Summary Slide zModern Hotel Innovators zLodging Management Associations zHotel Revenue Sources zProfit Margin–Room Cost zProfit Margin–Food Cost zOpportunity

Summary SlideModern Hotel InnovatorsLodging Management AssociationsHotel Revenue SourcesProfit Margin–Room CostProfit Margin–Food CostOpportunity CostCaptive Audience QuotientInternet ExercisesHotel Web Sites

Figure 1-1

Modern Hotel Innovators

Ellsworth StatlerConrad HiltonJ. W. MarriottKemmons WilsonJay Pritzker

What three innovators emerged at about the same time in history?

Figure 1-2

Lodging Management Associations

Owner-operated Owner-managed Independent FranchisedManagement contract

What are the similarities and differences between franchising and management contract?

Figure 1-3

• Greater Quality Control• Higher Fee to Owners• Less Owner Control• Higher Employee Standards• Higher Performance Expectations

• Less Quality Control• Lower Fee to Owners• Greater Owner Control• Varying Levels of Employee Experience and Training

Shared Benefits

Brand RecognitionCRS

National Marketing SupportStandard Operating Procedures

Differences

ManagementManagementContractsContracts

FranchisingFranchising

Lodging Management Association

Figure 1-4

Hotel Revenue Sources

Sleeping Rooms Meeting/Function Space Outlets/Ancillary

Why is this relationship so important?

Figure 1-5

#2Selling meeting/function space

to utilize it’s best potential

#1Selling as many sleeping

rooms as possible

#3Maximizing the capacity of the outlets and ancillary profit centers through the

selling of #1 and #2

+

+

Successful Hotel Equation

Figure 1-6

Profit Margin

Room CostRoom Cost Components

H/L/P Labor Overhead

Heat Housekeeping Debt Service of Owners

Light Engineering (internal structure maintenance)

Marketing (local effort)

Power Grounds Maintenance (land surrounding building).

Management Costs (including applicable franchise or management contract fees)

Taxes Corporate Obligations

Room Rate - Room Cost = Profit MarginFigure 1-7

Profit Margin

Food Cost Item Purchase Price Menu Price Food Cost Steak $5.95/ea. $22.00 27.0% Chicken $3.95/ea. $17.95 22.0% Caesar Salad $1.99/ea. $ 9.95 20.0%

Food Cost = Purchase Price/Menu Price

Figure 1-8

Opportunity Cost

Each night, when a room goes unsold, the hotel loses the opportunity to ever sell it again. A hotel cannot regain that opportunity.

The “Empty Room Theory” states that once a room goes unoccupied, it is gone forever.

Why does opportunity cost differ in catering/outlet food and beverage sales?

Figure 1-9

Captive Audience Quotient

Applies to both outlet/ancillary sales and catering sales.

A guest staying at a hotel is more likely, for convenience and other reasons, to choose at least once some outlet of the hotel (if it offer such services).

Catering traffic at a hotel benefits by the captive audience quotient, also called the group catering contribution.

Figure 1-10

Chain Histories Internet Exercise

In this chapter histories of Hilton, Marriott, Holiday Inn, and Hyatt were briefly discussed.

Using the Internet (sample URLs are provided following the questions), choose a different hotel chain and obtain any printed materials you can about their beginnings and history. Answer the following questions:

Figure 1-11

What is the name of the hotel chain you selected?

When was the hotel chain established?

What was the name of the first hotel in the chain?

Where was it located?Who was the person or persons who

started the chain?

Figure 1-12


How many hotels are now in this chain?How long has this chain been in

operation?What types of hotels does this chain

operate?Where is the corporate office for this

chain located? Has it changed locations?

Has there been any mergers or acquisitions within this chain?

Figure 1-13


Does this chain have more than one brand in its repertoire?

What unique thing did you learn about this chain that you didn’t know before?

Why did you choose this chain?Describe the hotel in this chain that

you would most like to visit.Would you like to work for this hotel

chain? Why or why not?

Figure 1-14


Is this chain publicly traded? If so, what is the current stock price?

What is the stock price history during the past 12 months?

What factors have been involved in any fluctuations over the past three years?

What is the current focus of this chain?What percentage of this chain’s

properties are corporately owned?

