Www ichotelsgroup com employee rate

Part

LODGING 3

CH009.indd 271 24/12/10 12:55 PM

Copyright © 2012 John Wiley & Sons, Inc.

LODGING: MEETING GUEST NEEDS

Courtesy Wyndham Hotel Group

CH009.indd 272 24/12/10 12:55 PM

Copyright © 2012 John Wiley & Sons, Inc.

Chapter

9

T H E P U R P O S E O F T H I S C H A P T E R

I n this chapter, we look at lodging as a set of products and services that have evolved out of guest

needs and preferences. We begin with the evolution of lodging to fit transportation and destination

patterns and individual guest preferences. We then delineate different types of lodging properties,

discussing the distinguishing characteristics of each. Different market segments are explained in relation

to their demographics and subsequently their needs and expectations when traveling. The tremendous

impact of technology is discussed from the perspective of changing guest expectations and from the

standpoint of how technology has changed major facets of hotel operations. The most important aspect

of the hotel industry, service, is explored with a discussion of hotel rating criteria through organizations

such as American Automobile Association (AAA) and directories such as the Forbes Travel Guides.

The crucial role of employees as “internal customers” in providing service is emphasized.

T H I S C H A P T E R S H O U L D H E L P Y O U

1. Describe the evolution of lodging, and relate it to changing patterns of transportation, destinations,

and guest needs.

2. Identify the five criteria for classifying hotels, and name the types of hotels in each classification.

3. Describe the principal customer types served by the hotel industry.

4. Identify the needs and preferences of business travelers, and provide examples of how the lodging

industry accommodates them.

5. Describe how AAA and the Forbes Travel Service evaluate lodging properties, and identify criteria

used in determining these ratings as well as describe how countries around the world

approach the rating of hotels.

Chapter

9

CH009.indd 273 24/12/10 12:55 PM

Copyright © 2012 John Wiley & Sons, Inc.

274 Chapter 9 Lodging: Meeting Guest Needs

T H E E V O L U T I O N O F L O D G I N G

T oday in the United States, there are 49,505 lodging properties containing over 4.6 million guest rooms. In 2008, this dynamic industry generated $40.6 billion in sales and directly supported over 7.5 million travel and tourism jobs.1 The industry

has surely come a long way since its origins.

T H E H I S T O R Y O F L O D G I N G

The history of lodging, leading to this enormous growth, is rich in variety and encom-

passes thousands of years. The Code of Hammurabi, dating back to about 1800 B.C., made

a reference to “tavern keeping,” another term used for innkeeping in that day. Later,

the Romans built an extensive system of paved roads and included way stations and

inns at regular intervals along the way. During the Middle Ages in Europe, religious pil-

grimages were the primary reason for traveling, with charitable institutions and religious

orders providing lodging facilities. In the fifteenth century, many European cities became

centers of commerce and culture. At the same time, innkeeping for profit began. With

the development of stagecoach routes connecting major cities, the first hotel boom

occurred as inns were located along these routes. The development of inns along

stagecoach routes was followed by the location of lodging establishments convenient

to the major travel modes of railroads, automobiles, and airplanes as the lodging industry

responded to changes in destination patterns.2

In the American colonies of the seventeenth and eighteenth centuries, inns and

taverns were important centers of activity. As meeting places for colonists planning to

separate from England, the early inns were sometimes called cradles of liberty. The inns

of Colonial America, called “ordinaries” because they provided respite for the ordinary

person, typically provided the midday meal or supper as part of the overnight stay. By

the beginning of the nineteenth century, lodging establishments that were larger and

more commercial than inns emerged, along with the term hotel. Early hotels in the

United States included the six-story, 200-room City Hotel in Baltimore, built in 1826, and

the Tremont House in Boston, built in 1829.3

Luxury hotels were still the exception in the United States during the nineteenth

century, however. The grand hotels of the world were, for the most part, still in Europe,

including such landmarks as the Grand Hotel in Rome, the Paris Ritz, and the Savoy of

London. The Waldorf Hotel in New York City was one of the first properties in the States

to provide many of the European amenities. Built in 1893 by William Waldorf Astor, the

Waldorf was followed by larger and more elaborate hotels, such as the Astoria Hotel,

also in New York. A later combination of these two properties created the Waldorf-Astoria

Hotel, which was the world’s largest hotel of its day.4

CH009.indd 274 24/12/10 12:55 PM

Copyright © 2012 John Wiley & Sons, Inc.

