The U.S. Hotel Industry: Nature & Evolution

From 1900 to 2000: A Century of Innovation & Change

Dr. Oscar Aguer

Areas of Focus

•  The numbers •  The benchmarks •  The players •  The consolidation •  The conclusions •  The conclusion (of the conclusions)

Rate and Occupancy

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The 1900’s •  1900 - The Lenox Hotel offered “fireproof lodging,

unexcelled cuisine, a shower bath, and roof garden”, all for $2.00.

•  1904 – New York City’s St. Regis provides individually controlled heating and cooling units in each guestrooms.

•  1908 – Gideons International places their first Bible in the Superior Hotel in Montana

•  1908 – The Hotel Statler chain begins in Buffalo. All rooms have private baths, full-lenght mirrors, phones, built-in radios: The model for the next 40 years.

The 1910’s •  1910 – The industry consists entirely of hotels located in

urban centers and few resorts near the principal vacation destinations.

•  1912 – Electricity is being installed in new hotels for cooking purposes. Most hotels still place candles and matchboxes in every rooms.

•  1919 – A Mr. Conrad Hilton purchases his first hotel, The Mobley in Cisco, Texas.

•  During that decade, the number of hotels is 10,000 and the average size is 60-75 rooms.

The 1920’s •  1920 – Prohibition begins. Occupancy reaches 85% •  1922 – The first management contract is signed by the

Treadway Company on small college inns. •  1925 – The first roadside “motel” opens in San Luis

Obispo, Calif, for $2.50 a night. •  1929 – Western Hotels, now Westin, starts with 17 hotels

in the Pacific Northwest and establishes the first hotel management company.

•  During that decade the hotel construction reaches an all-time peak, fueled by the state and federal highway program, and the developing automobile industry.

The 1930’s

•  1930 – Four out of five hotels go into bankrupcy. •  1933 – Due to the Great Depression, hotels post the lowest

occupancy ever: 51%. Construction stops.

The 1940’s •  1940 – Air conditionning becomes prevalent •  1945 – Sheraton becomes the first chain listed on the

NYSE. Travelodge is the first economy concept. •  1946 – Westin introduces the the first guest credit card.

Occupancy reaches all-time high of 93%. First casino hotel opens: The Flamingo in Las Vegas. The first Loews hotel comes to the market: Laurel-in-the-Pines, N.J.

•  1947 - Westin introduces the first hotel reservation system. The Roosevelt installs TVs in every rooms.

•  1949 - Hilton becomes the first international chain with the Caribe Hilton in San Juan.

The 1950’s •  1952 – A Mr. Kemmons Wilson opens his first Holliday

Inn in Memphis, Tenn, named after a Bing Crosby movie. •  1954 – A Mr. Howard Dearing Johnson initiates the first

lodging franchise, a motor lodge in Savannah, Georgia. Conrad Hilton buys the Statler for $111 M, the largest hotel transaction to that date.

•  1957 – J.W. Marriott opens his first hotel, The Twin Bridges Marriott Motor Hotel in Arlington, VA, and Jay Pritzker buys his first hotel, The Hyatt House, near the L.A. airport. Hilton offers direct-dial phone service.

•  1958 – First electronic reservation system by Sheraton.

The 1960’s •  1960 – First mini bar in guestrooms at the Siegas chain. •  1962 - Motel 6, forerunner of the budget brand opens in

Santa Barbara, Calif. •  1964 – Travelodge offer wheelchair-accessible rooms. •  1967 – The Atlanta Hyatt Regency opens, featuring a 21-

story atrium and changing the course of upscale hotel design.

•  1968 – Westin introduces the first 24-hour room service concept in all its hotels.

The 1970’s

•  1973 – The Sheraton Anaheim is the first to offer free in-room movies

•  1974 – The energy crisis hits the industry. Hotels ask guests to save electricity and cut heat to unoccupied rooms.

•  1975 – Four Seasons is the first chain to offer brand name bathroom amenities. Hyatt introduces its Regency Club, the first concierge level proposing ultimate VIP service.

The 1980’s •  1983 – Westin accepts reservation and express check out

with major credit cards. Vingcard is invented: the first optical electronic keycard

•  1984 – Choice hotels offers non-smoking rooms. Holliday Inn starts the first nationwide all-suite hotel chain.

