apparent with the evolution of the information highway
7 that managers will be increasingly involved in direct-to-consumer
8 marketing and knowledge sharing. This is already being seen in the
9 strategic alliances occurring with the development of Global Distribu-
20111 tion Services (GDS). While these systems are structured to deal with
1 each other (airline reservations with hotel systems tied to travel agents),
2 many of these intermediaries may find themselves shut out of the equa-
3 tion in the future. While it is still unclear how this will play out, the
4 direct-to-consumer dimension seems inescapable.
6
7
8
9
30111
1
2
3
4
5
6
7
8
9
40
41111
126
1111
2
3
8
11
4
5
6
7
9
101111
Property Ownership
1
3
and Management
2
4
5
6
7
8
9 The various functions of the hotel – rooms, food
20111 and drink and other guest services – were
1 described in Part III of this book. Part IV is
2 devoted to hotel support services; it begins with
3 the discussion of marketing in Chapter 10 and
4 concludes with a discussion of finance and
5 accounts in Chapter 12. All this activity takes
6 place in buildings, and the business of hotels is,
7 therefore, concerned, in addition to markets,
8 money and people, also with the ownership and
9 management of property. The hotel business is
30111 increasingly concerned with managing, devel-
1 oping and maintaining the property and its
2 facilities, and these activities present a constant
3 challenge for the hotelier.
4
5
6
Property Ownership
7
8 An investment in hotels is first and foremost an
9 investment in land and buildings, which repre-
40 sent the dominant assets of hotels. Other fixed
41111 assets are:
127
1111 plant and equipment, including such major items as air conditioning,
2 boilers, lifts, and heavy kitchen equipment;
3 furniture, furnishings, and small equipment;
4 china, glass, linen and cutlery.
5
6 Accordingly, there is a dual nature of investment in hotels – as an invest-
7 ment in land and buildings and an investment in interior assets. This distinction
8 has been recognized in three principal ways in recent years. First, the building
9 shell may be owned by a developer, sometimes as part of some larger project,
1011 and leased to an hotel operator on a rental basis. This relationship is also
1 implied by some hotel groups, which apply internal rentals to hotels owned
2 by them; in this way the hotel profits are assessed after taking into account
3111 the notional rental of the land and building. Secondly, hotel companies make
4 use of sale-and-lease-back arrangements as a means of financing the invest-
5 ment, which reduces the capital requirement for the hotel operator. Thirdly,
6 interior assets may be also leased by the hotel operator rather than bought,
7 thereby also reducing the capital requirement.
8
There are, therefore, various arrangements as to who is involved in prop-
9
erty ownership and in hotel management. An hotel operator may invest in
20111
the property represented by land and buildings or enter into a leasing arrange-
1
ment and invest only in the interior assets, or an operator may enter into a
2
management contract without any direct capital investment.
3
4
5
6 Property Operation and Maintenance
7
In large hotels and in multi-unit hotel groups normally a senior person
8
is ultimately responsible for property support services, who may be vari-
9
ously described as the technical services, buildings and services, or works
30111
director, officer, or superintendent, or simply as chief engineer, or by some
1
such title. In large organizations the technical services may be subdivided
2
between those responsible for buildings, for engineering, and for other
3
services.
4
5 Technical considerations involved in property operation and maintenance
6 and in the related subject of energy are outside the scope of this book.
7 Although they may be the direct concern of hotel management in smaller
8 hotels, they are specialist activities normally entrusted to specialist staff and
9 sometimes ‘contracted out’. Moreover, they are well documented in many
texts, and several of those published in the UK are listed as suggested further
41111reading.
128
Property Ownership and Management
1111 Property operation, maintenance and energy costs are costs of hotel oper-
2 ation, as distinct from the capital investment outlay on the assets. They
3 are, therefore, appropriately included in hotel profit and loss statements.
4 What role these costs play in different parts of the world is illustrated
5 in Tables 26 and 27, based on hotels contributing to both Horwath
International and Pannell Kerr Forster reports in the late 1990s (and see also
Figure 16).
8
In the Uniform System of Accounts for Hotels property operation and main-
9
tenance includes operating costs of repairs and maintenance of buildings,
101111
plant and equipment, furniture and furnishings, as well as the maintenance
1
of grounds, related wages and salaries, and work let out on contract.
2
The main factors that influence these costs are the age and size of the
hotel – older hotels tend to spend more of their revenue on property oper-
ation and maintenance than newer ones, and so do relatively smaller hotels
in comparison with large ones. When interpreting the above figures, it should
be borne in mind that the hotels on which the figures are based are typically
large, modern hotels.
9
20111
Technology is becoming an essential component of the increasingly
popular “smart hotel room” – where every need of the traveller is met
and systems control temperatures, air purity and sound. Functions are
controlled by sensors linked to computers, providing maximum guest
comfort at minimum cost. Communications ports connecting guests to
the outside world are increasingly expected by business travellers who
require constant contact with the office. Hotels which provide these
and make room design adjustments for the business guest, will undoubt-
edly be in a better position to capture their business.
1
2
3
Facilities Management
4
Although property operation and maintenance is often an internal function
of many hotel organizations, there is an increasing movement in many firms
to concentrate on what they do best and outsourcing other non-core activi-
8 ties. For hotel organizations, this core activity is the marketing and
management of the hotel operation, but other support functions require
specialist help. It may not be cost-effective or practical for an hotel to manage
41111activities such as cleaning, laundry, refuse collection, grounds maintenance,
129
1111 Table 26 Property operation and maintenance costsa as a ratio of hotel sales in
2 main regionsb
3
4 1995 1996 1997
5 (%) (%) (%)
6
7 Total world 5.1 5.3 5.0
Africa and the Middle East 6.1 5.4 5.2
8
Asia 4.6 5.1 4.0
9 Australia and New Zealand 4.2 c 4.4 c 4.0
1011 Europe 4.5 4.6 5.0
1 North America 5.4 5.5 5.0
2 Latin America/Caribbean 6.7 7.7 5.9 d
3111
4 Included in this category are the cost of materials in the upkeep and repair to the building,
curtains and draperies, electrical and mechanical equipment, elevators, floor, furniture, grounds
5 and landscaping and swimming pool. In addition, the cost of operating supplies, painting and
6 decorating, uniforms and the removal of waste matter.
7 Australia only.
South America.
8
20111
1
2 Table 27 Property operation and maintenance expensesa as a ratio of hotel
3 sales in selected European countriesb
4
5 1995 1996 1997
6 (%) (%) (%)
7
8 Austria n/a 5.6 5.1
9 France 5.1 n/a 3.6
Germany 4.9 4.7 5.1
30111 Ireland 5.2 4.1 4.3
1 Norway n/a 4.6 6.0
2 Portugal n/a 5.2 5.3
3 Switzerland 5.8 5.5 5.2
5
6 Included in this category are the cost of materials in the upkeep and repair to the building,
curtains and draperies, electrical and mechanical equipment, elevators, floor, furniture, grounds
7 and landscaping and swimming pool. In addition, the cost of operating supplies, painting and
8 decorating, uniforms and the removal of waste matter.
9
Source: Based on Worldwide Hotel Industry, 1996, 1997 and 1998
40
41111
130
1111
2 United Kingdom 5.2%
3
4
Canada 5.0%
5
6
7 Australia and 4.0%
New Zealand
8
9
United States 3.7%
10111
1
1 Figure 16 Property operation and maintenance costs in hotels, 1997
2
3
4 redecoration, minor repairs, heating and electrical matters, swimming pool
5 maintenance or even housekeeping. These activities may be outsourced to
6 facilities management firms who would manage these activities on a contrac-
7 tual basis. Such arrangements help the hotel to ensure that these essential
8 property management tasks are planned and budgeted for in a systematic
9 way, and that the quality of the facilities is maintained.
20111
1
2 Energy
3
In the Uniform System of Accounts for Hotels energy costs include the cost of
4
electricity, gas, oil, steam, water and other fuels. They are described in the
5
latest edition of the Uniform System as utility costs. These costs are shown in
6
Tables 28 and 29 for hotels contributing to Pannell Kerr Forster International
7
reports in 1998 as a ratio of total revenue. Overall energy costs account for a
8
higher proportion of hotel revenue in climates where air conditioning is an
9
essential requirement in first class hotels, than in cold climates where heating
30111
represents the major part of energy consumption.
1
2
3 Energy costs represent a significant element of hotel costs and their control
4 has been receiving particular attention in most regions and countries in recent
5 years. This is reflected in the Uniform System, which indicates the kind of
6 statistical information to be produced by monitoring demand and consump-
7 tion in physical units as shown on page 133.
8
9
40
41111
131
1111 Table 28 Energy costs as a ratio of hotel sales in

2 selected areas of Europe a
3
4 (%)
5
6 All Europe 2.98
7 Northern Europe 2.92
Eastern Europe 2.83
8 Southern Europe 2.83
9
1011 Energy costs and expenses as a percentage of total revenues.
1 Source: Based on Pannell, Kerr Forster, Europe, Middle East
2 and Africa Trends, 1998
3111
4
Table 29 Energy costs as a ratio of hotel sales
5
in selected countries and regions a
6
7 (%)
8
9 Middle East
20111 Israel 3.27
1 Pakistan 9.06
2 UAE 3.05
3 Africa
4 Egypt 4.17
5 Kenya 5.24
Morocco 7.27
6
7 Europe
8 Austria 4.03
Portugal 3.67
9
Switzerland 2.99
30111
2 Source: Based on Pannell, Kerr Forster, Europe,
3 Middle East and Africa Trends, 1998
4
5
6
7
8
9
40
41111
132
1111 Water cubic feet/ Purchased steam

2 gallons/litres pounds
3 Electricity kWh Natural gas 100 cubic feet
4 Electrical demand kW L.P. gas pounds
5 Oil gallons/litres Heating degree days
6 Coal tons/kilos Cooling degree days
7
8
9
101111 Technology will play an increasing role in providing a safe and healthy
1 environment through environmental control and guest protection
features; improved water quality and waste disposal processes made
possible by the advances in monitoring environmental variables and
4 biotechnology applications which use bacteria to destroy harmful
elements in the environment. Hoteliers who take advantage of these
exciting discoveries will be one step up on the competition in winning
business from safety-conscious guests.
9
20111
1
2
Hotels and the Environment
3
Over the past two or three decades concern has arisen over the effects of
human activities on the environment. The key problems have been identified
as global warming, ozone depletion and acid rain, as well as the depletion
and pollution of land and water natural resources.
8
Hotels are increasingly recognizing the need for using energy and other
9
resources responsibly and controlling consumption, as a social responsibility
30111
as well as good business. Many leading international companies are now
1
members of the International Hotels Environment Initiative (IHEI), which has
2
developed practical guidelines for hotels. The International Hotel & Restaurant
3
Association seeks to assist hoteliers in reconciling environmental issues with
4
competitive pressures. Hotels figure prominently also in the work of the World
5
Travel & Tourism Council which monitors, assesses and communicates
6
effective environmental strategies in travel and tourism.
7
The environmental conservation movement is gaining in momentum in its
concern for natural resources – water, land, air – and this is linked to protect-
ing the environment in previously underdeveloped regions in a socially
41111responsible fashion. There is a growing acknowledgement of the importance
133
1111 of ‘sustainable development’ and ‘ecotourism’ that will affect the way that
2 hotels, particularly in resorts and rural locations, develop their properties and
3 manage their operations in the future.
4
5
6 These interactions between aspects of the whole operation, from design,
7 purchasing specification, production planning, stock management, waste
8 management and waste disposal can provide financial as well as envi-
9 ronmental benefits. A hotel cannot afford to be altruistic, but by
1011 considering environmental management holistically it may be possible
1 to invest savings made in one area into other activities which have less
2 clear financial benefits.
3111 David Kirk, Environmental Management for Hotels
4
5
6
7 There can be little doubt that many businesses are still coming to terms
8 with the fact that a heightened awareness of the environment has added
9 an entirely new dimension to their decision-making processes.
20111
I believe that as environmental pressures from legislators, consumers,
1
investors, neighbours and even employees intensify, as I believe they
2
will, the real competitive advantage will be held by those who are
3
making environmental responsibility integral to their overall strategy,
4
both in the management of existing operations and in the planning of
5
new developments.
6
HRH the Prince of Wales, IHEI Manual
7
8
9
30111
1
2
3
4
5
6
7
8
9
40
41111
134
1111
2
3
12
4
5
6
7
8
9
10111
1
Finance and Accounts
1
2
3
4
5
6 The financial position and performance of an
7 hotel are reflected in two key statements – the
8 balance sheet and the profit and loss account.
9 The balance sheet gives a view of the position of
20111 the business at a particular point in time, for
1 example, at the end of a year, about the ways
2 money has been raised and about the forms it
3 takes in the business. The profit and loss account
4 shows the revenue and the costs and expenses
5 incurred in earning that revenue, for a given
6 period, a week, a month, or a year.
7
Several main groups of people are interested
8
in the information these two statements convey
9
– in particular the owners, lenders and managers
30111
– and it is possible to distinguish between two
1
outlooks – long-term and short-term.
2
3 Owners and long-term lenders are interested
4 in the sustained profitability of the hotel. They
5 look for evidence of this at the return on invest-
6 ment, as an indication of the use the business
7 makes of its assets, and at the relationship
8 between owners’ capital and loans, as an indica-
9 tion of the way in which risks are spread, as well
40 as at the long-term trends.
41111
1111 Short-term lenders and trade creditors take a more limited view and wish
2 to be particularly satisfied that the hotel can meet its current obligations.
3 They look for evidence of this at its current assets, particularly cash and
4 those readily convertible into cash, and at the extent of its current liabilities,
5 which have to be met in the short term.
6
Management has responsibilities to investors and to both long-term and
7
short-term creditors. Therefore, management has to consider all the aspects
8
that are of interest to these parties, but management is concerned also with
9
planning and day-to-day control of the business. The financial statements it
1011
needs have to be more detailed and more frequent than those required by
1
others, to enable it to direct the hotel and to monitor its progress.
2
3111 Both financial statements are of interest to all these different parties.
4 However, normally the balance sheet is of particular value to owners and
5 lenders, whilst the profit and loss account is of greater value to management.
6 In this chapter illustrations of hotel financial statements provide a basis for
7 the description of their main features and of the financial characteristics of
8 the hotel business.
9
20111
The Hotel Balance Sheet
1
2 There is no universal agreement on the presentation of the balance sheet and
3 one variation arises in its horizontal form: for example, in Britain assets are
4
5 Table 30 Balance sheet as at 31 December 0000
6
7 Fixed assets
8 Land and buildings £675 000
9 Plant and equipment £100 000
Furniture and furnishings £75 000
30111 China, glass, cutlery, linen £30 000 £880 000
1
Current assets
2
Stocks £30 000
3 Debtors and prepayments £60 000
4 Cash £30 000 £120 000 £1 000 000
5 Owner’s capital £600 000
6 Long-term loans £300 000
7 Current liabilities
8 Creditors and accruals £30 000
Bank overdraft £70 000 £100 000 £1 000 000
9
40
Note: The form of ownership and taxation have been ignored in this illustration.
41111
136
1111 shown on the right-hand side and capital and liabilities on the left-hand side;
2 in some countries the balance sheet is part of the double entry system of
3 accounts and the reverse applies. The simplified example in Table 30 is a
4 vertical statement of an hotel with an investment of £1 000 000, with the
5 assets listed first, and how they are financed next.
6
7
8 Balance Sheet Ratios and Analysis
9
The different forms of capital employed in the business are represented by the
10111
various types of assets used in the hotel, and balance sheet items are grouped into
1
sections – fixed and current assets, equity and long- and short-term liabilities.
1
2 Hotel investment requirements are basically of three types. Short-term capital
3 is required for up to a year for operating and minor capital expendi-ture;
4 medium-term finance is required for several years for internal fixed assets; long-
5 term finance, for more than a few years, is required for land and buildings. The
6 grouping of assets into fixed and current reflects the investment intensity, which
7 is normally very high in hotels, because the bulk of hotel investment is in land
8 and buildings and other fixed assets. The investment intensity – the relationship
9 between fixed and current assets – has important implications; for example, it
20111 contributes to high fixed costs of hotel operation through depreciation and other
1 expenses of property ownership. Current assets comprise cash and other items
2 convertible into cash in the normal course of business, such as stocks, which tend
3 to be small in the hotel business, because they are converted into debtors or cash
4
relatively quickly. It is, therefore, not uncommon to find 80–90 per cent of the
5
total investment in hotels in the form of fixed assets, giving an investment
6
intensity of 4 or more.
7
8 The distinction between long- and short-term liabilities emphasizes their
9 different nature and the time scale of the obligations. The former are a form
30111 of total financing of the hotel; the latter are in the main amounts owed to
1 suppliers and, unless they include such short-term borrowing as bank over-
2 drafts, they tend to be relatively small in hotels.
3
4 The difference between the total assets and the total liabilities is the equity or
5 the net worth of the business. It represents the owners’ capital, and accord-ing to
6 the form of ownership, is represented by the shareholders’ capital in a company
7 or by capital accounts for partnerships and individual proprietorships. Initially
8 money can be put in the business by the owners or contributed by others.
9 Subsequently capital can be increased by the owners putting in more or by profits
40 not drawn out by owners; more can be also borrowed as loans.
41111
137
1111 The relationship between equity and liabilities is known as capital gearing.
2 The ratio is calculated by dividing the net worth by total liabilities or, where
3 current liabilities fluctuate, the net worth is divided by the long-term debt
4 only, and indicates the strength of the capitalization. Both investors and
5 lenders are interested in the return on total assets irrespective of the source
6 of funds, but capital gearing influences their respective risks. Where the
7 proportion of indebtedness is high in relation to owners’ capital, small changes
8 in profit may have a significant impact on the return available to owners, as
9 interest on loans and instalments have to be paid in any case when due. The
1011 extent of desirable gearing in hotels, as in other types of business, depends
1 to a greater extent on whether the rate of return earned by the hotel exceeds
2 the rate of interest paid on the loan.
3111
Another important relationship exists between current assets and current
4
liabilities, because the latter have to be paid in the main out of the former.
5
The excess of current assets over current liabilities represents the net working
6
capital of the business. The current ratio, as it is called, is calculated by
7
dividing current liabilities into current assets, and represents a measure of
8
the liquidity of the business. Where stocks are high, it is preferable to exclude
9
them and to calculate the current ratio on the basis of other current assets.
20111
But in hotels a simple ratio of 1.00 is normally considered acceptable in
1
view of the commonly low stocks in relation to total current assets and their
2
rapid turnover.
3
4
5
6
The Hotel Profit and Loss Statement
7
8 A condensed statement showing the main revenue and expense headings is
9 normally used for financial reporting purposes to satisfy legal requirements,
30111 but a more detailed structured statement is helpful for management and oper-
1 ational control purposes. A form of this statement, known as the summary
2 operating statement, without the inclusion of intermediate profit levels, is
3 shown in Table 31, where the figures give the performance of an hotel with
4 a total revenue of £2 000 000.
5
The main profit and loss concepts are:
6
7
revenues are classified by product/department, showing the revenue mix;
8
costs and expenses are classified by type of cost and expense into cost
9
of sales, payroll, other direct expenses, undistributed operating expenses,
40
and fixed charges;
41111
138
1111 Table 31 Profit and loss summary operating statement for the year to 31
2 December 0000
3
4
5
6
7
8
9
10111
1
1
2
3
4
5
6
7
8
9
20111
1
2
3
4
5
6
7
8
9
30111
1
2
3
4
5
6
7
8
9
40
41111
£000 £000
Revenue
Rooms 968
Food 560
Beverages 256
Minor operated departments 148
Rentals and other income 68 2 000
Departmental cost of sales
Food 188
Beverages 61
Minor operated departments 73 322
Departmental payroll and related expenses
Rooms 166
Food and beverages 297
Minor operated departments 38 501
Other departmental expenses
Rooms 98
Food and beverages 95
Minor operated expenses 30 223
Undistributed operating expenses
Administration and general 188
Marketing 68
Property operation, maintenance, energy 200 456
Fixed charges
Rent 120
Depreciation 80
Other fixed charges 136 336
Net profit 162
(before income taxes and gain or loss on
sale of property)
139
1111 cost of departmental sales (opening stock purchases closing stock) is