The Evolution of Lodging 275

Toward the end of the nineteenth century, North American hotels grew to serve the

rail traveler. Often the hotel was physically connected to the railroad station. A few of

these hotels still survive, and some, such as Toronto’s Royal York, remain thriving centers.

Of the hotels built during the first half of that century, those not physically connected

to the railroad station were usually convenient to it and to the major destinations in

the downtown sections of cities.5

By 1900, there were still fewer than 10,000 hotel properties of varying service

levels throughout the United States. A typical luxury hotel might offer amenities such

as steam heat, electric call bells, baths, and clothes closets on all floors, barbershops,

and liveries. The Hotel Statler chain, which started in Buffalo, New York, served as the

model for construction of hotels for the next 40 years. With the opening of the Buffalo

hotel in 1908, rooms had private baths, full-length mirrors, and telephones. The market-

ing slogan for the Statler Hotel in Buffalo was “A bed and a bath for a dollar and a half.”

Other Statler properties that followed were also known for the introduction of many

firsts.6 In 1927, the Hotel Statler in Boston became the first hotel with radio reception;

individual headsets were provided in each guest room to receive broadcasts from a

central control room.7 The Hotel Statler in Detroit, which opened in 1934, was the first

property to have central air-conditioning for every public room.

By 1910, there were 1 million total hotel guest rooms in the United States, with

the industry employing some 300,000 people. The average property of that day had

between 60 and 75 guest rooms.8 The first two decades of the twentieth century

saw the beginnings of several major hotel companies that are still prominent today.

Conrad Hilton entered the hotel business in 1919 by acquiring the 40-unit Mobley

Hotel in Cisco, Texas. Ernest Henderson, founder of Sheraton Hotels, acquired four

hotels in the late years of the Great Depression, with the chain’s name coming from

one of these four hotels, the Sheraton Boston Hotel.9 Around the same era, J. Willard

Marriott, Sr., entered the hospitality industry with the opening of his first root beer

stand in 1927. This modest beginning led to the Marriott name as a multibillion-dollar

giant in the lodging industry.10

T H E E V O L U T I O N O F T H E M O T E L

The Federal Road Aid Act of 1916 resulted in a new segment of the lodging industry, as

thousands of rooms were added in properties along the new state and federal highways

being constructed. The first roadside motel opened in San Luis Obispo, California, in

1925 with room rates of $2.50 a night. Sometimes referred to as “tourist courts,” the

first motels were small, simple affairs, commonly with under 20 units (or guest rooms).

These properties lacked the complex facilities of a hotel and were generally managed

by resident owners with a few paid employees. The big wave of motel construction

followed World War II, accompanying the explosive growth in auto travel.

CH009.indd 275 24/12/10 12:55 PM

Copyright © 2012 John Wiley & Sons, Inc.

276 Chapter 9 Lodging: Meeting Guest Needs

Motels tended to be built at the edge of town, where land costs were substantially

lower than downtown. The single-story construction that typified motels until the late

1950s (and even the two-story pattern of later motor hotels) was significantly less expen-

sive compared with the downtown high-rise properties that were built on prime real

estate. Capital costs, such as land and building, represent the largest single cost in many

lodging establishments, and so lower land and building costs and the lower capital costs

that resulted gave motels significant advantages. These savings could be, and generally

were, passed on to guests in the form of lower rates.