•  1988 – The extended stay concept is introduced by Marriott with Residence Inns, and Holliday Corp with Homewood Suites.

•  1989 – Hyatt introduces the first kids program “Camp Hyatt”, and Hampton Inns offers “100% guaranteed satisfaction, or your money back!”.

The 1990’s •  1990 – Loews “Good Neighbors” policy becomes the first

comprehensive community program. •  1991 – Westin is first to offer voice mail in all guestrooms.

Industry looses a record 61.8% of revenue. (recession and overbuilding).

•  1992 – Industry breaks even after 6 years of consecutive losses. Radisson began offering the first “business class” rooms.

•  1994 – Hyatt and Promus are the first chains to establish a web site on the Internet.

•  1995 – Choice and Holliday Inn offer online reservations. •  1999 – Starwood creates the “W” boutique brand.

...and in the 2000’s

•  2000 – Hilton Hotels announces plans for the first hotel in space.

•  2002 – Precisely on January 1st, at 9:04 AM, in Barcelona, Catalonia, Spain, (waking up E.B, O.A, and J.C.P from their New Year’s Eve parties),

Jacques M. Bourgeois joins forces with THR (or vice-versa!?) to develop the newly created “Advanced Hotel & Resorts Management” Division.....OK! on to the next slide!!

The Big Players...then: Fifty two Days Inns . Ramada . Super 8 Motels. Howard Johnson. Travelodge. Knights Inns. Wingates Inns. Villager Inns. AmeriHost. Holiday Inn. Holiday Inn Express. Crowne Plaza. Inter-Continental. Holiday Select. Holiday Garden Court. Holiday Sunspree. Forum Hotels. Staybridge Suites. Marriott hotels, resorts, suites. Ritz Carlton. Courtyard. Renaissance. Stouffer. Fairfields. Residence Inns. Townplace Inns. Spring Hills Suites. Comfort Inns. Quality Inns. Econolodge. Clarion Hotels. Flag hotels. Sleep Inns. Rodeway Inns. MainStay Suites. Friendship Inns. Royal Inns. Hampton Inns. Hilton Hotels. Doubletree. Embassy Suites. Garden Inns. Homewood Inns. Red Lion. Conrad Intl. Sheraton. Westin. Four Points Hotels. St. Regis Collection. W Hotels. Hyatt Hotels & resorts Intl. Four Seasons.

The Big Players...now: Eight Days Inns . Ramada . Super 8 Motels. Howard Johnson. Travelodge. Knights Inns. Wingates Inns. Villager Inns. AmeriHost. Holiday Inn. Holiday Inn Express. Crowne Plaza. Inter-Continental. Holiday Select. Holiday Garden Court. Holiday Sunspree. Forum Hotels. Staybridge Suites. Marriott hotels, resorts, suites. Ritz Carlton. Courtyard. Renaissance. Stouffer. Fairfields. Residence Inns. Townplace Inns. Spring Hills Suites. Comfort Inns. Quality Inns. Econolodge. Clarion Hotels. Flag hotels. Sleep Inns. Rodeway Inns. MainStay Suites. Friendship Inns. Royal Inns. Hampton Inns. Hilton Hotels. Doubletree. Embassy Suites. Garden Inns. Homewood Inns. Red Lion. Conrad Intl. Sheraton. Westin. Four Points Hotels. St. Regis Collection. W Hotels. Hyatt Hotels & resorts Intl. Four Seasons.

The Consolidation

Cendant 6,540 hotels 555,000 rm

6Continents 3,030 hotels 481,482 rm

Marriott 2,084 hotels 384,010 rm

Choice 4,219 hotels 337,226 rm

Hilton 1,910 hotels 333,110 rm

Starwood 713 hotels 217,651 rm

Hyatt 190 hotels 87,234 rm

4 Seasons 53 hotels 15,048 rm

The conclusions

Individual Group Chain Flag Brand

Local Regional National International Global

Homy Hospitality Convenience Experience Commodity

Reality New reality Newer reality Newest reality Brandnew real

The Conclusion

(...of the conclusions)

and so, ...

THE ONLY CONSTANT IS CHANGE

my THR friends