2 related to each category of sales (food, beverages, minor operated depart-
3 ments);
4 departmental payroll is related to each category of sales (rooms, food and
5 beverages, minor operated departments);
6 other direct departmental expenses incurred in the operation of a depart-
7 ment are allocated to that department;
8 operating expenses relating to the whole hotel, which are not distributed
9 to departments, are distinguished from fixed charges related to assets and
1011 capital.
1
2 The summary operating statement enables profit margins to be established
3111 at various levels, after certain expenses but before others, and the net profit.
4 There are several profit levels:
5
6 departmental gross profit for food, beverages, and minor operated depart-
ments (revenue less cost of sales);
7
8 departmental net margin for rooms, food and beverages, and minor oper-
ated departments (revenue less prime cost, i.e. cost of sales and payroll);
9
departmental operating profit for rooms, food and beverages, and minor
20111
operated departments (revenue less direct expenses, i.e. prime cost and
1
other departmental expenses);
2
hotel operating income (the sum of departmental profits plus rentals and
3
other income);
4
hotel operating profit (operating income less undistributed operating
5
expenses);
6
hotel net profit (operating profit less fixed charges).
7
8
9 Profit and Loss Ratios and Analysis
30111
1 The relationship between revenues and costs and expenses of operated
2 depart-ments, which account for the first three profit levels above, were
3 presented for rooms, food and beverages, and minor operated departments in
4 Tables 13, 18 and 20 in Chapters 7, 8 and 9. The next three profit levels
5 relate to the hotel as a whole. All six profit levels based on Table 31 are
6 summarized in Table 32.
7 A number of ratios may be calculated from the information in Table 32:
8
9 for each operated department each element of cost (cost of sales, payroll,
40 other departmental expenses) may be expressed as a percentage of depart-
41111 mental sales;
140
1111 for each operated department each profit margin (departmental gross
2 profit, net margin, operating profit) may be expressed as a percentage of
3 depart-mental sales;
4 for the whole hotel rentals and other income, undistributed operating
5 expenses, and fixed charges may be expressed as a percentage of total
6 hotel revenue;
7 for the whole hotel operating income, operating profit, and net profit may
8 be expressed as a percentage of total hotel revenue.
9
10111 In Table 33 the information from Table 32 is expressed in the form of
1 ratios. Departmental costs and expenses and profit margins are related to
1 corresponding departmental sales. Costs and expenses and profit margins of
2 the whole hotel are related to total hotel revenue.
3
Particular ratios are of significance for particular purposes. They enable
4
each element of cost and expense to be controlled for each operated depart-
5
ment in relation to the sales of that department. Similarly, total departmental
6
7
8 Table 32 Profit and loss summary operating statement for the year to 31
9 December 0000 showing profit levels
20111
a
1 Rooms Food Beverages MOD Total
2 (£000) (£000) (£000) (£000) (£000)
3
b
4 Revenue 968 560 256 148 1 932
Less departmental cost of sales – 188 61 73 322
5 968 372 195 75 1 610
DEPARTMENTAL GROSS PROFIT
6 Less departmental payroll and related
7 expenses 166 297 38 501
8 DEPARTMENTAL NET MARGIN 802 270 37 1 109
9 Less other departmental expenses 98 95 30 223
DEPARTMENTAL OPERATING PROFIT 704 175 7 886
30111
Add rentals and other income 68
1 HOTEL OPERATING INCOME 954
2 Less undistributed operating expenses 456
3 HOTEL OPERATING PROFIT 498
4 Less fixed charges 336
HOTEL NET PROFIT 162
5
(before income taxes and gain or
6 loss on sale of property)
7
8 Minor operated departments.
9 Excluding Rentals and Other Income (£68 000), before this is added to Departmental
Operating Profit.
40
41111
141
1111 Table 33 Ratios of costs, expenses and profit margins to departmental sales
2 and to hotel revenue
3
4 Minor
5 Operated
Rooms Food Beverages Depts Total a
6 (%) (%) (%) (%) (%)
7
8 Revenue 100 100 100 100 100
9 Less departmental cost of sales –– 34 24 50 ––
1011 DEPARTMENTAL GROSS PROFIT 100 66 76 50 ––
1 Less departmental payroll and related
2 expenses 17 36 26 ––
DEPARTMENTAL NET MARGIN 83 33 25 ––
3111
Less other departmental expenses 10 12 20 ––
4 DEPARTMENTAL OPERATING
5 PROFIT 73 21 4 44.3
6 Add rentals and other income 3.4
7 HOTEL OPERATING INCOME 47.7
Less undistributed operating expenses 22.8
8
HOTEL OPERATING PROFIT 24.9
9 Less fixed charges 16.8
20111 HOTEL NET PROFIT 8.1
1
2 Including rentals and other income.
3
4
5 costs and expenses, as well as undistributed operating expenses and fixed
6 charges, can be controlled in relation to total hotel revenue. They can also
7 assist in decision-making. For example, the prime cost of the food and
8 beverage operation covers both the cost of food and beverages and the labour
9 cost, including preparation and service, and is an important concept in menu
30111 pricing. Thus in any comparison between fresh foods and convenience foods,
1 the prime cost and the departmental net margin ratios provide a basis for
2 evaluating alternative means of operation.
3
When the departmentalization of the operating statement follows the
4
responsibilities of the hotel organization structure, it is possible to equate the
5
various profit levels with individual responsibilities. In this only items of
6
revenue and expenditure which can be controlled by individuals are attrib-
7
uted to them. Thus for example:
8
9
departmental gross profit is the responsibility of the chef, head barperson,
40
telephone supervisor;
41111
142
1111 departmental operating profit is the responsibility of the front hall manager
and the food and beverage manager;
hotel operating profit is the responsibility of the hotel manager.
Hotel control is facilitated not only by the structure of the financial state-
ments and the amount of detail and analysis they contain, but also by the
frequency with which they are produced. This varies as between different
hotels, but it is common to find that the following are produced together
with related ratios and with supporting schedules:
101111
daily statement of revenue;
weekly statement of cost of sales and payroll;
monthly operating statement of revenue, costs and expenses;
quarterly balance sheet.
5
6
7 Hotel Operating Profit
8
The most significant profit level for management purposes is the hotel oper-ating
9
profit, i.e. the level after all operating costs and expenses have been deducted
20111
from hotel revenue, and before fixed charges. This is normally the level for
1
which the responsibility lies with the hotel operational management. The ratios of
2
hotel operating profit achieved by hotels contributing to Horwath
3
4
5
Table 34 Hotel operating profit as a ratio of hotel sales in main regions a
6
7
1995 1996 1997
8 (%) (%) (%)
9
30111 Total world 29.4 30.2 31.4
2 Asia 37.6 36.8 35.3
b b
3 Australia and New Zealand 27.5 28.6 31.7
4 Europe 28.8 29.4 29.2
North America 29.2 30.2 34.7 c
5
Latin America/Caribbean 25.7 24.7 25.8 d
6
7 All figures are arithmetic means and are calculated before management fees.
8 Australia only.
Excluding USA.
9 South America.
41111
143
1111 Table 35 Hotel operating profit a as a ratio of hotel sales in selected countries b
2
3 1995 1996 1997
4 (%) (%) (%)
5
6 Germany 24.7 23.9 23.2
7 Hungary 25.0 28.6 35.9
Ireland 22.9 22.9 26.0
8
Japan 27.3 22.7 19.8
9 Mexico 36.1 39.3 33.0
1011 Spain 23.0 24.0 18.4
1 Switzerland 24.9 13.6 17.6
3111
a
4 Represents hotel operating profit before management fees.
5
Source: Based on Worldwide Hotel Industry, 1996, 1997 and 1998
6
7
8
9
20111 United Kingdom 37.1%
1
2
United States 36.6%
3
4
5 Australia and 31.7%
New Zealand
6
7
Canada 30.2%
8
9
30111 Figure 17 Hotel operating profit, 1997
1
2
3 International reports in the late 1990s are shown in Tables 34 and 35. The
4 achieved operating profit in different regions and countries ranges widely
5 and in some of them fluctuates widely from year to year. The United
6 Kingdom appears to produce consistently high rates of profit (Figure 17).
7
8
9
40
41111
144
1111
Balance Sheet and Profit and Loss Relationships
2
3 So far we have considered mainly relationships between two individual items
4 or groups of items within one financial statement. Thus from the balance
5 sheet emerges the investment intensity of the hotel as a relationship between
6 fixed and current assets, the capital gearing as a relationship between owners’
7 capital and liabilities, and the liquidity of the hotel as a relationship between
8 current assets and current liabilities. From the profit and loss state-ment a
9 multitude of relationships emerges when components of revenue, costs and
10111 expenses, and profit margins are related to total or departmental revenue.
1
1 However, there are also many points at which items in the balance sheet
2 and in the profit and loss statement are related to each other. When assets
3 are used up, they become expenses; for example, fixed assets are depreci-
4 ated and depreciation becomes an expense; stocks are used up and become
5 the cost of sales. On the other hand revenues create assets; for example, sales
6 generate cash or debtors. Credit purchases create liabilities. Profit increases
7 the net worth of the business and loss reduces it. A meaningful financial
8 analysis of an hotel has to include these relationships between assets,
9 liabilities, income and expenses.
20111
1 The most important relationship is that between earnings and assets,
2 because the ratio of earnings to investment is a measure of the effectiveness
3 of management in employing assets to generate profits. This is a more mean-
4 ingful measure than return on owners’ capital in a total view of the
5 performance of the hotel. Earnings are used in the calculation before deduc-
6 tion of interest, which is not a charge against operations but a charge for the
7 use of a particular form of capital, and in evaluating the use that is made of
8 assets, the source of capital is immaterial.
9
There are also important relationships between stocks and sales, debtors
30111
and sales, and creditors and purchases. The rate of stock turnover is calcu-
1
lated by dividing the cost of food, beverages and other sales by the average
2
stock, i.e. the sum of opening and closing stocks divided by two. The rate
3
represents the number of times a particular stock turns over in a year and is a
4
useful indicator for avoiding overstocking.
5
6 The speed with which debts are collected from customers is shown by the
7 rate of debt turnover, which is measured by dividing credit sales by average
8 debtors, i.e. the sum of opening and closing debtors divided by two; some-
9 times total sales are used in calculating this ratio rather than credit sales.
40
41111
145
1111
2 The business environment will continue to challenge with its growing
3 complexity and uncertainty. It will require a talented management cadre
4 to balance the greater demands for the perfect delivery of services and
5 products, with the requirements of owners and investors who want
6 returns on their assets on a par with other investment opportunities.
7 So while the turbulence of the last decade has passed like an angry
8 hurricane, the calm after the storm will never mean a return to the
9 good old days prior to 1985. Better forecasting and long term strategic
1011 management will be a must, and there is every reason to believe that
1 the industry is well prepared to put these in place.
3111
4
5
6
7
8
9
20111
1
2
3
4
5
6
7
8
9
30111
1
2
3
4
5
6
7
8
9
40
41111
146
Part
1111
2
3
V
4
5
6
7
8
9
101111
1
2
People and
Procedures
3
4
5
6
7
8
9
20111
1
2
3
4
5
6
7
8
9
30111
1
2
3
4
5
6
7
8
9
40
41111
1111
2
3
4
5
6
7
8
9
1011
1
2
3111
4
5
6
7
8
9
20111
1
2
3
4
5
6
7
8
9
30111
1
2
3
4
5
6
7
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9
40
41111
1111
2
3
8
13
4
5
6
7
9
101111
Hotel Organization
1
2
3
4
5
Organization is the framework in which various
6
activities operate. It is concerned with such
7
matters as the division of tasks within firms and
8
establishments, positions of responsibility and
9
authority, and relationships between them. It
20111
introduces such concepts as the span of control
1
(the number of subordinates supervised directly
2
by an individual), levels of management (the
3
number of tiers through which management oper-
4
ates), delegation (the allocation of responsibility
5
and authority to designated individuals in the line
6
of ‘command’). This chapter is concerned with
7
characteristics of hotel organization rather than
8
with management concepts.
9
30111 Until not so long ago – about the middle of the
1 twentieth century and even later than that – the
2 typical hotel of almost any size was characterized
3 by a large number of individuals and departments
4 directly responsible to the hotel manager who
5 was closely concerned with his guests and with
6 all or most aspects of the hotel operation. There
7 might have been one or more assistant managers
8 who had little or no authority over such key
9 individuals as the chef, the head waiter or the
40 housekeeper. The hotel manager usually com-
41111 bined the ‘mine host’ concept of hotelkeeping
1111 with a close involvement in the operation. He normally had all or most of
2 the technical skills that enter into the business of accommodating and catering
3 for guests. Although he might have given more attention to departments in
4 which he felt confident about his expertise, and less to those in which his
5 knowledge and skills might have been lacking, his approach was essentially
6 that of a technician rather than the manager of a business. Hotels served
7 those who chose to use them. The financial control was exercised by the
8 owners or by accountants on their behalf. Personnel management rarely
9 extended beyond the ‘hiring and firing’ of staff. Hotel buildings and interiors
1011 were not often viewed as business assets required to produce a return
1 comparable to other commercial investments; maintenance and energy were
2 cheap.
3111
Several influences have tended to change this profile generally and the
4
approach to hotel organization in particular in the second half of the twen-
5
tieth century. The market for hotels, the number of hotels and the size of
6
individual operations have grown, against the background of economic and
7
social conditions in most parts of the world. Business and management
8
thought and practice have found their way into hotels, with the entry into
9
the hotel business of firms engaged in other industries, development of hotel
20111
education and training, and higher quality of management. Innovation in hotel
1
organization, at first largely confined to a few firms in North America, has
2
spread to others in other countries. These and other influences have brought
3
about changes in the ways in which hotels organize their activities today.
4
5 Three particular developments illustrate the changes in hotel organization
6 in post-war Britain. One relates to the grouping of functions. In the early
7 1950s hotel reception, uniformed services and housekeeping were invariably
8 regarded as separate departments, each reporting directly to the hotel manager;
9 twenty years later many large hotels had front hall managers, rooms managers,
30111 or assistant managers with specific responsibilities in this area. Similarly,
1 over the same period in most large hotels, food and beverage managers came
2 to be appointed, responsible for all the hotel activities previously organized
3 in restaurants, bars and kitchens under the direct control of the hotel manager.
4 Secondly, there has been a growth in specialists. In the early 1950s only a
5 few large hotels had a staff manager, a public relations officer or a buyer;
6 by the early 1970s personnel, sales and marketing, and purchasing depart-
7 ments were common features of the large hotels and of hotel groups. Thirdly,
8 where each hotel used to be more or less self-sufficient in the provision of
9 its various guest services and supporting requirements, many of these are
now provided through internal rentals and concessions and through specialist
41111suppliers and operators such as outside bakeries, butcheries and laundries.
150
Hotel Organization
1111 Organization is a function of purpose and the complexity of the hotel busi-
ness arises because it is concerned with several distinct products, services
and facilities, which are offered in various combinations, as we saw in Part
III of this book. It is helpful to arrange these, and the hotel activities described
in Parts III and IV, into a simple framework along the lines of those six
6 chapters, and the classification of activities outlined below follows the
common pattern of uniform and standard systems of accounts in use in a
number of countries:
9
101111 Operated departments Major (primary) Rooms
1 (revenue-earning) Food
2 Beverages
3
Minor (ancillary) Guest telephones
4
Guest laundry and valeting
5
Other guest services
6
7 Support service Administration and
8 departments general
9 (undistributed overhead) Marketing
20111 Property operation,
1 maintenance and energy
2
3 In this schedule a distinction is drawn first between revenue-earning
services operated by the hotel (dealt with in Part III of this book) and activ-
ities that service the hotel (dealt with in Parts IV and V). The revenue-earning
services are divided further into primary and ancillary (dealt with in Chapters
7, 8 and 9 respectively). It has been found in practice that the most effec-
tive hotel organization structures follow this classification and provide for
clear profit and cost centre responsibilities.
30111
1
Rooms
2
In Chapter 7 the accommodation function of the hotel is described in terms
of reception, uniformed services and housekeeping. Several typical organi-
zational approaches may be identified in respect of these activities in practice:
all three activities operate as separate departments with their own heads
of department;
reception and uniformed services are grouped together as the front hall
or front house of the hotel under an assistant manager for whom this is
41111the sole or main responsibility;
151
1111 reception and uniformed services are grouped together as a front hall or
2 front house department with its own head of department (this approach
3 is illustrated in Figure 18 below);
4 all three activities are grouped together as the rooms department under
5 an assistant manager for whom this is the sole or main responsibility;
6 all three activities are grouped together as the rooms department with its
7 own head of department.
8
9 The first approach provides for a direct line of responsibility and authority
1011 between each separate head of department and the hotel manager and hence
1 for a close contact between the two levels of management; however, it extends
2 the hotel manager’s span of control and he is required to coordinate the
3111 separate departments. The other four approaches are designed to reduce
4 the hotel manager’s span of control and provide for a coordination of related
5 activities at an intermediate level, but increase the number of levels through
6 which management has to operate, and reduce the amount of direct contact
7 between the hotel manager and the departments concerned.
8
Several activities were described in connection with rooms, which may be
9
arranged differently in large hotels.
20111
1
In most hotels advance reservations form an integral part of hotel recep-
2
tion and the same employees deal with them and with other reception
3
tasks. But advance reservations may be dealt with in a separate section
4
of the reception office or in a separate department, to enable employees
5
to concentrate on the respective tasks without conflicting demands on their
6
time and attention. Sometimes all advance reservations are concentrated
7
in the sales department, which has a responsibility for maximizing hotel
8
occupancy.
9
In smaller hotels guest accounts are normally handled by book-
30111
keeper/receptionists, but strictly speaking guest accounts represent an
1 extension of the accounting function of the hotel. Therefore, where guest
2
accounting is handled by bill office clerks and cashiers, they normally
3
form a part of the accounts department.
4
In some hotels room service is provided by housekeeping staff, but room
5
service is clearly part of the food and beverage function of the hotel.
6
7
8
Food and Beverages
9
In Chapter 8 the food and beverage function of the hotel is described in
41111 terms of the food and beverage cycle, the main sales outlets, and the related
152
Hotel Organization
1111 support services. Several typical organizational approaches may be identi-