Probably more important was the fact that motels offered a location convenient

to the highway. Because the typical guest traveled by car, he or she could drive to

any local destination during the day, returning to the accommodations in the evening.

Meanwhile, inexperienced travelers, who had always been put off by the formality of

hotels, with their dressy room clerks, bell attendants who had to be tipped, and ornate

lobbies, preferred the informal, come-as-you-are atmosphere of motels. In the motel,

they might be greeted by the owner working the front desk. Motel operators were proud

of their informality. The personal touch they offered guests and the motel’s convenience

and lower prices were their stock-in-trade.11

T H E M O T O R H O T E L

For a few years, it appeared that hotels (in general, the relatively large downtown proper-

ties) and motels (usually, the small properties located at the edge of town) would battle

for the new mobile tourist market. Unhappily for both the hotel and the mom-and-pop

motel, the situation was not that simple.

In 1952, Kemmons Wilson, a Memphis home-building and real-estate developer,

took his family on a vacation trip. He was depressed by the dearth of accommoda-

tions to meet his family’s and the business traveler’s needs. He returned to Memphis

with a vision of a new kind of motel property that combined the advantage of a hotel’s

broad range of services with a motel’s convenience to the auto traveler. That insight,

which came to be known as the motor hotel, revolutionized the lodging industry.

Motels became larger and began to offer a wide range of services. Dining rooms or

coffee shops, cocktail lounges, and meeting rooms appealed to the business traveler. Swim-

ming pools became essential to the touring family. Room telephones, usually present in

hotels but generally absent in motels, became the rule in motor hotels, thus requiring a

switchboard and someone to operate it. Whereas hotels and motels had offered coin-oper-

ated radios and television, free television and then free color television became the rule.

Although there were experiments with smaller inns having 50 to 75 rooms, most

lodging companies determined that generally a 100-unit facility was the smallest that

made economic sense. That size permitted full utilization of the minimum operating

staff and provided sufficient sales to amortize the investment in such supportive services

CH009.indd 276 24/12/10 12:55 PM

Copyright © 2012 John Wiley & Sons, Inc.

277

I N D U S T R Y P R A C T I C E N O T E 9 . 1

Europe: A Continent of Lodging

Distinctiveness

Although some parts of the world, such as Asia and the Middle East, are experiencing rapid hotel growth,

Europe remains the leader in hotel capacity. According to the World Tourism Organization (WTO), about

38 percent of the six worldwide tourism regions are located in Europe. European hotels are distinctive,

compared to the other tourism regions, in that properties tend to be older and smaller in the number

of rooms and average room size. European hotels also tend to be more fragmented, compared to other

parts of the world, in that only 20 percent to 25 percent of room capacity is branded by an integrated

chain. In North America, approximately 70 percent of hotels are chain-managed or franchised. Other

regions of the world fall somewhere in between North America and Europe.

The degree of chain penetration in Europe varies by country. For example, France has the highest

percentage of hotel rooms affiliated with a chain (not including consortia) at 38 percent. Spain follows

(34 percent) along with Germany (24 percent) and Ireland (21 percent). Significant reduced affiliations

exist in Italy (4.4 percent) and Switzerland (8 percent).

Paris-based Accor has the largest number of properties with 1,922 hotels (201,042 rooms) in Europe

carrying their flag. In Europe, Accor manages the well-known brands of Ibis, Mercure, Novotel, Formula 1,

and Etap. Accor also has the upscale brand of Sofitel and the extended stay brand of Suitehotels.

InterContinental Hotel Group also has a significant presence with 423 properties and 68,841 rooms in

Europe. InterContinental’s brands include Holiday Inn, Express by Holiday Inn, Crowne Plaza, Inter

Continental, and Staybridge Suites. Societe du Louvre is a publicly held company controlled by the Tat-

tinger family (known for being Champagne producers). Their brands include the upscale Groupe Concorde

hotels and budget Groupe Envergure. Hilton Group, a British-based chain with the rights to use the Hilton

name outside the United States, also has a presence in Europe with 118 hotels containing 28,501 rooms.