Figure 1-15


Hotel Web Site Home Pages

For this case study, try one of the following web sites:

Accorhttp://www.accorhotel.comhttp://www.sofitel.comhttp://www.novotel.comhttp://www.mercure.comhttp://www.ibishotel.comhttp://www.etaphotel.comhttp://www.hotelformule1.comhttp://www.motel6.comhttp://www.redroof.comhttp://www.coralia.com/coralia/gb/index.htm

Adam's Markhttp://www.adamsmark.comAmerisuiteshttp://www.amerisuites.comANAhttp://www.ananet.or.jp/anahotels/e/Astonhttp://www.aston-hotels.comBest Westernhttp://www.bestwestern.com

Figure 1-16

Cendanthttp://www.cendant.comhttp://www.super8.com/ctg/cgi-bin/Super8#http://www.knightsinn.com/ctg/cgi-bin/KnightsInnhttp://www.hojo.com/ctg/cgi-bin/HowardJohnsonhttp://www.villager.com/ctg/cgi-bin/Villagerhttp://www.ramada.com/ctg/cgi-bin/Ramadahttp://www.travelodge.com/ctg/cgi-bin/Travelodge

Choicehttp://www.choicehotels.comDorinthttp://www.dorinthotels.comDruryhttp://www.druryinn.com

Elegant Resortshttp://www.elegantresorts.comFairmonthttp://www.fairmont.comhttp://www.cphotels.com/cp.asp?loc=corp


Figure 1-17

Fiesta Americanahttp://www.fiestaamericana.comFour Seasonshttp://www.fourseasons.com/index.htmlGolden Tuliphttp://www.goldentulip.comHarrah'shttp://www.harrahs.com/home/home.htmlHiltonhttp://www.hilton.comhttp://www.hilton.com/doubletree/index.htmlhttp://www.hilton.com/conradinternational/index.htmlhttp://www.embassy-suites.comhttp://www.homewood-suites.comhttp://www.hampton-inn.comwww.redlion.comhttp://www.hilton.com/hiltongardeninn/index.html

Hyatthttp://www.hyatt.comJamesonhttp://www.jamesoninns.comhttp://www.signature-inns.com/index.htmLoewshttp://www.loewshotels.com


Figure 1-18

Le Meridianhttp://www.lemeridien-hotels.comhttp://www.forte-hotels.comhttp://www.heritage-hotels.comhttp://www.posthouse-hotels.comMandarin Orientalhttp://www.mandarin-oriental.com/Manhattan East Suite Hotelshttp://www.mesuite.comMarriotthttp://www.marriott.comhttp://www.renaissancehotels.comhttp://www.courtyard.comhttp://www.residenceinn.comhttp://www.fairfieldinn.comhttp://www.towneplacesuites.com/js/Default.asphttp://www.springhillsuites.com/js/Default.asp

Metropolitanhttp://www.methotels.comNikkohttp://www.nikkohotels.comNoble Househttp://www.noblehousehotels.com


Figure 1-19

Omegahttp://www.omegaresorts.com/omega_info/index.htmlOmnihttp://www.omnihotels.comOutriggerhttp://www.outrigger.comPark Placehttp://www.parkplace.comRadissonhttp://www.radisson.com/RAD/RadissonHome/0,2509,,00.htmlRed Carnationhttp://www.redcarnationhotels.comRegalhttp://www.regalhotel.com/main.htmlhttp://www.millennium-hotels.comRitz Carltonhttp://www.ritzcarlton.com]

Rosewoodhttp://www.rosewoodhotels.comRoyalhttp://www.royalhotels.com

Sierra Suiteshttp://www.sierrasuites.comSholodgehttp://www.shoneysinn.com


Figure 1-20

Sonestahttp://www.sonesta.com/sonesta/sonweb2.nsfStationhttp://www.stationcasinos.com/home/default.aspStarwoodhttp://www.starwoodhotels.com/http://www.westin.com/main.tafhttp://www.sheraton.com/main.tafhttp://www.fourpoints.com/main.tafhttp://www.stregis.com/http://www.luxurycollection.com/main.tafhttp://www.whotels.comSwissotelhttp://www.swissotel.com/index.html

SRShttp://www.srs-worldhotels.comSummithttp://www.summithotels.com


Figure 1-21

Super Clubshttp://www.superclubs.comThistlehttp://www.thistlehotels.comTrumphttp://www.trump.comUS Franchise Systemshttp://www.usfsi.comhttp://www.microtelinn.comhttp://www.hawthorn.comhttp://www.bestinn.comWalt Disney World Resortshttp://asp.disney.go.com/disneyworld/db/seetheworld/resorts/index.aspWarwickhttp://www.warwickhotels.com

Wyndhamhttp://www.wyndham.com/default.cfmhttp://www.summerfieldsuites.com


Figure 1-22

Documents

Summary Slide zModern Hotel Innovators zLodging Management Associations zHotel Revenue Sources zProfit Margin–Room Cost zProfit Margin–Food Cost zOpportunity