fied in respect of this function in practice:
each sales outlet and supporting service operates as a separate department

with its own head of department;
several departments are grouped together under an assistant manager for
whom they represent the sole or main responsibility, e.g. purchasing and
storage, bars and cellars, the ‘back-of-the-house’ activities including the
kitchen, and so on;
101111 several of these departments are grouped together as one department under
its own head of department;
all food and beverage activities are grouped together under an assistant
manager for whom they represent the sole or main responsibility;
all food and beverage activities are grouped together as a food and beverage
department with its own head of department, as illustrated in Figure 18
below.
7
The same observations apply to these approaches as are made above in
relation to rooms, regarding lines of responsibility and authority, span of
20111 control and levels of management; the size of the span of control and the
number of management levels are conflicting considerations.
Several aspects of the food and beverage function are closely related to
each other but also to other parts of the hotel operation:
5
Most hotels have facilities serving both food and beverages, although in
some of them food or beverages may predominate. Whilst it is usually
relatively easy to separate the revenue from each, it is often impractical
to separate accurately all the costs of operation other than the cost of
30111 sales, because the same employees may handle both products, and because
other goods and services provided in the same outlet may not be readily
identifiable as either food or beverages. In these circumstances food and
beverages are treated together, analysed by sales outlet, and the related
responsibilities are reflected in the organization structure.
Food and beverage control based on the food and beverage cycles described
in Chapter 8 may be appropriately seen as part of the total accounting
function of the hotel. In these circumstances such employees as restaurant
cashiers and cost control clerks are included on the staff of the hotel
accountant.
Where there is a separate sales department, food and beverage sales are
41111usually closely monitored by that department, and such arrangements as
153
1111 reservations for functions may form part of the responsibilities of the sales
2 department.
3
4
5 Miscellaneous Guest Services
6
In Chapter 9 miscellaneous guest services are illustrated in terms of such
7
activities as telephones and laundry and the typical organizational approaches
8
for most of them are shown to be of two main kinds:
9
1011
the services are operated under direct management of the hotel as minor
1
operated departments;
2
the services are operated under rental and concession arrangements with
3111
the hotel by another firm.
4
5
The alternative arrangements may apply in the provision of the following
6
main services to guests:
7
8
beauty shop and hairdressing secretarial services
9
florist squash courts and tennis courts
20111
garage gifts and souvenirs
1
laundry and dry cleaning swimming pool
2
newspapers and magazines tobacconist
3
4
Direct management of these services normally provides for a closer direct
5
control and supervision by the hotel and for greater flexibility in operation.
6
In many hotels the services are merely grouped as residuary hotel activities
7
for accounting and control purposes and are in practice provided as part of
8
the services of other hotel departments, e.g. reception, uniformed services,
9
housekeeping or general administration, and are not separate departments in
30111
the organizational sense. Only when the volume of a particular service is
1
sufficiently large, might it be organized as a separate department. And it is
2
only then that the option arises for the service to be provided for the guests
3
by another operator, because it warrants his or her involvement, under a
4
rental or concession arrangement. Such arrangement then relieves the hotel
5
from operating what is often to the hotel operator an unfamiliar service and
6
allows it to concentrate on its primary activities.
7
8 Therefore, major deciding factors are the size of the operation, the avail-
9 ability of suitable operators of particular services, and the operational philoso-
phies of the hotel or hotel group, as well as the quality of service and the
41111 financial return to the hotel, which may result from one or the other approach.
154
Hotel Organization
1111
Hotel Support Services
2
3 Earlier in this chapter hotel activities were classified into revenue-earning
4 and support service departments. The first group is considered in Part III of
5 this book, the second in Parts IV and V. The first of the support service
6 departments – administration and general – relates to functions of general
7 management (some of which are considered in this chapter), purchasing
8 (discussed in connection with food and beverages in Chapter 8, although not
9 confined to them), personnel (to be dealt with in Chapter 14) and accounting
10111 and control (included in Chapter 12). The remaining support services are
1 covered in Chapters 10 and 11.
1
2 In practice the non-revenue service activities are organized in one of three
3 main ways:
4
5 retained among the hotel manager’s own responsibilities;
6 assigned to an assistant manager as one of his or her responsibilities;
7 assigned to a separate department with its own head of department.
8
9 To a greater or lesser extent each of these activities may also draw for its
20111 performance on external specialist advice and assistance. The main specialist
1 activities, which may be organized in one of these ways, and examples of the
2 external sources of advice and assistance available to the hotel in respect of
3 each can be summarized as follows:
4
5 Accounting and finance Hotel accountants and consultants
6 Public accountants and auditors
7 Professional stock-takers
8
9 Personnel services Personnel recruitment and selection
30111 specialists
1 Work study, human resource and industrial
2 relations advisers
3 Training boards and other agencies
4
5 Purchasing Hotel accountants and consultants
6 Furniture and equipment specialists
7 Various suppliers
8 Sales and marketing Market research agencies
9 Advertising agencies
40 Public relations consultants
41111
155
1111 Property operation, Architects, builders, designers

2 maintenance, energy Consulting engineers
3 Utility undertakings
4
5 Advisory services are also sometimes provided by professional bodies, trade
6 associations for their members, the technical press and other agencies.
7
8 Apart from any operational philosophies, the adoption of the organiza-
9 tional approaches, in respect of a particular activity, is largely determined by
1011 the size of operation: the first is normally associated with a small hotel; the
1 second with medium size; and the third with large operations, but no hard
2 and fast rules apply. Each of these activities comprises specialist know-ledge
3111 and skills, as distinct from normal operational know-how inherent in the
4 primary operating activities.
5
6
7
The Management Structure
8
9 Following the discussion of the division and grouping of operated and
20111 service activities into departments, it is next necessary to consider the total
1 manage-ment structure of the hotel; this comprises all positions of
2 responsibility and authority below top management, which is represented in
3 an hotel company by the board of directors. The management team consists
4 of the hotel manager, one or more deputy or assistant managers, and the
5 heads of departments. A discussion of the management structure is
6 concerned with these posts and with the relationships between them.
7
8 According to the size of the hotel and the particular arrangement in oper-
9 ation, the hotel chief executive may be variously designated as managing
30111 director, general manager or simply hotel manager. He or she may to a
1 greater or lesser extent participate in the formulation of the hotel policies and
2 strategies, and will invariably be responsible for their implementation and for
3 the hotel performance. In larger hotels this level may be sub-divided between
4 a managing director or general manager and the hotel manager or a resident
5 manager. The former then reports to the board and normally coordinates the
6 work of the specialist departments and of the hotel or resident manager, who
7 is in turn responsible for the day-to-day management of the hotel activities.
8
9
40 The complexity and continuity of the hotel activities normally give rise to
the need for one or more deputy or assistant managers. A deputy hotel
41111
156
Hotel Organization
1111 manager normally has authority over the heads of departments. But there is
much variation in the role, authority and responsibilities of hotel assistant
managers. In some instances they are the hotel manager’s deputies in all but
name, in respect of the whole operation or some parts of it, e.g. food and
beverages, front hall, ‘back of the house’, and so on; in other cases they
have these specific responsibilities in addition to their general role as the
manager’s deputies. But many so-called assistant managers perform roles,
8
which are more appropriately described as those of general assistants
(assisting where required throughout the hotel) or of personal assistants to
101111
the manager (acting on his or her behalf as the manager directs them to do).
Yet in other cases their main role is guest contact.
All the roles described above may be appropriate in particular circum-

4 stances, but effective hotel management calls for a clear definition of
responsibility and authority. The relationships with heads of departments are
especially important in this context. Titles, which describe the particular roles,
can be helpful in this direction.
8
In order to provide clear-cut lines of responsibility and authority and
20111 an effective coordination of related activities, some hotels function without
assistant managers as such: those who would normally be in such posi-
tions are allocated specific responsibilities and appropriate titles to describe
them.
4
Those in positions of heads of departments fall into two distinct cate-
gories. Heads of operated departments are known as line managers, with
7 direct lines of responsibility and authority to their superiors and to their

subordinates in respect of each operated department. Heads of service depart-
ments are specialists who provide advice and service to line management,
30111 and relieve them of such specialist tasks as are considered to be more effec-
tively discharged through the appointment of specialists; they have no direct
authority over employees other than those of their own departments. Line
management includes, for example, head receptionists, head housekeepers,
head chefs and restaurant managers. Specialists include accountants, buyers,
personnel and purchasing officers and similar posts. In order to draw a distinc-
tion between the two, it is helpful to confine the designation ‘manager’ to
operated departments.
8
It is also relevant to refer in this context to a confusion, which often arises
with various trainee positions. It is difficult to justify such titles as ‘trainee
41111 manager’ unless its holder has been designated to fill a specific post, for
157
1111 which he or she is training. A person who is undergoing training with a view
2 to an ultimate unspecified position of responsibility is more appropriately
3 described as a management trainee.
4
5
6 Organization Structure of a Large Hotel: an Illustration
7
8 Some of the concepts discussed in this chapter are illustrated in the organi-
zation chart of a large London hotel with several hundred rooms, extensive
9
food and beverage facilities and several hundred employees (Figure 18). In
1011
this instance a conscious attempt has been made to introduce a manage-ment
1
structure designed to reduce the span of control of those concerned with the
2
coordination of related activities and to provide a high degree of delegation.
3111
4
5 Each position in the chart carries specific responsibilities and also over-all
6 responsibilities common to all management positions, such as the imple-
7 mentation of policy in relation to sectional requirements, employee
8 motivation, training, safety, adherence to budgets and accountability for the
9 performance and results of the department(s) for which a particular indi-
20111 vidual is responsible. However, each individual is responsible only for those
1 results he or she can control.
2
3 The organization chart is supported by schedules of management respon-
4 sibilities, which state for each position the title, the responsibilities of the
5 post, the immediate superior, the relationships with other management posi-
6 tions within the organization, as well as the requirements of the post in terms
7 of age, education, training, experience and any special requirements.
8
A ‘principle of three’ has been introduced in this hotel in decision-making.
9
For example, menu planning for each outlet is undertaken by the food and
30111
beverage manager, the chef and the appropriate departmental head; full-time
1
members of staff are engaged by the personnel officer, the immediate and the
2
next-but-one superior of the employee. In relation to menu plan-ning this
3
approach is considered helpful in securing maximum utilization of kitchen
4
facilities and in giving full recognition to the position of each departmental
5
manager. In relation to staff engagement the principle is considered to be
6
conducive to good selection, to creating a favourable impres-sion on future
7
employees, to securing the acceptance of new employees by their superiors,
8
and to establishing a close knowledge of employees by management.
9
40
41111
158
Head
Telephonist
Public
1111 Relations
Officer
2 Head of
Reservations
3
4
Sales Head
5 Promotion Concierge
6 Officer
7 Head
8 Receptionist
Front of
9 House
10111 Human Manager Head Bill
Resources Office Clerk
1 Officer
1
Head
2 Cashier Assistant
3 Housekeepers
General Resident
4 Manager Manager
Deputy Head
Head
5 Housekeeper
Housekeeper
6
Head Linen
7 Deputy Night
Keeper
Night Manager
8 Manager
9
Head
20111 Storekeeper Head
1 Barperson
2 Food and
Beverage Bar and Cellar
3 Manager Manager
4 Purchasing
Cellar
5 Officer Banqueting Supervisor
6 Manager
7
Head of
8 Accounts
9
30111 Comptroller
1
2 Head of
Control
3
4 Property
5 Manager
6
7
8
Security
9 Officer
40
41111
Head Sous
Chef Chefs
Restaurant Lounge Head

Manager Waiter
Grill Room Floor Head

Manager Waiter
Coffee Shop Restaurant

Manager Head Waiter
Staff Catering Sommelier

Supervisor
Figure 18 Organization chart of a large hotel

1111
2 The scenarios surrounding the role of technology suggest that the struc-
3 ture of the hotel – how resources are allocated and functions assigned
4 – will change dramatically for two reasons. First, because the hotel will
5 have to be an efficient user of increasingly scarce resources. This is
6 already apparent as hotel companies continue to downsize and use
7 technology to supplement what has been lost. Secondly, the nature of the
8 tasks performed to deliver optimum levels of service will be altered by the
9 use of technology. The combination of downsizing and technology will
1011 require more responsibility from hotel employees at all levels.
2
3111
4
6
In hotel uniform and standard systems of accounts operational expenses
7
relating to the whole hotel, as distinct from those relating to particular oper-
8
ated departments, are treated as undistributed operating expenses. They are
9
20111
1 Table 36 Administrative and general expenses a as a ratio of hotel sales in
main regions b
2
3
1995 1996 1997
4
(%) (%) (%)
5
6
Total world 9.6 9.6 9.2
8 Asia 8.1 8.7 8.0
9 Australia and New Zealand 7.8 c 7.6 c 7.0
30111 Europe 9.7 9.2 9.2
1 North America 9.2 9.9 9.0 d
Latin America/Caribbean 12.8 12.5 13.3 e
2
3
Typically includes cash overages and shortages, credit card commissions, credit and collection,
4 data processing and information systems, donations, dues and subscriptions, executive office
5 charges, human resources, internal audit, internal communications systems, loss and damage,
operating supplies, postage and telegrams, professional fees, provision for doubtful accounts,
6 security, transportation (non-guest) and travel and entertainment.
Australia only.
8 Excluding USA.
9 South America.

41111
160
Hotel Organization
1111 Table 37 Administrative and general expenses a as a ratio of hotel sales in