The best affiliation solution for the average European hotel tends to be the voluntary chain or consor-

tium option. These synonymous terms refer to a loosely structured hotel grouping that requires less of the

individual hotelier in terms of costs and prescribed standards. The affiliation with the voluntary chains is

typically easier to cancel (usually within two years or less) whereas cancellations with the more structured

hotels can stretch over several decades. Although Switzerland, for example, has only 8 percent of its hotels

affiliated with the “hard brand chains,” an estimated 27 percent are affiliated with a consortium.

The typical voluntary European chain hotel is not as attractive as properties in other parts of the world.

The smaller size and the location of many European hotels are not good fits with the larger worldwide chain

model. Urban locations or close access to major transportation arteries are preferred by the large chains.

The major chains have recently lost capacity in Europe. One reason is linked to the tightening of

standards by the consortia. Best Western, for example, added 14 new operating standards. Best Western

conducts yearly inspections of its properties, as does Logis de France (with almost 4,000 hotels), the

voluntary chain of Relais & Chateaux.

Source: M. Marvel, “Hotel Chain Penetration in Europe—Understanding the European Hotel Market,” for EHLITE.com, January 8, 2004,

ahlaradio.hsyndicate.com/news/4018166.html.

CH009.indd 277 24/12/10 12:55 PM

Copyright © 2012 John Wiley & Sons, Inc.

278 Chapter 9 Lodging: Meeting Guest Needs

as pools and restaurants. However, with the advent of the limited-service hotel, which

does not include a restaurant, smaller properties in small cities are once again feasible.12

The basic distinction between hotels and motels has become more complex as

different types of lodging properties have emerged since the advent of the motor hotel

of the 1950s. Today’s lodging properties fall into one of several categories, with some

blurring of distinctions between lodging types. Many major hotel corporations, such as

Marriott, have properties in each lodging category, addressing the varied needs of dif-

ferent market segments of travelers.

Many lodging properties are part of larger chain operations, typically with recogniz-

able brand names, and are corporately owned or franchised. Other properties, smaller in

number, are known as independents; here the owner may be one or several individuals

or a company but has no ties to a larger corporation or major brand name. Industry

Practice Note 9.1 looks at the state of hotel chain affiliations in Europe. (This topic is

also explored further in Chapter 12 as it relates to U.S. properties.)

C L A S S I F I C AT I O N S O F H O T E L P R O P E R T I E S

L odging properties can be categorized according to varied criteria. Classification criteria can include price, function, location, particular market segment, and dis- tinctiveness of style or offerings. It should be emphasized that many types of hotels

can fall into more than one category.

H O T E L S C L A S S I F I E D B Y P R I C E

Categorized by price, lodging properties can range from limited-service hotels to

full-service properties and up to luxury hotels.

L I M I T E D - S E R V I C E H O T E L S . Limited-service hotels typically offer guest rooms

only. There is little or no public space, no meeting or function space, and usually no or

very limited food and beverage facilities. Room rates are correspondingly lowest for

this type of lodging property. Terms previously used for this classification of properties

included “budget” or “economy” hotels. The average daily rate per occupied room for

limited-service hotels in 2008 was $83.18. The average size of this type of property in

2008 was 122 rooms. Transient travelers, including business and tourists, make up 82.2

percent of the market mix for limited-service hotels followed by conference groups at

6.9 percent. Contract and other travelers account for 4.6 percent.13

SELECT-SERVICE HOTELS. This relatively new segment has evolved in much the same

way as fast casual restaurants have emerged in the food service sector; these hotels

CH009.indd 278 24/12/10 12:55 PM

Copyright © 2012 John Wiley & Sons, Inc.