2 selected European countries b
3
4 1995 1996 1997
5 (%) (%) (%)
6
7 Austria n/a 6.7 8.7
France 10.6 n/a 9.0
8
Germany 9.0 9.3 9.9
9 Ireland 12.3 10.2 10.5
10111 Norway n/a 6.0 6.4
1 Portugal n/a 10.6 9.5
1 Switzerland 7.5 6.7 9.1
3
4 Typically includes cash overages and shortages, credit card commissions, credit and collection,
data processing and information systems, donations, dues and subscriptions, executive office
5 charges, human resources, internal audit, internal communications systems, loss and damage,
6 operating supplies, postage and telegrams, professional fees, provision for doubtful accounts,
security, transportation (non-guest) and travel and entertainment.
8 Source: Based on Worldwide Hotel Industry, 1996, 1997 and 1998
9
20111
1
commonly classified in four main groups: administrative and general;
2
marketing; energy; property operation and maintenance.
3
4 The first category, administrative and general expenses, covers to a great
5 extent the payroll and other expenses of general management, accounting and
6 control. Their incidence in hotels contributing to Horwath International
7 reports in the late 1990s is shown in Table 36 and in European hotels in
8 Table 37. In most global regions, with the major exception of Latin America
9 and the Caribbean, administrative and general expenses amount to around 8-
30111 10 per cent of total sales. Among European countries that level is
1 consistently exceeded by Ireland.
2
3
4 Information Technology in Hotels
5
Since the 1960s, rapid development of information technology and computers
6
has spread to almost every walk of life and some of its most fruitful appli-cations
7
have been in service industries, in accounting, banking and retailing, as well as in
8
hotels. More recently developments in computer hardware and software have
9
enabled the more widespread use of computers in both small
40
41111
161
1111 and large hotel operations. This technology now makes possible fast, reliable
2 and cheap electronic devices that can help hotels in the following areas:
3
4 Administration: word-processing, spreadsheets, data storage and manipulation.
5 Communications: fax, e-mail, telephone, messaging, pagers.
6 Control: reservations, billing, telephone charging, in-room entertainment.
7 Finance: budgeting, accounting and taxation.
8 Internal systems: property and energy management, security and fire
9 control. Management: management information and decision-making,
1011 project management systems.
1 Marketing: Internet selling, customer profiling.
2
3111 The new technology is fast and speed is important in hotels – in
4 responding to a guest, travel agent or tour operator enquiring about room
5 availability, in effecting a reservation, in linking the reservation with the
6 registration of guests, their charges, and the settlement of accounts.
7 The new technology is accurate and accuracy is important in hotels. The
8 sale of a drink affects cash or a guest’s bill, the liquor stock and the revenue
9 analysis of the hotel – it should affect all three to exactly the same extent.
20111
The new technology is becoming cheap to use, cheaper than ordinary
1
office machinery, and with rising costs of clerical labour in hotels, the scope
2
for saving may be considerable.
3
4 The new technology, therefore, also has a major contribution to make to
5 the way that hotels operate.
6
The main applications of computers in hotels are being extended from
7
their established role in reservation systems to front office procedures and
8
guest accounting, to purchasing, stock control and general accounting func-
9
tions of hotels, as well as other aspects of hotel operations, to form integrated
30111
management information systems, which enable the whole business to be
1
closely coordinated and monitored.
2
3 A major development of recent years has been a rapid growth of computer
4 reservation systems (CRS) and global distribution systems (GDS) and central
5 reservations systems. Developed initially by airlines, the interactive electronic
6 data systems provide direct access through terminals not only to airline but also
7 hotel and other operators’ computers, to establish product availability, make
8 reservations and print tickets or confirmations. The leading hotel consortia
9 shown in Appendix G use the power of the new technology to market the hotel
40 services of their members around the world. Global distribution systems allow
41111 these consortia to update information on availability of room stock and prices.
162
1111
2
3
8
14
4
5
6
7
9
101111
Hotel Staffing
1
2
3
4
5
It is difficult to consider any aspect of hotel oper-
6
ations without reference to staffing and it is
7
impossible to confine staffing considerations to
8
a single chapter. Staffing and related aspects of
9
hotel operations, therefore, receive some atten-
20111
tion throughout this book. It is helpful to set this
1
chapter in the context of the various references
2
made to staffing earlier and also subsequently, so
3
that a wider view may be taken of the human
4
resources in the hotel business by linking together
5
the separate parts.
6
7 In Chapter 1 hotels are seen as important
8 employers of human resources, in Chapter 2 the
9 service provided by employees is described as an
30111 integral element of hotel products, and in Chapter
1 3 hotel employees enter into the policies, philoso-
2 phies and strategies of the business. The
3 organization and staffing of the revenue-earning
4 activities of hotels are considered in Chapters 7,
5 8 and 9, and similarly these matters are included
6 in relation to the servicing activities of hotels in
7 Chapters 10, 11 and 12. Several of these consid-
8 erations are brought together in Chapter 13 as
9 part of the discussion of hotel organization.
40 Performance in hotels forms a separate Chapter
41111 15. The distinctive characteristics of small hotels,
1111 hotel groups and international hotel operations are outlined in Chapters 4, 5
2 and 6.
3
The concern with the human resource function (or the personnel function
4
as it used to be described) of the hotel covers the following main aspects:
5
6
job analysis, manpower planning and scheduling of work;
7
recruitment, selection and training of employees;
8
job evaluation, conditions of employment and welfare of employees;
9
promotion, retirement and termination of employment;
1011
employee consultation, negotiation and the handling of disputes.
1
2
The employment of people in hotels in different countries takes place in
3111
particular economic, political and social environments, in hotels with differ-
4
ent market and operating conditions, customs and practices; increasingly
5
employment is regulated by laws of those countries. It is, therefore, less than
6
realistic to attempt to deal with the various aspects of the human resource
7
function in a way that would be meaningful to all or most hotels. This chapter
8
has particular and somewhat limited aims and scope, and focuses on three
9
aspects: determinants of hotel staffing, variations in hotel staffing to be found
20111
in different regions and countries, and the organization of the human resource
1
function, which may be applicable beyond the boundaries of one country.
2
There are many texts dealing more or less comprehensively with human
3
resource function, some of them specifically in hotels, and several of
4
those available in Britain are listed as suggested further reading for this
5
chapter.
6
7
8
9 Determinants of Hotel Staffing
30111 In their study of British hotels, the Department of Employment Manpower
1 Research Unit (1971) identified eight main factors that determine hotel
2 staffing:
3
4 Size of hotel (number of bedrooms, number of beds, number and size of
5 restaurants, etc.) determines the scale and type of operations and the extent
6 to which economies of scale can be achieved. Large hotels tend to have
7 a lower staff/guest ratio than medium-sized hotels and the ratio was also
8 found to be low in smaller owner/managed hotels where the owner and
9 his family generally work longer hours and employ fewer staff.
40 Ownership may affect staffing by its influence on the scale of operation
41111 and through the owner’s attitude to hotelkeeping. Group-owned hotels tend
164
Hotel Staffing
1111 to be larger and more standardized than the independent hotels, which
tend to be more individualistic.
Age and layout of the buildings affects the efficiency of hotel operations
and, therefore, the staffing levels. Modern purpose-built hotels with a view
to ease and economy of operation can operate with fewer staff than older
hotels, which are more difficult and expensive to operate.
Range and type of facilities and services influence the number and type
of staff required to provide them. Generally the greater the variety of food
and beverage facilities and of other guest services within the hotel, the
101111greater the staffing requirements.
Methods by which hotel services are provided have a pronounced effect
on the number and skills required to provide them. Hotel services may
be provided personally by staff or through self-service and other non-
personal methods with wide variations in required staffing.
Quality of staff has a bearing on their output and, therefore, on the number
of staff required to provide a particular volume and standard of hotel facil-
ities and services. This is a matter of attitude, motivation and training.
Organization influences the staffing of hotels through the division of tasks
and responsibilities, the extent of use of labour-saving equipment, tech-
20111niques and procedures, and the extent to which specialist contractors and
suppliers are used for particular hotel requirements.
Incidence of demand, annually, weekly and during the day, gives rise to
annual, weekly and daily fluctuations in staffing requirements, which can
be met to a varying extent by the employment of temporary, casual and
part-time staff.
6
7
Hotel Products and Staffing
9
Numbers of employees in different departments depend on several factors,
30111
including the relative importance of each activity in the total hotel opera-
1
tion, and also on the criteria used in allocating employees between
2
departments. The distribution of employees between the various activities of
3
the hotel provides a broad indication of the occupational requirements of the
4
hotel operation. Generally even smaller hotels require a range of several quite
5
distinct skills and attributes in their employees, and the larger the hotel, the
6
greater the range and complexity of its staffing.
7
The operating conditions of various hotels, the range of skills and occu-
pations, their grouping in departments and the conditions of work, are some
of the distinctive features of employment in hotels. The staffing of hotels
41111has particular requirements and poses particular problems for management,
165
1111 especially when the human resource function is interpreted as dealing with
2 more than just the process of employment. It is, therefore, important to
3 consider how the human resource function may be organized.
4
5
6 Organization of the Human Resource Function
7
The various aspects of the human resource function may be the direct respon-
8
sibility of the hotel manager in a smaller hotel, but as the size of the operation
9
increases, the manager may delegate some or all of them to an assistant manager.
1011
In a large hotel or in an hotel group the human resource function is normally the
1
responsibility of a separate department, which forms one of the main service
2
departments of the hotel. In any hotel where the responsi-bility is delegated, line
3111
management is to a greater or lesser extent concerned with aspects of the human
4
resource function too. Whilst human resource
5
6
7 General Manager
8
9
20111
1
Human Resource Human Resource
2 Development
Manager
3 Assistant
(a)
4 (b)
5
6
7
8
9
30111
1
2
Recruitment
Training Manager Welfare Assistant
Assistant
(d) (e)
(c)
Head Office Each Hotel
3
4
5
6
7 Human Resource
Assistant Manager
Manager
8 (Head Office)
(Human Resources)
(g)
9 (f)
40
41111 Figure 19 Organization of the human resource function of a group of hotels
166
41111
1111
2
3
4
5
6
7
8
9
10111
1
1
2
3
4
5
6
7
8
9
20111
1
2
3
4
5
6
7
8
9
30111
1
2
3
4
5
6
7
8
9
40
Hotel gh the direc-tion and supervision of employees they are also directly
Staffi concerned with the human relations of the business generally.
ng
The particular responsibilities involved and how they may be organized,
admi can be seen most clearly in hotel operations where they are highly devel-oped
nistra and specialized. This is illustrated in what follows in the example of an hotel
tion – group, which operates 18 London hotels with some 3500 employees. The
the illustration of the organization of the whole human resource function is
vario followed by an illustration of the approach of the same company to training,
us one of the integral component functions of the human resource department.
empl The organization of the central human resource department and the rela-
oyme tionship between the centre and individual hotels is summarized in outline in
nt Figure 19 and in Table 38. This is not necessarily typical of the approaches
proce adopted in hotel companies generally or in Britain in particular, but it illus-
dures trates well what is involved and a possible approach.
in
partic Table 38 Schedule of human resource responsibilities in a group of hotels
ular –
may
be
remo
ved
from
line
mana
gers,
they
never
theles
s
norm
ally
partic
ipate
in
empl
oyee
select
ion
and
usuall
y also
in on-
the-
job
traini
ng;
throu
Position Responsible to Responsible for
(a) Human Resource General Manager All aspects of the human

Manager resource function
(b) Human Resource Human Resource Job analyis and evaluation,
Development Assistant Manager research, records,
statistics
(c) Recruitment Assistant Human Resource Recruitment and preliminary
Manager selection
(d) Training Manager Human Resource All aspects of training
Manager
(e) Welfare Assistant Human Resource Health, welfare, safety,
Manager including staff
accommodation
(f) Human Resource Human Resource All aspects of the human
Manager (Head Office) Manager resource function in
respect of head office
personnel and hotel
management
(g) Hotel Assistant Manager Hotel Manager All aspects of the human
(Human Resources) resource function in
respect of staff in the hotel
167
1111 The human resource manager is one of several specialists reporting directly
2 to the general manager; he or she is particularly concerned with employment
3 policies, with broad issues of employment in the company and with the
4 management of the department. The day-to-day operation of the department
5 is divided between several key subordinates within the department and those
6 with human resource responsibilities in individual hotels. One of the key
7 subordinates is responsible for the human resource function of head office
8 employees, hotel managers and assistant managers.
9
The central human resource department provides a service to the head
1011
office and to the hotels in the group. The allocation of responsibilities for
1
human resource matters to an assistant manager in each hotel implies that
2
that person is the group human resource officer’s representative in the hotel,
3111
but with a direct line of responsibility to the hotel manager.
4
5
6
7 Organization of Training
8 The training division of the human resource department aims to contribute
9 to:
20111
1 improving employees’ knowledge, skills and attitudes to work;
2 increasing output and sales;
3 improving recruitment;
4 increasing employees’ loyalty;
5 improving the image of the Company in the outside world;
6 reducing breakages, waste of materials and misuse of equipment;
7 reducing accidents;
8
9
Human
30111 Resource
1 Manager
2
3
Training
4 Manager
5 (d)
6
7 Operative Supervisory Management Training Trainer, Aids
8 Trainer Trainer Trainer Instructors and Equipment
9 (h) (i) (j) (k) (I)
40
41111 Figure 20 Organization of the training function in a group of hotels
168
Hotel Staffing
1111 Table 39 Schedule of training responsibilities in a group of hotels

2
3 Position Role
4
5 (d) Training Manager Directs and coordinates all training and
6 maintains close liaison with Recruitment and
7 Welfare Assistants, Human Resource
Manager (Head Office) and Hotel Assistant
8 Managers (Human Resources)
9 (h) Operative Trainer Is responsible for supervision and coordination
10111 of all training below the level of assistant
1 head of department
1 (i) Supervisory Trainer Is responsible for supervision and coordination
2 of all management training above operative
and below assistant manager level, i.e. head
3 and assistant head of department training
4 (j) Management Trainer Is responsible for supervision and coordination
5 of all management training above head of
6 department level
7 (k) Training Instructors Are specialist trainers in food production, food
and drink service, housekeeping, reception and
8
administration, providing instruction at all
9 levels, under the supervision and in
20111 cooperation with training officers
1 (l) Trainer, Aids and Equipment Is responsible for production, maintenance and
2 storage of all training aids and equipment,
including operational and training manuals
3
4
5
6
reducing absenteeism;
7
reducing labour turnover;
8
reducing stresses on management.
9
30111
The organization of the training division is shown in outline in Figure 20
1
and in Table 39.
2
3
4 Functions of the Training Division
5
6 In order to achieve its aims, the training division has the following main
7 functions:
8
9 to formulate a training policy for the approval of the General Manager and
40 the Board and to keep them regularly informed of its implementation;
41111
169
1111 to prepare an annual budget for the approval of the General Manager and
2 the Board and to report regularly to them on income and expenditure;
3 to identify quantitatively and qualitatively the training requirements for
4 all grades and categories of employees and keep them under review;
5 to maintain close liaison with educational institutions and training centres,
6 assess the appropriateness of their facilities and services for the training
7 requirements of the Company, and to arrange for new courses;
8 to establish and operate induction, orientation, refresher and other appro-
9 priate courses for different grades and categories of Company employees
1011 as necessary, and to make arrangements for their attendance;
1 to cooperate with appropriate staff of the human resource department in
2 establishing and maintaining an inventory of management and supervisory
3111 staff and those suitable for developing into such positions, with a view to
4 providing for systematic development of existing and new managers and
5 supervisors;
6 to establish and administer training schemes for all grades and categories
7 of employment;
8 to maintain adequate premises for purposes of training administration and
9 instruction;
20111 to prepare operating and training manuals and other publications, teaching
1 aids and other necessary material for employee training;
2 to maintain all necessary procedures for training within the Company;
3 to represent the Company in all matters concerned with training both
4 within and outside the Company and advise the General Manager and the
5 Board on all such matters.
6
7
8 . . . the hotel industry, along with other sectors in travel and tourism, will
9 find it necessary to rethink attitudes towards investment in human capital.
30111 Training and development programmes will no longer be luxuries but
1 will be essential to meet the needs brought about by technology and
2 by the changing customer and labour force. Such programmes will
3 require considerable investment in technology to implement effectively.
4 In addition, managers will have to re-examine attitudes to the way human
5 resources can be used to meet both customers’ and employees’ needs,
6 requiring an in-depth analysis of the spectrum of human relations.
8
9
40
41111
170
1111
2
3
15
4
5
6
7
8
9
10111
1
Performance in Hotels
1
2
3
4
5 The performance of hotels reflects their success
6 in a range of areas. Successful performance is
7 necessary for any hotel to survive and prosper,
8 often in an increasingly competitive
9 environment. Success enables the hotel to earn
20111 the revenue required to pay its debts, reward its
1 staff and make the profit to give a suitable rate
2 of return for its owners or investors. As with any
3 modern business activity, there are greater
4 pressures to perform better, not least to ensure
5 that customers are happy with the services
6 provided and that they return to the hotel.
7 Performance is a broad term and this final
8 chapter will explore some ways in which it
9 might be measured and moni-tored.
30111
1
2 Criteria of Performance
3
The hotel can be regarded as a systems model
4
which takes in inputs that lead to desirable
5
outputs, as shown in Figure 21.
6
7 The effort, time and capital that is put into a
8 business can lead to outputs of job satisfaction,
9 wages and salaries and return on investment for
40 staff and owners. Similarly, the hotel system can
41111
1111
2
3
4 INPUTS OUTPUTS
5
Costs Revenue
6
7 Employees Job satisfaction
8 Tired and hungry Fed and rested
9 customers customers
1011 Capital Return on investment
1
Time and effort Wages and salaries
2
3111
4
5
6 Figure 21 The hotel as a systems model
7
8 input tired and hungry customers and output those whose needs are satis-fied
9 by the services provided by the hotel.
20111
1 Performance is a relationship between the inputs and outputs of an hotel,
2 including tangible goods and intangible services. Tangible goods include
3 food and drink to be consumed by the customer, while the services produced
by an hotel are less tangible and are often subjectively judged by the
4
customer. As a consequence, it is more difficult to measure intangibles
5
objectively and to ensure that hotel services always satisfy the customer. It is
6
much easier to use absolute measures of performance such as profit, return
7
on investment and assets, as described in Chapter 12. Similarly, hotels need
8
to know how efficient they are in relating inputs to outputs (e.g. costs to
9
sales), especially with labour costs, which are often the largest single
30111
element of cost for an hotel.
1
2 One way of integrating the tangible and intangible measures that drive
3 performance is through Kaplan and Norton’s (1992) ‘Balanced Scorecard’,
4 which is shown in Figure 22.
5 Because the running of an hotel nowadays is such a complex activity,
6 managers need to be able to monitor the business from a number of perspec-
7 tives:
8
9 Financial perspectives: How the hotel looks to shareholders.
40 Internal business perspectives: The activities in which the hotel must
41111 excel.
172
1111 Innovation and learning perspective: Ways in which the hotel can
2 improve and create value.
3 Customer perspective: The hotel from the viewpoint of customers.
4
5
6
Financial
7 Perspective
8
9
10111
1
1
2
3 Customer Internal Business
4 Perspective Perspective
5
6
7
8
9
20111 Innovation and
1 Learning
Perspective
2
3
4 Figure 22 Kaplan and Norton’s (1992) Balanced Scorecard
5
6
7
8 Financial Perspective
9
In order to succeed, hotels must generate outputs that can be measured in
30111
terms of profitability, growth and shareholder value. As shown in Chapter
1
12, financial information can be shown either as actual figures or as ratios.
2
Profitability, sales and costs can be indicated in the profit and loss operating
3
statement, while the net worth of the business is recorded in the balance
4
sheet.
5
6 Because the fixed costs of hotels are usually high, it is important that sales
7 and revenue (outputs) are maximized and costs (inputs) are minimized. The
8 correct balance must be struck between charging a price that covers costs and
9 includes a suitable profit, with attracting a volume of trade that the hotel can
40 cope with while maintaining the desired level of quality. As demand for
41111
173
1111 hotel services is often variable, seasonal or intermittent, management must

2 ensure that staff are kept occupied and productive.
3
Measures of labour productivity relate output to labour input, and three
4
main types are physical, financial and combined physical/financial measures:
5
6
physical measures relate physical units of output to numbers employed or
7
hours worked;
8
financial measures relate output measured in financial terms to pay-
9
roll;
1011
physical/financial measures relate output measured in financial terms to
1
numbers employed or hours worked.
2
3111
Physical measures are normally specific to particular types of business;
4
financial and combined physical/financial measures can be applied to different
5
types of business, and comparisons can be drawn between them.
6
7
8
There have always been two fundamental ways of widening business
9
profit margins. One is by increasing demand for a service or product
20111
and the other is by reducing fixed and/or variable costs. Each approach
1
has commonly been regarded as distinct and unrelated to the other
2
. . . However, adopting either market or cost strategies is too limited
3
an approach to hotel productivity . . . it is fundamental to the successful
4
management of productivity in hotels to accept that a reciprocal rela-
5
tionship exists between demand and supply, inputs and outputs, market
6
strategies and cost strategies. Hence there is a need for hotels to be
7
more than simply cost- or market-orientated, but to be both simulta-
8
neously.
9
Stephen Ball et al., in Hospitality Management,
30111
Vol. 5, No. 3
1
2
3
Most measures used in productivity comparisons, which have a common
4
application to establishments and firms, as well as whole industries and
5
economies, relate output in money terms to numbers employed. A simple
6
and widely used approach is to calculate the amount of sales generated per
7
employee. Another guide to productivity and service is the number of
8
employees per bedroom.
9
40 Tables 40 and 41 show the staff to room ratios of hotels in Europe, Africa
41111 and the Middle East in the years 1996 and 1997. The tables suggest that the
174
1111 Table 40 Employees per room in hotels in

2 selected European citiesa
3
4 Staff to Staff to
5 room ratio room ratio
1996 1997
6
7
Average 0.71 0.72
8 Barcelona 0.49 0.51
9 Brussels 0.46 0.47
101111 Geneva 0.74 0.72
1 London 0.82 0.83
2 Madrid 0.64 0.62
Moscow 1.46 1.42
3
Paris 0.82 0.82
4 Rome 0.65 0.70
5 Warsaw 1.22 1.26
6
8 Source: Based on Pannell Kerr Forster, City Surveys, 1998
9
20111
Table 41 Employees per room in hotels in
1 selected African and Middle Eastern citiesa
2
3 Staff to Staff to
4 room ratio room ratio
5 1996 1997
6
7 Average 1.34 1.30
8 Abu Dhabi 1.25 1.22
Eilat 1.32 1.32
9
Jeddah 1.06 1.06
30111 Karachi 1.71 1.63
1 Kuwait City 1.08 1.11
2 Manama 1.23 1.23
3 Muscat 1.53 1.55
4 Riyadh 1.04 1.05
Tel Aviv 0.90 0.88
5
7
Source: Based on Pannell Kerr Forster, City Surveys, 1998
8
9
40
41111
175
1111 Table 42 Sales and payroll in hotels in main regionsa

2
3 Payroll/sales Sales/payroll
4
5 1995 1996 1997 1995 1996 1997
6 (%) (%) (%)
7
8 Africa and the Middle East 23.9 23.8 26.5 4.2 4.2 3.8
9 Asia 25.7 26.2 29.1 3.9 3.8 3.4
1011 Australia 36.1 35.5 34.3 2.8 2.8 2.9
Europe 32.3 33.1 33.8 3.1 3.0 3.0
1 North America 32.7 32.4 30.9 3.1 3.1 3.2
2 Latin America/Caribbean 28.8 28.8 b 32.0 c 3.5 3.5 b 3.1 c
3111
4 a
5 Latin America.
South America.
6
Source: Based on Worldwide Hotel Industry, 1996, 1997, 1998
7
8
9
20111 hotels in Europe have fewer employees per bedroom, and this may be a
reflection of the greater cost of labour than in Africa or the Middle East.
1
2 Table 42 shows the relationships between payroll to sales, and sales to
3 payroll in hotels in the main regions in the late 1990s. This relationship may
4 be expressed in one of two ways. One is calculated as a percentage, which
5 shows payroll as a proportion of sales. Another is an index, calculated by
6 dividing payroll into sales; the index represents the number of times the
7 payroll is covered by sales, or, in other words, the number of sales dollars or
8 pounds generated for each dollar or pound of payroll.
9
30111 These measures give a broad indication of productivity levels and trends
for an individual hotel, but have to be interpreted with care in comparisons
1
between hotels, which may differ in the range and type of facilities and
2
services provided.
3
4
5
Internal Business Perspective
6
7 The second perspective of the Balanced Scorecard is the internal business
8 perspective. This includes the activities and processes in which the hotel
9 must excel in order to be successful, such as:
40
41111
176
1111 Management: of the property, people and planning for the future. Hotel
management is an important activity and a determinant of the success of
the hotel.
Operations: the day-to-day running of the business that is central to the
way that hotels run. The operational day often runs from check-in time
to check-out time on the following morning. These are often busy times
for hotels and need to operate efficiently.
Systems: those internal processes that ensure that, for example, informa-
tion is sent to the right department.
101111 Information: All hotels need to keep records about, for example, customers
and finance. Keeping customer records can help the hotel to be respon-
sive to the needs of regular customers.
Communication: Managers and staff need to work together to satisfy
customers, so there is a constant need to communicate effectively. In some
hotels there can be conflict between departments that can adversely affect
relationships.
7
8
Innovation and Learning Perspective
20111
In the current highly dynamic market environment, there is an increasing
1
need for hotels to consider how they should operate in the future, and this takes
2
into account product development, marketing and technology. It is the role
3
of management to constantly re-evaluate the facilities and services of the hotel
4
to ensure that they will meet the needs of the market in the future. This might
5
include reviews of the physical facilities; bedrooms, public areas and food
6
and beverage offerings as well as the menus, drinks and style of service offered.
7
In the past few decades, the hotel industry has been characterized by greater
8
change and less traditionalism, and this calls for an openness on the part of
9
management and staff that requires greater creativity and innovation.
30111
One of the greatest challenges of the present era is for hotels to manage
their workforce effectively, because many hotels realize that their employees
are their greatest assets. With an effective workforce, hotels can deliver the
required level of service quality and make the required level of profit, but
the challenge is to develop and retain staff.
6
7
8
9
40
41111
177
1111
2 In addition to upgrading their competencies and skills, managers need
3 to become more effective in the behavioural domain by learning how
4 to obtain, motivate and develop human resources that are becoming
5 increasingly scarce, diverse and expensive. The “my way” or
6 “highway” style of leadership will have to be replaced with one that
7 incorporates a more individualistic employee who expects more from
8 management than ever before. This will also require new
9 communication skills that acknowledge cultural diversity.
1
2
3111 Customer Perspective
4
5 The final perspective on performance is that of the customer. Of course, hotels
6 have always had a direct and intimate relationship with their customers, but good
7 relationships do not always ensure that hotels know how customers see them.
8 This is why many hotels take much time and effort in conducting guest
9 satisfaction surveys and using ‘mystery’ guests to objectively test the quality of
20111 their products and service. As the hotel industry world-wide has become so
1 competitive, there is a greater need to focus more on the customer and
2 continuously adapt to their needs. This means that hotels must review their
3 service and facilities against what is offered by competitors, so that the product is
4 periodically developed. Such developments may take the form of
5
6 COMMENT SLIP
7
We hope that you have enjoyed your visit and that you will return again soon. We
8 strive for quality at this hotel and would appreciate any comments or constructive
9 ideas that you may have by filling in this Comment Slip.
30111
Name Room No. (if applicable)
1
2 Address
3 Tel. No. Date
4
5 Comment
6
7
8
9 PLEASE HAND THIS COMMENT SLIP TO RECEPTION
40
41111 Figure 23 Forte Hotels comment slip, 1999
178
1111
2 Name
3 Address
Country
4
5 Arrival date Departure date
6 Please take a moment and answer the following questions.

7 How would you rate this hotel on:
8
9
When you arrived at the hotel, was the information the hotel had concerning your
10111 reservation correct? Yes No
1 How were your reservations made?
Hotel reservation department Free-phone number
1 Travel agent Group reservatioin card
2 Other (please specify)
3 Ease of reservations process 10 9 8 7 6 5 4 3 2 1

4 Check-in speed 10 9 8 7 6 5 4 3 2 1
5
Staff efficiency 10 9 8 7 6 5 4 3 2 1
6
Staff attitude 10 9 8 7 6 5 4 3 2 1
7
8 Attentiveness of front desk staff 10 9 8 7 6 5 4 3 2 1
9 Attentiveness of bell staff 10 9 8 7 6 5 4 3 2 1

20111 Check-out speed 10 9 8 7 6 5 4 3 2 1
1
Overall quality of service and staff 10 9 8 7 6 5 4 3 2 1
2
Providing adequate information about 10 9 8 7 6 5 4 3 2 1
3 the activities/facilities in and around
4 the hotel
5 Was your bill correct? Yes No

6 Please share any comments about the quality of our hotel staff or their service
7
8
9
30111 Figure 24 Extract from a guest satisfaction survey from Marriott Hotels, 1999
1
2
3
an improvement in the physical environment, or the nature of the hotel
4
service, as described in Chapters 7, 8 and 9.
5
6 Hotels, therefore, need to gauge customer feedback regularly so that
7 regular complaints of service or facilities can be addressed. The most popular
8 means of measurement is by asking hotel users to complete questionnaires or
9 comment cards about their perceptions. Two examples are shown in Figures
40 23 and 24.
41111
179
1111
2 Some Ways to Higher Productivity
3 Productivity measures provide a means of monitoring productivity levels and
4 trends, and of comparing them between hotels and departments, with a view
5 to identifying reasons for differences, and taking steps to improvement.
6
Although annual ratios for the hotel and for each significant department
7
are a useful starting point, it is clear that for many hotels annual figures
8
conceal wide variations between different parts of the year. It is, therefore,
9
desirable to monitor changes in productivity for periods for which basic input
1011
data are readily available, on a quarterly, monthly or weekly basis.
1
2 When interpreting the calculated ratios in comparisons, the reasons for
3111 differences between hotels and departments and between different periods
4 can be normally identified to the factors that determine hotel staffing,
5 described in Chapter 14. Over short periods of several weeks or months, the
6 incidence of demand may be the only variable. Over a year or so, some
7 changes in productivity may result from changes in most of the factors listed
8 except size, ownership and age and layout of the buildings. Over a longer
9 period all the influencing factors may change and generate changes in produc-
20111 tivity.
1
The traditional view about increasing labour productivity is that it is largely
2
related to the substitution of capital for labour, by machines replacing men.
3
Whatever scope there may be for this in hotels, there are other means to
4
improved productivity in the short and medium term:
5
6
A major scope lies in an examination of the extent to which highly labour-
7
intensive guest services continue to meet an economic demand, and in
8
the elimination of those which do not, or their provision by non-personal
9
methods. In many hotels beds are ‘turned down’ at night; yet, the bulk
30111
of hotel guests do not have beds ‘turned down’ at home; it is expensive
1
in staff time; it intrudes into guests’ privacy. Tea and coffee making
2
equipment and bar units in rooms tend to be preferred by many guests
3
to floor service.
4
As the incidence of demand results in much idle time in hotels, there is
5
often much scope for improving the utilization of employees’ time through
6
the definition of jobs, work scheduling and multifunction staffing, when
7
the same employee performs more than one role or task in a working day.
8
Concurrently, an improvement in the quality of staff may be achieved
9
through improved recruitment, selection and training, and through finan-
40
cial and other incentives to better performance.
41111
180
1111
Labour productivity is of major importance for firms and industries
and for the whole economy. Through its effect on output, it is a major
influence on the viability of economic activities and ultimately on living
standards. It is also a major influence on the competitive position of
firms and industries in their markets and on the country’s international
competitiveness.
8
The employment share of hotel and catering services in the (UK)
9
economy exceeds significantly their share of national output, indicating
101111
that they are labour-intensive.
1
2 The highest turnover per person employed is generated by public
houses, the lowest by hotels, restaurants and related activities.
4 S. Medlik, Tourism and Productivity
5
6
7
8
9
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9
101111
1 Appendices
2
3
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7
Appendix A
Travel and Hotels in the
8
9
10111
1
1
United Kingdom in
2
3 the 1990s
4
5
6
7
In the 1990s UK residents made in most years more than 100 million
8
overnight trips, with well over 400 million nights away from home. Overseas
9
visitors increased from 18 million in 1990 to 26 million by the end of the
20111
decade and their nights in the country from less than 200 to more than 220
1
million. Hotels were significant providers of accommodation for both UK
2
residents and overseas visitors.
3
4 The total number of hotels has been variously estimated at more than 60
5 000, but in the absence of compulsory registration, less than half of the total
6 are registered with a tourist board – around 19 000 in England, 2 500 in
7 Scotland, 1 400 in Wales, with a total capacity of some 900 000 beds. About
8 4 500 hotels are inspected by the motoring organizations.
9
The industry turnover increased at current prices throughout the 1990s,
30111
from more than £6 billion in 1990 to around £10 billion by the end of the
1
decade. Following major growth in employment in the 1980s when the
2
industry created more than 50 000 new jobs, in the 1990s employees in
3
employment (excluding self-employed) approached 300 000.
4
5 After its emergence from the recession of the early 1990s, much of the hotel
6 industry experienced one of the most sustained periods of growth in its history,
7 when it benefited from strong demand, high occupancies and increasing
8 profitability. This performance stimulated a major investment programme,
9 reflected both in the expansion of UK companies abroad and in foreign invest-
40 ment in the UK. UK companies own three of the most important global hotel
41111
1111 brands – Hilton International, Holiday Inn and Inter-Continental Hotels and
2 Resorts.
3
As we go to print, at the end of the decade and of the century, the UK
4
hotel industry faces with cautious optimism the millennium year.
5
6
7
8
9
1011
1
2
3111
4
5
6
7
8
9
20111
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186
1111
2
3
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5
6
7
8
Appendix B Travel
9
10111
1
1
2
and Hotels in
3
4 America in the 1990s
5
6
7
8
9 Following the recession of the early 1990s and the Gulf War of 1991, the US
20111 economy enjoyed significant growth for much of the decade. Americans
1 made well over one billion trips and stayed more than four billion nights
away from home each year. In addition to travel by US residents, US hotels
2
benefited annually from well over 40 million international visitors. However,
3
their profile changed substantially: while the number of overseas travellers to
4
the US continued to grow, for a number of years travel from Canada and
5
Mexico declined or stagnated.
6
7 There was major growth in hotel employment in the 1980s, when the
8 industry created more than half a million jobs against an indifferent produc-
9 tivity performance. Employment in the early 1990s remained in the region of
30111 1.6 million jobs, before it resumed modest growth, and there appears to have
1 been a substantial improvement in hotel productivity.
2
3 Increasing occupancies and room rates combined with improved efficiency
4 resulted in the industry recording in the 1990s the highest profits in its
5 history. The dramatic increase in profitability brought about an inflow of
6 investment capital into acquisitions, new development and modernization.
7 However, new development was primarily concentrated in the limited service
8 and extended stay sectors throughout the United States, whilst new full
9 service hotels were mainly concentrated in such locations as Orlando and Las
40 Vegas.
41111
187
1111 Hotel chains represent the most visible part of the US hotel industry, each
2 with hundreds of units and thousands of rooms. But, as in most countries,
3 the bulk of US hotel firms are small businesses, which tend to escape
4 published statistics; yet they represent much of the strength of the American
5 hotel industry.
6
As we go to print, the hotel industry in America, as in the UK, faces the
7
future with cautious optimism.
8
9
1011
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2
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4
5
6
7
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1111
2
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4
5
6
7
Appendix C Global
8
9 Capacity of Hotels and
10111
1
1
Similar
2
a
3
4
Establishments , 1995
5
6
7
8
9
20111
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7
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7
8
9
40
41111
Rooms Beds
Capacities in global regions Number % of

(000) world
Europe 5 558 43.8
Americas 4 638 36.5
East Asia and the Pacific (EAP) 1 761 13.9
Africa 402 3.2
Middle East 190 1.5
South Asia 147 1.2
World 12 696 100.0
Major capacities in Europe Number % of Number

(000) Europe (000)
Italy 944 17.0 1 738

Germany n/a 1 491
France 597 10.7 1 193
Spain 565 10.2 1 074
United Kingdom n/a 880
189
1111
2 Rooms Beds
3
4 Major capacities in the Americas Number % of Number
(000) Americas (000)
5
6
United States b 3 000+ 65.0+ n/a
7 Mexico 370 8.0 741
8 Canada 280 6.0 n/a
9
1011 Major capacities in East Asia and the Number % of Number
1 Pacific (EAP) (000) EAP (000)
2
3111 China 486 27.6 987
4 Japan 284 16.1 n/a
5 Thailand 256 14.5 n/a
Australia 170 9.6 489
6
7
For most countries, hotels and similar establishments include hotels, motels, inns and boarding
8 houses; figure for the United Kingdom relates to England only.
9 Authors’ own estimate.
20111 Source: World Tourism Organization, Compendium of Tourism Statistics 1992–1996, 18th edn, 1998
1
2
3
4
5
6
7
8
9
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4
5
6
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8
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40
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190
1111
2
3
4
5
6
7 Appendix D
8
9
10111
Hotel Occupancies in
1
1 Selected Countries, 1994,
2
3
4
1995, 1996
5
6
7
8
9
20111
1
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3
4
5
6
7
8
9
30111
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2
3
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5
6
7
8
9
40
41111
1994 1995 1996
(%) (%) (%)
Room occupancy
Australia 56.8 58.5 65.5
Canada 60.6 61.1 62.4
China 62.2 58.1 55.3
Egypt 56.0 58.0 63.0
France 50.2 49.5 50.3
India 69.3 73.7 71.1
Japan 67.7 67.8 68.4
Malaysia 65.3 65.5 62.3
Mexico 50.4 51.2 53.3
South Africa 49.3 57.1 56.4
Bed occupancy
Austria 34.7 33.3 32.5
Chile 37.5 26.6 28.5
Germany 34.7 33.9 32.7
Kenya 43.1 43.7 44.6
Netherlands 34.7 35.3 36.4
Portugal 36.0 38.0 38.2
Spain 57.0 60.7 59.8
Sweden 30.0 32.0 32.0
Switzerland 41.0 38.5 36.8
Turkey 39.1 47.0 51.2
Source: World Tourism Organization, Compendium of Tourism Statistics 1992–1996,

18th edn, 1998
1111
2
3
4
5
6
7 Appendix E Leading
8
9
1011
Hotel Groups
1
2 World-wide
3111
4
5
6
7
8
9
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3
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5
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9
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7
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40
41111
Rooms Hotels Head office
1 Cendant Corporation 528 896 5 978 Parsippany, NJ, USA

2 Bass Hotels & Resorts 461 434 2 738 Atlanta, GA, USA
3 Marriott International 328 300 1 686 Washington, DC, USA
4 Choice Hotels International 305 171 3 670 Silver Spring, MD, USA
5 Best Western International 301 899 3 814 Phoenix, AZ, USA
6 Accor 291 770 2 666 Evry, France
7 Starwood Hotels & Resorts 225 014 694 White Plains, NY, USA
Worldwide
8 Promus Hotel Corp. 192 043 1 337 Memphis, TN, USA
9 Carlson Hospitality 106 244 548 Minneapolis, MN, USA
Worldwide
10 Patriot American Hospitalty Inc./ 100 989 472 Dallas, TX, USA
Wyndham International Inc.
11 Hilton Hotels Corporation 85 000 250 Beverley Hills, CA, USA
12 Hyatt Hotels/Hyatt International 82 224 186 Chicago, IL, USA
13 Sol Meliá 65 586 246 Palma de Mallorca, Spain
14 Hilton International 54 117 170 Watford, Herts, England
15 FelCor Lodging Trust Inc. 50 000 193 Irving, TX, USA
16 Forte Hotels 48 407 249 London, England
17 Société du Louvre 37 630 601 Paris, France
18 Westmont Hospitality Group Inc. 37 207 305 Houston, TX, USA
19 La Quinta Inns 37 019 287 San Antonio, TX, USA
20 Club Méditerranée SA 36 010 127 Paris, France
21 Red Roof Inns 34 181 295 Hilliard, OH, USA
22 Extended Stay America 32 347 305 Fort Lauderdale, FL, USA
23 Bristol Hotels & Resorts 32 066 120 Addison, TX, USA
24 MeriStar Hotels & Resorts Inc. 29 455 117 Washington, DC, USA
192
Appendix E Leading Hotel Groups World-wide
1111
2 Rooms Hotels Head office
3
4 25 Lodgian Inc (formerly Servico) 26 968 143 Atlanta, GA, USA
26 Prince Hotels Inc. 26 304 80 Tokyo, Japan
5
27 Tokyu Hotel Group 25 337 118 Tokyo, Japan
6 28 Prime Hospitality Corp. 24 516 180 Fairfield, NJ, USA
7 29 Hospitality Properties Trust 23 440 170 Newton, MA, USA
8 30 Circus Circus 23 418 15 Las Vegas, NV, USA
9 31 Park Place Entertainment 23 000 17 Las Vegas, NV, USA
32 Walt Disney Co. 21 050 19 Burbank, CA, USA
10111
33 Scandic Hotels AB 20 415 126 Stockholm, Sweden
1
34 Riu Hotels Group 20 150 72 Playa de Palma, Mallorca,
1 Spain
2 35 US Franchise Systems Inc. 19 844 227 Atlanta, GA, USA
3 36 Friendly Hotels Plc 19 740 283 Edgware, Middlesex,
4 England
37 Marcus Hotels & Resorts 19 462 175 Milwaukee, WI, USA
5
38 Tharaldson Enterprises 19 041 288 Fargo, ND, USA
6 39 Nikko Hotels International 18 907 52 Tokyo, Japan
7 40 Fujita Kanko Inc. 18 860 81 Tokyo, Japan
8 41 Shangri-La Hotels & Resorts 18 455 36 Hong Kong
9 42 Iberostar 17 865 34 Palma de Mallorca, Spain
20111 43 Homestead Village Inc. 16 847 125 Atlanta, GA, USA
44 Hotels & Compagnie 16 838 326 Les Ulis Cedex, France
1 45 CDL Hotels 16 683 64 Singapore
2 46 Whitbread Hotel Company 16 313 247 Luton, Bedfordshire,
3 England
4 47 Husa Hotels Group 16 147 178 Barcelona, Spain
5 48 Richfield Hospitality Services Inc. 15 180 57 Englewood, CO, USA
49 Omni Hotels 15 112 43 Irving, TX, USA
6
50 Queens Moat Houses Hotels 14 811 106 Romford, Essex, England
7
8
Source: Based on Hotels July 1999
9
30111
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2
3
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6
7
8
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1111
2
3
4
5
6
7 Appendix F Leading
Hotel Groups in
8
9
1011
1
2
Europe
3111
4
5
6
7
8
9
20111
1
2
3
4
5
6
7
8
9
30111
1
2
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5
6
7
8
9
40
41111
Rooms Hotels Head office
1 Accor 291 770 2 666 Evry, France