279

are filling a niche created by guests who want value in their lodging experience

but also require some basic services. Not surprisingly, then, select-service hotels

represent the fastest-growing category of hotels. The biggest reason for this segment’s

success is that these properties appeal to both consumers looking for a nice room

at a value and business travelers who have to manage their expenses closely—and

spend less than they would at a full-service hotel. Ranging from 100 to 200 guest

rooms on average, these hotels offer limited food service operations and scaled-down

meeting space but typically include lounge areas for working and socializing, hot

breakfast service, and free high-speed Internet access.

FULL-SERVICE HOTELS. Full-service hotels offer a wide range of facilities and ameni-

ties. Usually there will be, in comparison to budget/economy properties, more public

space and meeting/function space, with at least one food and beverage facility. Room

rates tend to be equal to or slightly above market-area average. In 2008, the average rate

for full-service hotels was $155.82. These properties had, on average, 272 rooms and

catered primarily to business travelers and leisure travelers, which represent 57.3 per-

cent, with groups, contract sales, and other taking the remaining full-service rooms.14

LUXURY HOTELS. At the top of the price category are the luxury hotels, which usually

have from 150 to 500 guest rooms. Featuring upscale decor and furnishings that may

be unique to the particular hotel, these properties offer a full array of services and

amenities. Such hotels typically have a concierge service and several food and bever-

age operations, including a gourmet or fine-dining restaurant, banquet facilities, and

full room service (available 24 hours per day or close to this). Recreational facilities

or access for guests to nearby facilities is also usually available. There is a high ratio

of employees to guest rooms, and room rates are considerably above the market-area

Hotels come in many different sizes and offer room rates for all types of customers. (Courtesy of Las Vegas News Bureau.)

CH009.indd 279 24/12/10 12:55 PM

Copyright © 2012 John Wiley & Sons, Inc.

Image Intentionally Removed

280

average. In the buying and selling of luxury properties in the United States, selling

prices have reached $1 million per room for some hotels. In Milan, Italy, $2 million was

paid per room for a luxury property in late 2006. One of the recent trends contributing to

the climbing prices of these properties has been high-end corporations, such as Italian

jeweler Bulgari and fashion designers Versace and Giorgio Armani, entering the luxury

hotel market.15 The average daily rate for luxury chain hotels in the United States for 2008

was $224.08 with an average occupancy rate of 68.1 percent compared to the overall

hotel market with an average occupancy of 70 percent. These statistics reflect recent

recessionary conditions. According to Smith Travel Research, during 2007 and 2008,

occupancy at many luxury hotels was around 50 percent. Correspondingly, many luxury

hotels were forced to cut rates dramatically just to achieve these low occupancy rates. In

fact, some luxury hotels even saw reductions in average room rates of up to 17 percent.16

H O T E L S C L A S S I F I E D B Y F U N C T I O N

Hotels categorized by function include convention hotels and commercial hotels.

C O N V E N T I O N H O T E L S . Convention hotels are large, with 500 or more guest rooms.

The average size of convention hotels in 2005 was 780 rooms. These properties offer

extensive meeting and function space, typically including large ballrooms and even

exhibition areas. Food and beverage operations tend to be extensive, with several restau-

rants and lounges, banquet facilities, and room service. Convention hotels are often in

close proximity to convention centers and other convention hotels, providing facilities

for citywide conventions and trade shows.17

Luxury hotels cater to a guest’s every need. (Courtesy of Rosewood Hotels & Resorts.)

CH009.indd 280 24/12/10 12:55 PM

Copyright © 2012 John Wiley & Sons, Inc.

Classifications of Hotel Properties 281

C O M M E R C I A L H OTE L S. Commercial hotels, in comparison to convention hotels, are

smaller, with 100 to 500 guest rooms. There is less public space, smaller meeting and

function space, fewer food and beverage outlets, and limited recreational amenities.