2 Sol Meliá 65 586 246 Palma de Mallorca, Spain
3 Hilton International 54 117 170 Watford, Herts, England
4 Forte Hotels 48 407 249 London, England
5 Société du Louvre 37 630 601 Paris, France
6 Club Méditerranée SA 36 010 127 Paris, France
7 Scandic Hotels AB 20 415 126 Stockholm, Sweden
8 Riu Hotels Group 20 150 72 Playa de Palma, Mallorca, Spain
9 Friendly Hotels Plc 19 740 283 Edgware, Middlesex, England
10 Iberostar 17 865 34 Palma de Mallorca, Spain
11 Hotels & Compagnie 16 838 326 Les Ulis Cedex, France
12 Whitbread Hotel Company 16 313 247 Luton, Bedfordshire, England
13 Husa Hotels Group 16 147 178 Barcelona, Spain
14 Queens Moat Houses Hotels 14 811 106 Romford, Essex, England
15 Barcelo Hotels 14 063 61 Palma de Mallorca, Spain
16 Dorint Hotels & Resorts 11 758 77 Mönchengladbach, Germany
17 Occidental Hotels 11 106 46 Madrid, Spain
18 Treff Hotels AG 10 782 82 Bad Arolsen, Germany
19 Thistle Hotels, Plc 10 764 60 Leeds, England
20 Steigenberger Hotels AG 10 529 61 Frankfurt/Main, Germany
21 Tryp Hotels 10 500 59 Madrid, Spain
22 Orbis Co. 10 324 55 Warsaw, Poland
23 Maritim Hotels 10 245 41 Bad Salzuflen, Germany
24 Fiesta Hotels 9 708 37 Ibiza, Spain
25 Mövenpick Hotels & Resorts 8 684 43 Adliswil, Switzerland
26 LTI International Hotels 8 309 34 Düsseldorf, Germany
27 Ringhotels 8 118 154 Munich, Germany
194
Appendix F Leading Hotel Groups in Europe
1111
3
4 28 NH Hotels SA 8 100 71 Madrid, Spain
29 Stakis Hotels, Ltd 8 054 53 Glasgow, Scotland
5
30 Rica Hotels & Restaurants 8 000 73 Sandvika, Norway
6 31 Regal Hotel Group Plc 7 700 115 Newbury, Berkshire, England
7 32 Restel 7 461 39 Helsinki, Finland
8 33 Golden Tulip Hotels 7 000 46 EM Hilversum, Netherlands
9 34 Swissôtel Ltd 7 000 22 Zurich, Switzerland
35 Kempinski Hotels & Resorts 6 648 25 Munich, Germany
10111
36 Greenalls Hotels & Leisure 6 599 99 Warrington, Cheshire, England
1
(De Vere)
1 37 Sunwing 6 500 22 Stockolm, Sweden
2 38 Danubius Hotel & Spa Co. 6 356 39 Budapest, Hungary
3 39 Jolly Hotels 6 042 37 Valdagno, Italy
4 40 Sokos Hotels 6 021 39 Helsinki, Finland
41 Euro Disney SCA 6 000 7 Marne-la Valleé, France
5
42 Romantik Hotels 5 890 182 Karlstein/Main, Germany
6 43 Robinson Club GmbH 5 831 25 Hannover, Germany
7 44 Grecotel SA 5 628 22 Rethymnon, Crete, Greece
8 45 First Hospitality AB 5 146 59 Stockholm, Sweden
9 46 Paradores 5 000 86 Madrid, Spain
20111 47 Jarvis Hotels 5 000 62 High Wycombe,
Buckinghamshire, England
1 48 Swallow Hotels Ltd. 4 848 37 Tyne and Wear, England
2 49 Princess Hotels 4 647 11 Tarragona, Reus, Spain
3 50 Warwick International Hotels 4 500 33 Paris, France
4
6
7
8
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195
1111
2
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6
7
Appendix G
Leading Hotel Consortia
8
9
1011
1
2
3111
4
6
7 1 REZsolutions Inc 1 500 000 7 700 Phoenix, AZ, USA
8 2 Lexington Services Corporation 375 000 3 000 Irving, TX, USA
3 VIP International Corporation 183 500 1 468 Calgary, Alberta, Canada
9
4 Supranational Hotels 123 500 827 London, England
20111 5 Leading Hotels of the World 90 200 315 New York, NY, USA
1 6 Hotusa-Eurostars-Familia Hotels 80 000 757 Barcelona, Spain
2 7 Keytel, S.A. 76 000 650 Barcelona, Spain
3 8 Logis de France 66 180 3 682 Paris, France
9 SRS Hotels Steigenberger 60 300 365 Frankfurt/Main, Germany
4 10 Sceptre Hospitality Resources 55 904 105 Englewood, CO, USA
5 11 Golden Tulip Worldwide Hotels 49 789 394 Brentwood, Middlesex,
6 England
7 12 Associated Luxury Hotels 35 657 62 Washington, DC, USA
13 Summit Hotels & Resorts 31 846 159 Brentwood, Middlesex,
8 England
9 14 Minotel International 31 000 720 Lausanne, Switzerland
30111 15 TOP International Hotels 30 000 260 Düsseldorf, Germany
1 16 Sterling Hotels 27 320 92 Phoenix, AZ, USA
17 Robert F. Warner Inc. 26 050 164 New York, NY, USA
2 18 Preferred Hotels Worldwide 24 115 114 Chicago, IL, USA
3 19 Historic Hotels of America 23 844 127 Washington, DC, USA
4 20 Prima Hotels 22 143 143 New York, NY, USA
5 21 ILA-Châteaux & Hotels de Charme 18 295 418 Brussels, Belgium
22 Flag Choice Hotels 18 000 489 Melbourne East, Victoria,
6 Australia
7 23 Small Luxury Hotels of the World 14 555 246 Surrey, England
8 24 Concorde Hotels Group 14 000 74 Paris, France
9 25 Relais & Châteaux 10 000 415 Paris, France
40
196
1111
2
3
4
5
6
7 Appendix H Horwath
International
8
9
10111
1
1
Reports
2
3
4
5 Many illustrations of hotel operations in this book draw on Worldwide Hotel
6 Industry studies published by Horwath International. What the reader should
7 be aware of is described below.
8
9 All data originate from Horwath International questionnaires completed
20111 each year by several thousand hotels and are subject to non-sampling errors,
1 such as differences in the interpretation of questions by the respondents.
2 The terminology and definitions follow the 9th revised edition of the
3 Uniform System of Accounts for the Lodging Industry. An explanation of the
4 main terms and bases used is given in each report but the reader is advised to
5 consult the Uniform System for detail.
6
7 Arithmetic means of contributing hotels are now used throughout the
8 reports. Each item is analysed separately and the reported accounts and ratios
9 are calculated for each item. All accounts are expressed in the common
30111 currency of the US dollar, into which accounts in national currencies have
1 been converted. Users of the information should be aware that currency
2 fluctuations may have a significant effect on the dollar values.
3
Accounts and ratios are examined separately for six global regions and for
4
a number of countries. Data are indicative of contributing hotels but not
5
necessarily representative of any type of hotel or of any region or country. In
6
the reports themselves data are also analysed into three price and three size
7 categories.
8
9 The general profile of the typical contributing hotel in the late 1990s is
40 shown below:
41111
197
1111 Location Urban, mainly city centre

2 Some suburban, especially in North America
3 Some resort, especially in Africa, Middle East and Latin
4 America
5 Market Primarily business travellers
6 Also leisure travellers, especially in Africa, Middle East
7 and Latin America
8 Management Mainly chain-affiliated
9 Also independent in all regions, especially in Europe and
1011 Latin America
1
2
3111 Pannell Kerr Forster Reports
4
For some illustrations the book also draws on Pannell Kerr Forster surveys
5
of Europe, Middle East and Africa, which follow a somewhat different
6
approach. The results are also presented according to the Uniform System
7
8 but in local currencies. Separate city surveys are produced in addition to
regional and country reports.
9
20111
1
2
3
4
5
6
7
8
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2
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4
5
6
7
Appendix I
Select List of Hotel and
8
9
10111
1
1
Related Organizations
2
3
4
5 Australia
6 Australian Hotel Association
7 8 Quay Street, Sydney, NSW 2000
8
9
20111 Canada
1 Hotel Association of Canada
2 1016–130 Albert Street, Ottawa, Ontario KIP 5GY
3
4
5 Ireland
6
CERT (Ireland’s State Tourism Training Agency)
7
Cert House, Amiens Street, Dublin 1
8
9 Irish Hotel Federation
30111 13 Northbrook Road, Ranelagh, Dublin 6
1
2
New Zealand
3
4 Hotel Association of New Zealand
5 8th Floor, Education House, 178 Willis Street, Wellington
6
7
South Africa
8
9 Federated Hotel Association of South Africa
40 PO Box 514, Rivonia 2128
41111
199
1111 United Kingdom

2
3 British Hospitality Association
4 Queens House, 55–56 Lincoln’s Inn Fields, London WC2A 3BH
5 Hotel & Catering International Management Association
6 191 Trinity Road, London SW17 7HN
7
8
9
United States
1011
1 American Hotel & Motel Association
2 1201 New York Avenue NW, Washington DC20005–3931
3111
Council on Hotel Restaurant and Institutional Education (CHRIE)
4
5 International Headquarters Office, 1200 17th Street NW, Seventh Floor,
Washington DC20036-3907
6
7
8
9 International
20111
ASEAN Hotel and Restaurant Association (AHRA)
1
Bank Pacific Building, Jalan Jenderal Sudirman, Jakarta, Indonesia
2 (brings together hotel and restaurant groups in South-East Asia)
3
4 Caribbean Hotel Association (CHA)
5 18 Marseilles St, Ste 2B, Santurce 00907, Puerto Rico
6
Confederation of National Hotel and Restaurant Associations in the
7 European Community (HOTREC)
8 Bd Anspach 111, Bte 4, B–1000 Brussels, Belgium
9
30111 Inter-American Hotel Association (IAHA)
1 Fernandez Albano 171, 3er Piso, Casilla 3410, Santiago, Chile
2 International Association of Hotel Management Schools (IAHMS)
3 c/o Hague Hotel School, Brusselselaan 2, B–2587 AH Den Haag, Netherlands
4
5 International Association of Hotel Schools Directors
6 Euhofa Inernational, Le Chalet-à-Gobet, CH–1000 Lausanne 25, Switzerland
7 International Hotel & Restaurant Association (IHRA)
8 251 rue du Faubourg St Martin, Paris 75010
9
40 International Hotel Association South Asia (IHASA)
41111 PO Box 2151, Tripureswar, Kathmandu, Nepal
200
Appendix I Select List of Hotel and Related Organizations
1111 International Organization of Hotel and Restaurant Associations (HoReCa)

Blumenfeldstrasse 20, CH–8046 Zurich, Switzerland
3
Nordic Hotel and Restaurant Association
4
c/o SHR, PO Box 1158, Kammakarg 39, S–11181, Stockholm, Sweden
5
(brings together hotel and restaurant bodies in the Nordic countries)
6
7
8
9
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3
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5
6
7
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7
8
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40
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1111
2
3
4
5
6
7 Appendix J Select
List of Hotel
8
9
1011
1
2
Periodicals
3111
4
5
6 United Kingdom
7
8 Caterer & Hotelkeeper (weekly)
9 Reed Business Publishing, Quadrant House, The Quadrant, Sutton, Surrey
20111 SM2 5AS
1 Hospitality (10× annually)
2
Reed Business Information Ltd, Quadrant House, The Quadrant, Sutton,
3
Surrey SM2 5AS
4
5 Hospitality & Hotelier International (annual)
6 Sterling Publications Ltd, PO Box 799, Brunel House, 55A North Wharf
7 Road, London W2 1XR
8
9 Hospitality Matters (6× annually)
30111 Wordsmith and Company, Suffolk House, The Green, Wooburn Green,
1 Buckinghamshire HP10 0EU
2
Hospitality (monthly)
3
Reed Business Information Ltd, Quadrant House, The Quadrant, Sutton,
4
Surrey SM2 5AS
5
6 Hotel (10× annually)
7 Manor Publishing Ltd., 19c Commercial Road, Eastbourne, East Sussex
8 BN21 3XE
9
40 Hotel Management International (2× annually)
41111 Cornhill Publications, Kings Court, 2–16 Goodge Street, London W1P 1FF
202
Appendix J Select List of Hotel Periodicals
1111 Hotel & Restaurant Magazine (monthly)

2 Quantum Publishing Ltd, Quantum House, 19 Scarbrook Road, Croydon,
3 Surrey CR9 1LX
4
International Journal of Contemporary Hospitality Management (7×
5
annually)
6
MCB University Press, 60/62 Toller Lane, Bradford, West Yorkshire BD8 9BY
7
8 International Journal of Hospitality Management (quarterly)
9 Elsevier Science Ltd, The Boulevard, Langford Lane, Kidlington, Oxford
10111 OX5 1GB
1
1
2
United States
3
4 Cornell Hotel & Restaurant Administration Quarterly (bimonthly)
5 Elsevier Science Inc., Box 945, New York, NY 10010
6
Hotel Business (24× annually)
7
8 45 Research Way, #106, East Setauket, NY 11733-6401
9 Hotel & Motel Management (21× annually)
20111 Advanstar Communications Inc, 7500 Old Oak Boulevard, Cleveland, OH
1 44130–3343
2
3 Hotels (monthly)
4 Cahners Publishing Co, 1350 East Touhy Avenue, Des Plaines, IL 60018–3303
5
Journal of Hospitality and Tourism Research (3× annually)
6
Sage Publications Inc, 2455 Teller Road, Thousand Oaks, CA 91320
7
8 Lodging Hospitality (monthly)
9 Penton Publishing Inc, 1100 Superior Avenue, Cleveland, OH 44114
30111
1
2 Other countries
3
4 Australian Hotelier (monthly)
5 Level 2, 44 Chippen Street, Chippendale, NSW 2008, Australia
6
Hospitality Magazine (monthly)
7
PO Box 9904, Newmarket, Auckland, New Zealand
8
9 Hospitality Today Magazine (monthly)
40 4180 Lougheed Highway, 4th Floor, Burnaby, BC V5C 6A7, Canada
41111
203
1111 Hotel & Catering Review (monthly)

2 Marino House, 52 Glastuhule Road, Sandycove, Co. Dublin
3
Hotelier & Caterer (monthly)
4
PO Box 180, Howard Place, 7450 Cape Town, South Africa
5
6
7
8
9
1011
1
2
3111
4
5
6
7
8
9
20111
1
2
3
4
5
6
7
8
9
30111
1
2
3
4
5
6
7
8
9
40
41111
204
1111
2
3
4
5
6
7
Appendix K
Suggested Further Reading
8
9
10111
1
1
2 Chapter 1 Staying Away from Home
3
4 Chin J., Barney W. and O’Sullivan H. (1995) Hotels: Financial Management
5 and Reporting: An Industry Accounting and Auditing Guide, Chapter 1
6 Hanlon P. (1999) Global Airlines
7 Jones P. and Lockwood A. (1989) The Management of Hotel Operations,
8 Chapter 1
9 Jones P. (1996) Introduction to Hospitality Operations, Part A
20111 Knowles T. (1998) Hospitality Management – An Introduction, Chapter 1, 2
1 Quest M. ed. (1990) Horwath Book of Tourism
2
3
Chapter 2 Hotel Products and Markets
4
5 Buttle F. (1994) Hotel and Food Service Marketing. A Managerial
6 Approach, Chapters 4, 5
7 Gee C.Y. (1994) International Hotels: Development and Management,
8 Chapter 13
9 Mullins L. (1992) Hospitality Management. A Human Resources Approach,
30111 Chapter 1
1
2
Chapter 3 Hotel Policies, Philosophies and Strategies
3
4 Boella M.J. (1996) Human Resource Management in the Hospitality Industry
5 Teare R. and Boer A., eds (1991) Strategic Hospitality Management. Theory
6 and Practice for the 1990s
7 Teare R. and Ingram H. (1993) Strategic Management. A Resource-based
8 Approach for the Hospitality and Tourism Industries
9 Teare R., Adams S. and Messenger S., eds (1992) Managing Projects in
40 Hospitality Organizations
41111
205
1111 Teare R., Mountinho L. and Morgan N., eds (1993) Managing and
2 Marketing Services into the 1990s
3
4
5 Chapter 4 The Small Hotel
6 Jones P. (1996) Introduction to Hospitality Operations, Chapter 6
7 Lennick J. (1989) Running Your Own Small Hotel Quest M.
8 (1996) How to Buy Your Own Hotel
9 Thomas, R. (1997) Management of Small Tourism and Hospitality Firms
1011
1
2 Chapter 5 Hotel Groups
4 and Reporting: An Industry Accounting and Auditing Guide, Chapters 5, 10
5 Jones P. (1996) Introduction to Hospitality Operations, Chapter 6
6 Kotas R., Teare R, Logie J, Jayawardena C. and Bowen J., eds (1997) The
7 International Hospitality Business, Chapter 4
8 Teare R. and Olsen M. (1992) International Hospitality Management, Part 3
9
20111
1 Chapter 6 International Hotel Operations
2
Gee C.Y. (1994) International Hotels: Development and Management Kotas
3
R., Teare R., Logie J., Jayawardena C. and Bowen J. eds (1997) The
4
International Hospitality Business
5
Teare R. and Olsen M. (1992) International Hospitality Management.
6
Corporate Strategy in Practice
7
Jones P. and Pizam A., eds (1993) The International Hospitality Industry
8
9
30111 Chapter 7 Rooms and Beds
1
2 Abbott P. and Lewry S. (1999) Front Office. Procedures, Social Skills and
3 Management
4 Braham B. (1993) Hotel Front Office
5 Hotel and Catering Training Company (1990) The Accommodation Operation
6
7 Chapter 8 Food and Drink
8
9 Kinton R., Ceserani V. and Foskett D. (1992) The Theory of Catering
40 Knowles T. (1998) Hospitality Management – An Introduction, Chapter 7
41111 Lillicrap D.R. and Cousins J.A. (1990) Food and Beverage Service
206
Appendix K Suggested Further Reading
1111 Davis B. and Lockwood A. (1994) Food and Beverage Management: A