Many of these hotels tend to be located in downtown areas. Downtown properties

(also mentioned in the next section) have many advantages. They are near the large

office complexes and retail stores; by day, they are near business destinations; by night,

they are close to many of a large city’s entertainment centers. Many well-located older

downtown properties have been remodeled to include necessary facilities. Although

on-premise parking has not always been feasible, reasonably convenient off-premise

parking with valet service to pick up and deliver the car is common. Thus, nearly all

first-class downtown properties are reasonably “auto friendly.” One final note: Down-

town hotels almost always command higher rates than suburban hotels. The higher

rate is needed to offset the higher land cost and to cover the cost of whatever public

facilities they might have.18

Figure 9.1 illustrates some different operating characteristics of hotels in different

property categories.

H O T E L S C L A S S I F I E D B Y L O C AT I O N

Location can also be a criterion for categorizing lodging properties. Types of hotels

under this categorization include downtown hotels (discussed above), suburban hotels,

highway/interstate hotels, and airport hotels. Suburban hotels tend to be smaller (200 to

350 guest rooms) and involve low- to midrise structures. Highway/interstate hotels are

even smaller, with 100 to 250 rooms, and are low-rise properties. Suburban hotels most

Figure 9.1

Average Occupancy and Average Room Rate for U.S. Hotels in 2008.

T Y P E O F L O D G I N G P R O P E R T Y

O C C U P A N C Y P E R C E N T A G E

A V E R A G E D A I L Y R O O M R A T E

Full-Service Hotels 69.8% $155.82

Limited-Service Hotels 64.9% $83.18

Resorts 68.1% $224.08

Suite Hotels 73.1% $136.29

Convention Hotels 73.3% $186.43

All Hotels 70.0% $155.54

Source: Data from Hospitality Research Group, PKF Consulting, Trends 2009.

CH009.indd 281 24/12/10 12:55 PM

Copyright © 2012 John Wiley & Sons, Inc.

282 Chapter 9 Lodging: Meeting Guest Needs

likely have interior corridors and meeting and banquet

facilities whereas highway/interstate properties most

likely have exterior corridors leading to guest rooms,

minimal banquet and meeting space, and some food

and beverage facilities.

In the 1950s and 1960s, as air travel became more

and more common, a new kind of property appeared,

designed especially to accommodate air travelers.

Airport hotels vary depending on location and size

of the airport, with such properties offering a mix of

facilities and amenities. Typically, airport hotels range

from 250 to 550 rooms.19 An important extra service

provided by almost all airport hotels is the courtesy

van, which offers guests transportation to and from

the airport.

H O T E L S C L A S S I F I E D B Y M A R K E T

S E G M E N T

Particular markets served include executive conference

centers, resorts, and health spas.

E X E C U T I V E C O N F E R E N C E C E N T E R S . Executive conference centers are often in

secluded or suburban settings and have fewer than 300 guest rooms. These facilities,

which offer well-designed learning environments, provide a variety of small meeting

rooms and classrooms featuring full audiovisual and technological support. Meals and

use of recreational facilities are often included in the quoted daily room rate. An exam-

ple of an executive conference center is the Georgia Tech Hotel & Conference Center

in Atlanta, Georgia (www.gatechhotel.com).

R E S O R T S . Resorts are typically located in picturesque settings and have 200 to 500

guest rooms. An example of a well-known resort in the United States is The Breakers,

Palm Beach, Florida (www.thebreakers.com). Resorts provide a comprehensive array

of recreational amenities, depending on the geographic location. A variety of food and

beverage outlets is available, ranging from informal to fine-dining restaurants. With many

resorts located in remote locations, often it is not feasible for guests to have to leave

the property for dining options. Resorts can be further characterized and defined in

more explicit terms. Some resorts are destination resorts; these tend to be in dramatic,

desirable locations, such as Hawaii, Mexico, and the Caribbean. Hotel guests tend to

The San Francisco Marriott is a prime example of a downtown high-rise hotel. (Courtesy of Marriott International.)