2 Selection of Readings
3
4
5 Chapter 9 Miscellaneous Guest Services
6 Braham B. (1993) Hotel Front Office, Chapter 6
8
9
10111 Chapter 10 Marketing
1
Buttle F. (1994) Hotel and Food Service Marketing. A Managerial Approach
1
Fewell A. and Wills N. (1992) Marketing. Hospitality Managers’ Pocket Book
2
Series
3
Roberts J. (1993) Marketing for the Hospitality Industry
5
Warne N. and Morrison A. (1996) Hospitality Marketing
6
7
8 Chapter 11 Property Ownership and Management
9
20111 International Hotels Environment Initiative (1996) Environmental
1 Management for Hotels. The Industry Guide to Best Practice
2 Jones C. and Jowett V. (1997) Managing Facilities
3 Katsigris C. and Thomas C. (1999) Design and Equipment for Restaurants
4 and Foodservice: A Management View
5 Lawson F. (1994) Restaurants, Clubs and Bars: Planning, Design and
6 Investment for Food Service
7 Lawson F. (1995) Hotels and Resorts: Planning, Design and Refurbishment
8 Lawson F. (1999) Conference, Convention and Exhibition Centres Touche
9 Ross (1995) Environmental Action Pack for Hotels
30111
1
Chapter 12 Finance and Accounts
2
3 Adams D. (1997) Management Accounting for the Hospitality Industry: A
4 Strategic Approach
6 and Reporting: An Industry Accounting and Auditing Guide
7 Harris P. (1999) Profit Planning. Hospitality Managers’ Pocket Book Series
8
9 Harris P. and Hazzard P. (1995) Managerial Accounting in the Hotel and
40 Catering Industry
41111
207
1111 Messenger S. and Shaw H. (1993) Financial Management for the Hospitality,
2 Tourism and Leisure Industries
3
4
5 Chapter 13 Hotel Organization
6
Chin J., Barney W. and O’Sullivan H. (1995) Hotels: Financial Management
7
and Reporting: An Industry Accounting and Auditing Guide, Chapter 6
8
Mullins L. (1992) Hospitality Management. A Human Resources Approach,
9
Chapter 3
1011
O’Connor P. (1999) Using Computers in Hospitality
1
Wood R. (1994) Organizational Behaviour for Hospitality Management,
2
Chapter 1
3111
4
5
Chapter 14 Hotel Staffing
6
7 Boella M.J. (1996) Human Resource Management in the Hospitality Industry
8 Guerrier Y. (1999) Organizational Behaviour in Hotels and Restaurants: An
9 International Perspective
20111 Hotel and Catering Training Company (1995) Employment in the Catering
1 and Hospitality Industry
3 Chapter 8, 14
4 Wood R. (1994) Organizational Behaviour for Hospitality Management, Part 2
5
6
7 Chapter 15 Performance in Hotels
8
Boella M.J. (1996) Human Resource Management in the Hospitality Industry,
9
Chapter 19
30111
1
and Reporting: An Industry Accounting and Auditing Guide, Chapter 3
2
Johns N. (1996) Productivity Management in Hospitality and Tourism
3
4 Olsen M. et al. eds (1996) Service Quality in Hospitality Organizations,
Part One
5
6
7
8
9
40
41111
208
1111
2
3
4
5
6 Select Bibliography
7
8
9
101111
1
2
3
Abbott P. and Lewry S. (1999) Front Office. Procedures, Social Skills and
Management, 2nd edition, Butterworth-Heinemann, Oxford
Adams D. (1997) Management Accounting for the Hospitality Industry: A
Strategic Approach, Cassell, London
Baker S. and Huyton, J. (1994) Principles of Hotel Front Office Operations,
Casssell, London
20111 Baud-Bovy M. and Lawson F. (1998) Tourism and Recreation: Handbook of
Planning and Design, Butterworth-Heinemann, Oxford
Beavis J.R.S. and Medlik S. (1981) A Manual of Hotel Reception, 3rd edition,
Heinemann, London
Boella M.J. (1996) Human Resource Management in the Hospitality Industry,
6th edition, Stanley Thornes, Cheltenham
Borsenik F.D. and Stutts A.T. (1992) Management of Maintenance and
Engineering Systems in the Hospitality Industry, John Wiley, New York
Braham B. (1993) Hotel Front Office, Stanley Thornes, Cheltenham
Burkart A.J. and Medlik S. eds (1975) The Management of Tourism: A
30111Selection of Readings, Heinemann, London
Burkart A.J. and Medlik S. (1981) Tourism: Past, Present and Future,
Heinemann, London
Burkart A.J. and Medlik S. (1990) Historical Development of Tourism, CIRET,
Aix-en-Provence
Buttle F. (1994) Hotel and Food Service Marketing. A Managerial Approach,
Cassell, London
Callan R.J. (2000) Registration, Classification and Grading, Treadmill, Lancaster
Casado M.A. (2000) Housekeeping Management, Wiley, New York
and Reporting: An Industry Accounting and Auditing Guide, Accountancy
41111Books, Milton Keynes
209
1111 Davis B. and Lockwood A. (1994) Food and Beverage Management: A

2 Selection of Readings, Butterworth-Heinemann, Oxford
3 Davis B., Lockwood A. and Stone S. (1998) Food and Beverage
4 Management, 3rd edition, Butterworth-Heinemann, Oxford
5 Doswell R (1970) Towards an Integrated Approach to Hotel Planning, New
6 University Education, London
7 Fellows R. and J. (1990) Buildings for Hospitality. Principles of Care and
Design for Accommodation Managers, Pitman, London
8
Fewell A. and Wills N. (1992) Marketing. Hospitality Managers’ Pocket
9
Book Series, Butterworth-Heinemann, Oxford
1011
Gee C.Y. (1994) International Hotels: Development and Management,
1
Educational Institute of American Hotel and Motel Association,
2 Washington, DC
3111 Goss-Turner S. (1992) Managing People in the Hotel and Catering Industry,
4 Croner, Kingston upon Thames
5 Greene M. (1987) Marketing Hotels and Restaurants into the 90s,
6 Butterworth-Heinemann, Oxford
7 Guerrier Y. (1999) Organizational Behaviour in Hotels and Restaurants: An
8 International Perspective, Wiley, Chichester
9 Hanlon P. (1999) Global Airlines, 2nd edition, Butterworth-Heinemann,
20111 Oxford
1 Harris P. (1999) Profit Planning. Hospitality Managers’ Pocket Book Series,
2 2nd edition, Butterworth-Heinemann, Oxford
3 Harris P. and Hazzard P. (1995) Managerial Accounting in the Hotel and
Catering Industry, Stanley Thornes, Cheltenham
4
Horwath & Horwath (UK) Ltd (1988) Hotels of the Future. Strategies and
5
Action Plan. International Hotel Association, Paris
6
Horwath International (Annual) Worldwide Hotel Industry (formerly
7 Worldwide Lodging Industry), HI, New York
8 Hotel and Catering International Management Association (1994) European
9 Management Skills in the Hospitality Industry, HCIMA, London
30111 Hotel and Catering Training Company (1990) The Accommodation
1 Operation, HCTC, London
2 Hotel and Catering Training Company (1995) Employment in the Catering
3 and Hospitality Industry, HCTC, London
4 Ingram H. and Ransley J. (2000) Developing Hospitality Properties and
5 Facilities, Butterworth-Heinemann, Oxford
6 International Association of Hospitality Accountants (1986) Uniform System
7 of Accounts for Hotels, 8th revised edition, Hotel Association of New
8 York City Inc., New York
9 International Association of Hospitality Accountants (1996) Uniform System
40 of Accounts for Hotels, 9th revised edition, Hotel Association of New
York City Inc., New York
41111
210
Select Bibliography
1111 International Hotels Environment Initiative (1996) Environmental Management

for Hotels. The Industry Guide to Best Practice, 2nd edition, Butterworth-
Heinemann, Oxford
Johns N. (1996) Productivity Management in Hospitality and Tourism, Cassell,
London
Johns N., Ingram, H. and Lee-Ross, D. (1994) Operational Techniques: A
Resource-Based Approach, Cassell, London
Jones C. and Jowett V. (1997) Managing Facilities. Hospitality Managers’
Pocket Book Series, Butterworth-Heinemann, Oxford
101111 Jones P. (1996) Introduction to Hospitality Operations, Cassell, London
Jones P. and Lockwood A. (1989) The Management of Hotel Operations:
2 An Innovative Approach to the Study of Hotel Management, Cassell,
London
Jones P. and Pizam A. eds (1993) The International Hospitality Industry.
Organisational and Operational Issues, Pitman, London
Kaplan R.S. and Norton D.P. (1992) The Balanced Scorecard – Translating
Strategy into Action, Harvard Business School Press, Ithaca, NY
Katsigris C. and Thomas C. (1999) Design and Equipment for Restaurants
and Foodservice: A Management View, Wiley, New York
20111 Kinton R., Ceserani V. and Foskett D. (1992) The Theory of Catering, Hodder
& Stoughton, Sevenoaks
Kirk D. (1996) Environmental Management for Hotels: A Student’s Handbook,
Butterworth-Heinemann, Oxford
Knowles T. (1998) Hospitality Management: An Introduction, Pitman, London
Kotas R., Teare R, Logie J, Jayawardena C. and Bowen J., eds (1997) The
International Hospitality Business, Cassell, London
Lawson F. (1994) Restaurants, Clubs and Bars: Planning, Design and Investment
for Food Service, Butterworth-Heinemann, Oxford
Lawson F. (1995) Hotels and Resorts: Planning, Design and Refurbishment,
30111Butterworth-Heinemann, Oxford
1 Lawson F. (1999) Conference, Convention and Exhibition Centres,
Lennick J. (1989) Running Your Own Small Hotel, Kogan Page, London
Lillicrap D.R. and Cousins J.A. (1990) Food and Beverage Service, Hodder
& Stoughton, Sevenoaks
Medlik S. (1961) The British Hotel and Catering Industry, Pitman, London
Medlik S. (1965) Higher Education and Research in Tourism in Western
Europe, Goldsmiths’ travelling fellowships study tour report, Colleges of
Advanced Technology, London
Medlik S. (1977) Britain – Workshop or Service Centre to the World? University
41111of Surrey lecture, University of Surrey, Guildford
211
1111 Medlik S. and Airey D.A.(1978) Profile of the Hotel and Catering Industry,
2 2nd edition, Heinemann, London
3 Medlik S. (1982) Trends in Tourism: World Experience and England’s
4 Prospects, English Tourist Board, London
5 Medlik S. (1983) Holiday Surveys Examined: A Pilot Guide to National
6 Holiday Surveys in Western Europe, Horwath and Horwath, London
7 Medlik S. (1983) Trends in World Tourism: A Review, International Hotel
8 Association, Paris, Horwath and Horwath, London
9 Medlik S. (1984) Europeans on Holiday, Horwarth and Horwarth (UK), London
1011 Medlik S. (1985) Paying Guests: A Report on the Challenge and Opportunity
1 of Travel and Tourism, CBI, London
2 Medlik S. (1988) Tourism and Productivity, British Tourist Authority/English
3111 Tourist Board Research Services, London
4 Medlik S. (1988) Tourism Employment in Wales, Wales Tourist Board, Cardiff
5 Medlik S. ed. (1991) Managing Tourism, Butterworth-Heinemann, Oxford
6 Medlik S. (1996) Dictionary of Travel, Tourism and Hospitality, 2nd edition,
7 Butterworth-Heinemann, Oxford
8 Medlik S. (1997) Understanding Tourism, Butterworth-Heinemann, Oxford
9 Medlik S. and Denton J. (1967) Your Manpower: A Practical Guide to the
20111 Manpower Statistics of the Hotel and Catering Industry, HMSO, London
1 Messenger S. and Shaw H. (1993) Financial Management for the Hospitality,
2 Tourism and Leisure Industries, Macmillan, Basingstoke
4 Pitman, London
5 O’Connor P. (1999) Using Computers in Hospitality, Cassell, London
6 Olsen M. (1995) Into the New Millennium: A White Paper on the Global
7 Hospitality Industry, International Hotel Association, Paris
8 Olsen M. et al., eds (1996) Service Quality in Hospitality Organizations,
9 Cassell, London
30111 Organisation for Economic Co-operation and Development (Annual), Tourism
1 Policy and International Tourism in OECD Countries, OECD, Paris
2 Pannell Kerr Forster (1998) EuroCity Survey, Pannell Kerr Forster, London
3 Pannell Kerr Forster (1998) Europe, Middle East and Africa Trends, Pannell
4 Kerr Forster, London
5 Pannell Kerr Forster (1998) Middle East and Africa City Survey, Pannell Kerr
6 Forster, London
7 Quest M. ed. (1990) Horwath Book of Tourism, Macmillan, London
8 Quest, M. (1996) How to Buy Your Own Hotel, Brodie Marshall, London
9 Raleigh L.E and Roginsky R.J. eds (1995) Hotel Investments: Issues and
40 Perspectives, Educational Institute of American Hotel and Motel Association,
41111 Washington, DC
212
Select Bibliography
1111 Riley M. (1995) Managing People, Butterworth-Heinemann, Oxford

Riley M. (1996) Human Resource Management. A Guide to Personnel Practice
in the Hotel and Catering Industries, 2nd edition, Butterworth-Heinemann,
Oxford
Roberts J. (1993) Marketing for the Hospitality Industry, Hodder & Stoughton,
Sevenoaks
Shone A. (1998) Business of Conferences, Butterworth-Heinemann, Oxford
8 Smith J. (1990) Practical Computing. A Guide for Hotel and Catering
Students, Butterworth-Heinemann, Oxford
101111 Swarbrooke J. and Horner S. (1999) Consumer Behaviour in Tourism,
Teare R., Adams S. and Messenger S. eds (1992) Managing Projects in
Hospitality Organizations, Cassell, London
Teare R. and Boer A. eds (1991) Strategic Hospitality Management. Theory
and Practice for the 1990s, Cassell, London
Teare R. and Ingram H. (1993) Strategic Management for the Hospitality
and Tourism Industries: A Resource Based Approach, Cassell, London
8 Teare R. and Olsen M. (1992) International Hospitality Management.
Corporate Strategy in Practice, Pitman, London
20111 Teare R., Mountinho L. and Morgan N. eds (1993) Managing and Marketing
Services into the 1990s, Cassell, London
Thomas R. (1997) Management of Small Tourism and Hospitality Firms,
Cassell, London
Touche Ross (1995) Environmental Action Pack for Hotels, International Hotel
Association, Paris
Venison P. (1983) Managing Hotels, Butterworth-Heinemann, Oxford
Waller K. (1996) Improving Food and Beverage Performance, Butterworth-
Heinemann, Oxford
Warne N. and Morrison A. (1996) Hospitality Marketing, Butterworth-
30111Heinemann, Oxford
1 Witt S.F., Brooke, M.Z. and Buckley P.J. (1991) The Management of
International Tourism, Unwin Hyman, London
Wood R. (1994) Organizational Behaviour for Hospitality Management,
World Tourism Organization (Annual) Compendium of Tourism Statistics,
WTO, Madrid
Yeoman I. and Ingold A. (1997) Yield Management: Strategies for the Service
Industries, Cassell, London
9
40
41111
213
1111
2
3
4
5
6
7
Index
8
9
1011
1
2
3111
4 Abu Dhabi, 124, 175 Amex, 69
5 Accommodation: Asia, 66, 67, 68, 69, 80, 103, 104, 118,
6 capacities, 9, 185, 189 120, 121, 130, 160, 176
7 markets, 7–8, 16–17, 185 Associated Luxury Hotels, 186
Accor, xviii, 22, 28, 51, 52, 53, 64, 71, Athens, 124
8
192, 194 Australia, 9, 66, 67, 68, 69, 80, 103,
9
Accounting and control: 104, 118, 120, 121, 122, 130,
20111
administration, 160–1 131, 160, 176, 190, 191
1 balance sheet, 136–8, 145–6 Austria, 8, 67, 86, 87, 100, 109, 136,
2 centralization, 58, 62 passim 132, 161, 191
3 energy, 131–3
4 food and beverages, 90–4, 135–43 Balance sheet:
5 passim general, 135–7
6 general, 135–6 ratios and analysis, 137–8
7 groups of hotels, 55–62 passim relationships with profit and
8 international operations, 70–2 loss, 145
9 marketing, 121–3 Ball, S., 174
30111 minor operating departments, 109, Bamford, G., xviii
138–43 Bank of Tokyo-Mitsubishi, 71
1
profit and loss statement, 138–46 Bankers Trust, 71
2
property operation and Barcelo Hotels, 194
3 maintenance, 129–31 Barcelona, 175
4 rooms, 85–8, 138–43 Barney, W., 56
5 small hotel, 45–7 Bars, 95–6
6 Aer Lingus, 64, Bass Hotels & Resorts, 52, 53, 63, 64,
7 Africa, 9, 66, 67, 68, 69, 80, 86, 88, 65, 70, 192
8 103, 104, 118, 120, 121, 124, Battersea Polytechnic, xv
9 130, 132, 160, 175, 176, 189, 198 Beavis, J.R.S., xv
40 Air France, 65 Belgium, 88
41111 Americas, 9, 189, 190 Benelux, 122
214
Index
1111 Berlin, 124 Computers, 161–2

2 Best Western International, 64, 192 Concessions, 103, 106–8, 150, 154
3 Beverage cycle, 93–4 Concorde Hotels Group, 196
4 Boca Raton Resort and Club, 31 Consortia, 48, 49, 196
Boomer, L., xiii Control, see Accounting and control
5
Branding, 22 Copthorne Hotels, 65 Cornell
6
Bristol Hotels & Resorts, 192 University, xv
7
British hotel industry, 185 Credit cards, 68, 69
8 British Standards, 124 Crowther, Lord, xv
9 Brussels, 124, 175 Czech Republic, 8, 88
10111 Budgets, 35
1 Burkart, A.J., xv Danubius Hotels & Spa Co., 195
1 Buying economies, 54–5 Definition and function of hotels, 3–4
2 Buying hotel services, 22–3 Demand generating sources, 18–19
3 Department of Employment Manpower
4 Cairo, 124 Research Unit, 164
5 Caisse Centrale de Coopération Deutsche Bank, 71
6 Économique, 71 Deutsche Finanzierungsgesellschaft für
7 Campbell-Smith, G., xvi Beteilgungen in
Canada, 9, 71, 122, 131, 144, 187, 190, Entwicklungsländern, 73
8
191 Developed countries, 65
9
Capital gearing, 138 Developing countries, 63–5, 71
20111
Caribbean, 68, 69, 80, 103, 104, 118, Diners, 69
1 130, 160, 161, 176 Direct mail, 120
2 Carlson Hospitality Worldwide, 53, 64, Discounts, 108, 124
3 70, 192 Dorint Hotels, 194
4 Casablanca, 124 Doswell, R., xvi, 13, 15, 116
5 Catering market(s), 17–18 Drucker, P., xiii
6 CDL Hotels, 193
7 Cendant Corporation, 50, 53, 65, East Asia and the Pacific, 9, 189, 190
8 192 Centralization, 58–62 Charge Economies of scale, 53–5
9 cards, 69 Edinburgh, 6
30111 Chartered Institute of Marketing, 115 E-funds transfer, 68
Chile, 191 Egypt, 88, 132, 191
1
Chin, J., 56 Eilat, 175
2
China, 69, 190, 191 Energy, 131–3
3
Choice Hotels International, 53, 64, 70, England, 6, 7, 51, 62, 88, 185
4 192 Environment, 133–4 Erstad,
5 Circus Circus, 193 M., xviii
6 Club Méditerranée SA, 64, 69, 71, 192, Euro Disney SCA, 195
7 194 Eurocard, 69
8 Commissions, 108, 123 Europe, 6, 7, 9, 51, 66, 67, 68, 69, 71,
9 Commonwealth Development 80, 86, 87, 103, 104, 109, 118,
40 Corporation, 71 120, 121, 122, 124, 130, 132,
41111
215
1111 160, 161, 175, 176, 189, 194, Franchising, 52, 53, 70
2 198, see also individual Friendly Hotels Plc, 193, 194
3 countries Front desk, see Reception
4 European Bank for Reconstruction and Fujita Kanko, 193
Development, 71 Fuller, J., xv
5
European Investment Bank, 71 Functions, 96
6
Extended Stay America, 192
7
Geneva, 175
8 Facilities management, 129–31 Germany, 8, 9, 51, 67, 71, 86, 88, 100,
9 Facilities and services as products, 13 109, 122, 130, 144, 160, 189, 191
1011 Far East, 71
1 Fayol, H., xiii Gerty, M., xviii
2 Fearn, D.A., xvi Gilbreth, F.B. and L.M., xiii
3111 FelCor Lodging Trust Inc., 192 Global Distribution Services, 126
4 Fenton, L.S., xvi Fiesta Hotels, Golden Tulip Hotels, 195, 196
5 194 Goldman Sachs, 71 Granada, 63,
6 Finance, see Accounting and control 75
7 Financial economies, 54 Finland, Grecotel SA, 195
51, 88 Greece, 51, 88
8
First Hospitality AB, 195 Greenalls Hotels & Leisure, 195
9
Flag Choice Hotels, 196 Grosvenor House Hotel, London, xv
20111 Food and beverages: Groups of hotels:
1 accounting and control, 99–101, advantages, 53–5
2 141–3 centralization, 57–9
3 cycles, 90–4 illustrations, 59–62
4 expenses, 100 operations, 52–3
5 function, 89–90 problems of, 55–7
6 future, 101 statistics, 50–1, 192–6
7 organization, 99, 152–4 Guest:
8 outlets, 94–7 arrivals and departures, 81–2
9 preparation and production, 98 information, 82–4 laundry,
profit, 100 105–6 mail, 82–3
30111
revenue and sales, 66, 67, 90, 100
1
staffing, 99 reception, 79–81
2 registration, 81
statistics, 99–100
3 support services, 97–8 satisfaction surveys, 178–9
4 Food cycle, 90–3 services, 77–109 passim, 118
5 Foreign currency, 108
6 Forte Hotels, xviii, 22, 29, 63, 64, 70, Helsinki, 124
7 178, 192, 194 Herzberg, F., xiii
8 Four Seasons Hotels, 64, 71 Hilton Hotels Corporation, 192 Hilton
9 Fowler, N.A., xvi International, 64, 70, 186, 192,
40 France, 8, 9, 51, 67, 71, 86, 88, 100, 194
41111 109, 130, 160, 189, 191 Historic Hotels of America, 196
216
Index
1111 Historical development, 5–7 International hotel operations:

2 Holiday Hospitality Corporation, 22, definition, 63–4 examples,
3 123, 186 63–5
4 Homestead Village Inc., 193 finance, 70–2
Honegger, G., xviii markets, 66–9
5
Hong Kong, 71 organization, 72–5
6
Horwath and Horwath, 88, 101 ownership, 70–2
7
Horwath International, xviii, 121, 122, products, 65–6
8 197 International Hotels Environment
9 Hospitality Properties Trust, 193 Initiative, 133
10111 Hotusa-Eurostars-Familia Hotels, 196 Internet, 120
1 Hôtel garni, 6 Investment, 136–8, 185, 187
1 Hotel industries, 185–8 Hotel Ireland, 66, 67, 86, 100, 109, 122, 130,
2 organizations, 199–201 Hotel 144, 160
3 periodicals, 202–4 Hotel Israel, 88, 132
4 Waldorf Astoria Italy, 9, 51, 189
5 Corporation, xiii
6 Hotels, xviii, 52, 53, 193, 195, 196 JAL Hotels, 71
7 Hotels & Compagnie, 53, 193, 194 Japan, 9, 69, 71, 144, 190, 191
Housekeeping, 79–80, 84–5, 151–2 Japan Airlines, 65 Jarvis Hotels,
8
HSBC Group, 71 195
9
Human resources: Jeddah, 175
20111
centralization, 58–62 passim Johannesburg, 124
1 function, 163–4, 166–8, 170 Joint Industry Committee for National
2 organization, 155 Readership Surveys, 21
3 see also Policies; Productivity; Joint ventures, 70
4 Staffing Jolly Hotels, 195
5 Hungary, 8, 51, 144 Jones, A.H., xv
6 Husa Hotels Group, 193, 194 J.P. Morgan, 71
7 Hyatt Hotels/Hyatt International, 52, 64,
8 70 Kaplan and Norton’s Balanced
9 Scorecard, 172–3
30111 Iberostar, 193, 194 ILA-Châteaux & Karachi, 124, 175
Hotels de Charme, Kempinski Hotels & Resorts, 195
1
196 Kenya, 88, 132, 191
2
Image as part of product, 14 Keytel, S.A., 196
3 Importance of hotels, 4–5 Kirk, D., 134
4 India, 191 Kitchens, 97–8
5 Information technology, 161–2 Inter- Kuwait, 175
6 Continental Hotels and Resorts, 63,
7 64, 186 La Quinta Inns, 192
8 Inter-hotel comparison surveys, 49 Las Vegas, 187
9 International Hotel & Restaurant Latin America, 68, 69, 80, 103, 104,
40 Association, 133 118, 130, 160, 161, 176, 198
41111
217
1111 Laundry, 105–6 payroll, 121

2 Leading Hotels of the World, 196 resources, 121–3
3 Lease, 52, 70 special features, 116–18
4 Leggett, D.M.A., xv Marriott International, xviii, 52, 53, 64,
Less developed countries, 63–5, 71 65, 70, 73, 75, 179, 192
5
Lexington Services Corporation, Mastercard, 69
6
196 Liquidity ratios, 145 Mediterranean, The, 69
7
Location of hotels, 9–10, 13, Meek, H.B., xv
8 198 Lodgian Inc., 193 Logis de Merchandising, 120
9 France, 196 Meridien Hotels, 65, 70, 72
1011 London, 59, 114, 124, 167–9, 175 MeriStar Hotels & Resorts Inc., 192
1 Lowe, A., 41 Mexico, 9, 144, 187, 190, 191
2 Loyalty cards, 120 Middle East, 9, 66, 67, 68, 69, 80, 88,
3111 LTI International Hotels, 71, 194 103, 104, 118, 120, 121, 124,
4 130, 132, 160, 175, 176, 189,
5 McGregor, D., xiii 198
6 Madrid, 175 Middleton, V.T.C., xv
7 Mail, 82–3 Minor operated departments:
Malaysia, 191 accounting and control, 108,
8
Management by objectives, 36 141–3
9
Management contracts, 52, 70 function, 102–3
20111 Management structure, 156–8 organization, 102–9, 154
1 Managerial economies, 54 revenue and sales, 103–4
2 Manama, 175 Minotel International, 196
3 Marcus Hotels & Resorts, 193 Monitoring of marketing
4 Maritim Hotels, 194 Market: performance, 120
5 Morocco, 88, 132
6 areas, 19–20 Moscow, 175
7 composition, 66–7 Mullins, L., 45
8 concept, 13–15 Multinational companies, 63–4, 71
9 evolution, 114–15 Muscat, 175
international hotels, 66–9
30111
research, 119, 120 Nailon, P.W., xvi
1
segmentation, 20–22 Nairobi, 124
2
small hotels, 40–1 Neil, J., xviii
3 UK hotels, 185 Netherlands, 8, 51, 191
4 US hotels, 188 New Zealand, 66, 67, 68, 69, 80, 103,
5 Marketing: 104, 120, 121, 122, 130, 131, 160
6 concept, 115–16
7 cycle, 119–21 NH Hotels SA, 195
8 economies, 54 Nightingale, M.A., xvi
9 expenses, 121–3 Nikko Hotels International, 64, 65,
40 mix, 121 193
41111 orientation, 23–4, 115 Nomura, 71
218
Index
1111 North America, 7, 66, 67, 68, 69, 71, Pacific, see East Asia and the Pacific;
2 80, 103, 104, 118, 120, 121, 130, individual countries
3 160, 176, 198; Pakistan, 88, 132
4 see also Canada, United States Pan American World Airways, 64
Norway, 51, 67, 86, 100, 109, 130, Pannell Kerr Forster, xviii, 85, 86, 88,
5
161 124, 132, 175, 198
6
Paradores, 195 Paribas,
7
Objectives, 26–36 passim 71
8 Occidental Hotels, 71, 194 Paris, 114, 124, 175
9 Olsen, M., 108, 126, 129, 133, 146, Park Place Entertainment, 193
10111 160, 178 Parker, A., xviii Parkinson, G.,
1 Omni Hotels, 193 xvi
1 Orbis Hotels, 194 Parties in the hotel business, 27–9
2 Organization: Patriot American Hospitality Inc./
3 food and beverages, 99, 152–4 Wyndham International Inc.,
4 general, 149–51 192
5 groups of hotels, 50–62 passim, Paying for hotel services, 22–3, 68
6 166–70 Performance, 171–81 passim
7 international hotel operations, 72–5 Philosophies, 33–4 Plans, 34–6
large hotel, 158–9 marketing, 119–
8
20, 125–6 Poland, 51
9
minor operated departments, 103–6, Policies, 25–36 passim
20111
154 Portugal, 8, 67, 86, 100, 109, 130, 132,
1 miscellaneous guest services, 102–9, 161, 191
2 154 Prague, 124
3 property ownership, operation and Preferred Hotels Worldwide, 196
4 maintenance, 127–31 Price as part of product, 14
5 rooms, 85–6, 151–2 Prime Hospitality Corporation, 193
6 small hotel, 42–5 Prince Hotels, 71, 193
7 support services, 155–6 Prince of Wales, HRH, The, 134
8 training, 168–70 Princess Hotels, 195
9 Organization for Economic Co- Print advertising, 120
operation and Development, 7, 8 Product branding, 22
30111
Organizations, 199–201 Product formulation and
1
Orlando, 185 O’Sullivan, development, 119, 120
2
H., 56 Outdoor Production orientation, 114
3 advertising, 120 Productivity:
4 Ownership: importance of, 181
5 finance and accounts, 135–8, measures, 174–6
6 145–6 scope for improvement, 180
7 groups of hotels, 50–1 Profit and loss:
8 international hotel operations, 70–2 general, 135–6 operating
9 property, 127–8 profit, 143–4 ratios and
40 small hotels, 41–2 analysis, 140–3
41111
219
1111 relationships with balance sheet, 145 organization, 85

2 statement, 138–40 payroll, 86
3 Promotion, 119–20 profit, 86, 142
4 Promus Hotel Corporation, 52, 53, records, 81–2
192 reservations, 68, 81–2, 151–2
5
Property: revenue and sales, 66, 67, 80–2,
6
costs, 129–31 86
7
operation and maintenance, 128–9 service, 96
8 statistics, 86–7
ownership, 127–8 staffing, 128
9 Royal Garden Hotel, London, 28
1011 Purchasing, 54–5, 58–62, 155
1 Sales and marketing, 58–62 passim,
2 Quality management, 123–4 115–16, 155
3111 Queens Moat Houses Hotels, 193, 194 Sales orientation, 115
4 Salvage, 108
5 Radio promotion, 120 Scandic Hotels AB, 193, 194
6 Receiving (supplies), 91–2, 93–4 Sceptre Hospitality Resources, 196
7 Reception, 79–80, 151–2 Red Scotland, 6, 51, 185 Selling:
Roof Inns, 52, 192
8
Regal Hotels Plc, 195 as element of marketing cycle,
9
Relais & Châteaux, 196 119–20
20111 Rentals, 106–7, 154 beverages, 95
1 Restaurants, 94–5 food, 92
2 Restel, 195 rooms, 81–2
3 REZsolutions Inc., 196 Service in hotels, 14, 15 Services as
4 Rica Hotels & Restaurants, 195 products, 15–16 Shangri-La Hotels &
5 Richfield Hospitality Services Inc., 193 Resorts, 71, 193 Small hotel:
6 Ring Hotels, 194
7 Risk-spreading economies, 55 accounting and control, 45–7
8 Riu Hotels Group, 193, 194 definition, 39–40 future, 48–
9 Riyadh, 175 9
Robert F. Warner Inc., 196 organization and staffing, 42–5
30111
Robinson Club GmbH, 195 ownership and finance, 41–2
1
Romantik Hotels, 64, 195 products and markets, 40–1
2
Rome, 175 Small Luxury Hotels of the World, 196
3 Rooms: Social grades, 21
4 accounting and control, 87–8, Société du Louvre, 52, 64, 71, 192,
5 141–3 passim 194
6 allocation, 81 Société Générale, 71
7 capacity, 9, 79 Sokos Hotels, 195
8 expenses, 86 Sol Meliá, 52, 71, 192, 194
9 function, 79–80 South Africa, 88, 191
40 future, 87 South America, 67, 68, 80, 120, 121,
41111 occupancies, 87, 124, 191 130, 143, 160, 176
220
Index
1111 South Asia, 9, 189 Thistle Hotels Plc, 194 Tokyu

2 Spain, 8, 9, 51, 71, 122, 144, 189, Hotel Group, 71, 193 TOP
3 191 International Hotels, 196
4 SRS Hotels Steigenberger, 196 Tourist product, 125–6
Staffing: Training, 168–70
5
determinants, 164–5 Trans World Airlines, 64
6
food and beverages, 99 Travel agents’ commissions, 108, 123
7
general, 163–4 Travel and hotels, 5–6, 185–6
8 rooms, 85–6 Travel market(s), 8–9, 16–17
9 small hotel, 42–5 Travellers cheques, 108
10111 see also Human resources; Policies; Treff Hotels AG, 194
1 Productivity Trigano, G., 69
1 Stakis Hotels, 195 TRI Hospitality Consulting, xviii
2 Standard systems of accounts, 151, Tryp Hotels, 194 Turkey, 191
3 160
4 Starwood Hotels & Restaurants, 52, 53, TV promotion, 120
5 64, 70, 192 Types of hotels, 10–12
6 Steigenberger Hotels AG, 194
7 Sterling Hotels, 196 United Arab Emirates, 88, 132 Uniform
Storing and issuing (supplies), 92, 94 system of accounts, 121, 129,
8
Supplementary accommodation, 8 131, 150, 160, 197, 198
9
Support services, 155–6 Uniformed staff and services, 79–80,
20111
Supranational Hotels, 196 Strategies, 83–4
1 34–6 United Kingdom, 7, 9, 67, 70, 86, 100,
2 Summit Hotels & Resorts, 196 109, 122, 130, 131, 144, 161, 185–
3 Sunwing Hotels, 195 6, 189; see also England; Scotland;
4 Surrey University, xv, xvi, xvii Wales
5 Swallow Hotels Ltd, 195 United States of America, 7, 9, 50–1,
6 Sweden, 8, 51, 191 70, 122, 131, 144, 187–8, 190
7 Swissair, 65 University:
8 Swissôtel, 65, 195 Cornell, xv
9 Switzerland, 51, 67, 86, 100, 109, 122, Surrey, xv, xvi, xvii
130, 132, 144, 161, 191 US Franchise Systems, 53, 193
30111
Systems model, 171–81 passim US hotel industry, 187–8
1
2
Taylor, F.W., xiii Venison, P., 47
3 Technical economies, 54 VIP International Corporation, 196
4 Technology, 129, 133, 161–2 Visa, 69
5 Tel Aviv, 124, 175
6 Telecommunications, 66, 67, 104, 109 Waldorf-Astoria Hotel Corporation,
7 Telemarketing, 120 xiii
8 Telephones, 103–5 Wales, 62, 185
9 Thailand, 9, 190 Walt Disney Co., 193
40 Tharaldson Enterprises, 52, 193 Ward, T., xviii
41111
221
1111 Warsaw, 175 World Tourism Organization, 9, 191

2 Warwick International Hotels, 195 World Travel & Tourism Council, 133
3 Website, 120 Worldwide Hotel Industry, 66, 67, 68,
4 Westmont Hospitality Group Inc, 192 69, 80, 86, 87, 100, 104, 109,
Whitbread Group of Hotels, xviii, 22, 118, 120, 121, 122, 130, 143,
5
35, 193, 194 144, 160, 197
6
White Hart Hotel, Salisbury, xviii
7
World Bank Group, 71 Yield management, 123, 124
8
9
1011
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20111
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1111

1111 PART II THE STRUCTURE OF THE HOTEL

Select Bibliography 209

1111 20 Telecommunications income, expenses and profit ratios in

41111 1999 179

1111 Table 1 Accommodation profile of selected European countries, 1995

1111 Where there is a pronounced tendency to a short or long duration of

1111 of professional and commercial organizations for meetings and conferences.

1111 For hotel accommodation it is necessary to identify all the institutional

1111 A concomitant of market segmentation is product branding, with a view to

Housekeeper Head Porter Receptionist Head Barperson Head Waiter Chef

Room staff Porters Receptionists Bar staff Waiters Cooks

Figure 4 Organization chart of a

1111 It is normally adequate to analyse income and certain expenses under

1111 Table 4 Leading hotel franchising companies

Scope for Centralization

Joint General Joint General

1111 Table 5 Composition of hotel revenue in main regionsa

1111 Table 6 Composition of hotel revenue in selected European countriesa

1111 Table 8 Advance reservations in hotels in main regionsa

1111 Table 10 Charge/credit card hotel sales in main regionsa

1111 from France, Accor (Sofitel, Novotel, Formule 1, Mercure, Etap,

Loss Prevention Africa America Accounting

Figure 9 Organization Chart of Marriott International Lodging, June 1999

Finance Marketing Food & Human Director of IT Revenue Vice President

Regional Regional Regional Regional Regional Regional

Figure 10 Organization Chart of Le Méridien Hotels & Resorts, June 1999

1111 Marriott International is a leading world-wide hospitality company whose

1111 Table 11 Room sales as a ratio of hotel revenue in main regions a

Table 12 Rooms payroll and related expenses

1111 Table 14 Room occupancies and average rates

1111 Table 15 Double occupancies in selected cities and regions a

1111 supplied, it is a relatively simple procedure. In contrast to food, all bever-

1111 Table 17 Food and beverage payroll and related expenses

41111 Figure 12 Food and beverage ratios in European hotels, 1997

There is a discernible trend towards more leisure eating in most devel-

1111 Africa and the

1111 Table 19 Miscellaneous sales and income as a ratio of hotel revenue in

1111 Table 20 Telecommunications income, expenses and profit ratios in hotels in

30111Marketing is the management function which organizes and directs

1111 In order to understand marketing in its totality, it is helpful to distinguish

1111 Table 21 Guest services offered by hotelsa in main regions

1111 Table 22 Use of promotional tools by hotels in main regionsa

8 Source: Based on Worldwide Hotel Industry, 1998

1111 Table 24 Marketing expensesa as a ratio of hotel sales in selected European

1111 of their total revenue on marketing activities as defined earlier. However,

3 Rooms sold Average achieved room rate

1111 Table 25 Room occupancies, discounts and yield in selected cities

1111 Table 28 Energy costs as a ratio of hotel sales in

1111 Water cubic feet/ Purchased steam

1111 cost of departmental sales (opening stock purchases closing stock) is

1111 support services. Several typical organizational approaches may be identi-

each sales outlet and supporting service operates as a separate department

1111 Property operation, Architects, builders, designers

All the roles described above may be appropriate in particular circum-

7 direct lines of responsibility and authority to their superiors and to their

Restaurant Lounge Head

Grill Room Floor Head

Coffee Shop Restaurant

Staff Catering Sommelier

Figure 18 Organization chart of a large hotel

40 Source: Based on Worldwide Hotel Industry, 1996, 1997, 1998