CH009.indd 282 24/12/10 12:55 PM

Copyright © 2012 John Wiley & Sons, Inc.

283

Modern guest rooms can accommodate a variety of needs and types of guests. (Country Inns and Suites; Courtesy of Carlson Hotels Worldwide.)

Resort hotels provide ample opportunity for guests to relax in pic- turesque surroundings. (Courtesy of Rosewood Hotels & Resorts.)

CH009.indd 283 24/12/10 12:55 PM

Copyright © 2012 John Wiley & Sons, Inc.

284 Chapter 9 Lodging: Meeting Guest Needs

have to travel at least several 100 miles to reach such a resort, and travel is typically by

air. Visits to destination resorts tend to be infrequent, usually once a year or less. Non-

destination resorts or regional resorts involve a two- to three-hour trip for visitors and

are usually reached by car. The visits to such locations are more frequent but usually

for shorter periods of time as compared to the destination resorts. It is very feasible for

a resort to cater to both destination and nondestination visitors.20 Resorts can also be

classified on a seasonal basis, indicating the time of year when the resort is at a peak

demand. Seasonal classifications include summer, cold winter (i.e., ski resorts), warm

winter (such as south Florida or southern Arizona), and year-round. At one time, the

majority of resorts operated seasonally. Today, most resorts operate year-round, with group

business and lower-rate packages bringing in guests during the less desirable times of

the year. Two cities that epitomize the year-round resort market are Las Vegas, Nevada,

and Orlando, Florida. Orlando, with just over 111,000 hotel rooms,21 and Las Vegas, with

over 140,529 rooms, 22 lead the nation in hotel room inventory, surpassing even Los

Angeles, Chicago, and New York City.

An interesting segment of resorts focuses on ecotourism. These typically remote

lodging establishments usually are located in areas of significant natural beauty, and

the design elements of the property blend with the surroundings and protect the eco-

system. Often incorporated with adventure travel, these lodging properties can be

found from the Great Barrier Reef of Australia to the rugged highlands of Tasmania

and the jungles of Costa Rica. As with P&O Australian Resorts, many of these hotels

stress comfort, with luxurious rooms and gourmet food and beverage selections.23

C A S I N O H O T E L S . Casino hotels and resorts24 differ significantly in their operation

compared to most hotels. In casino hotels and resorts, gaming operations are the major

revenue centers. Most of these are in Las Vegas; a number of casino operations that

Casino hotels, such as the Excalibur in Las Vegas, use architecture to convey the desired image of the property. (Courtesy of MGM MIRAGE.)

CH009.indd 284 24/12/10 12:55 PM

Copyright © 2012 John Wiley & Sons, Inc.

Classifications of Hotel Properties 285

include hotels are also located on Native American reservations throughout the United

States. Casino operations are discussed more fully in Chapter 14. Numerous examples

of casino hotels are discussed throughout the text. One well-known casino hotel in the

United States is the Excalibur in Las Vegas.

H E A LT H S PA S . Health spas, often located in resort-type settings or as a part of a larger

resort, provide additional amenities focusing on needs ranging from losing weight, to

reducing stress, to pampering oneself. Resort/hotel spas are the second largest cat-

egory next to day spas. Resort/hotel spas were also the fastest-growing segment in the

first part of the new century, growing 290 percent between 1999 and 2004. Spas are

increasingly being considered as a necessity to remain competitive in attracting both

leisure and business travelers. In a sample of 88 U.S. properties, spa revenue for hotels

averaged $2,076 per available room, or 2.3 percent of total revenue. At resort proper-

ties, spa revenue was $3,117 per available room, or 3.4 percent of total revenue. In

comparison, golf revenue declined by 2.7 percent per occupied room.25 Of course, the

economic conditions have impacted these numbers, and while revenue per available

room increased, average occupancy decreased from 2007 through 2009. Spas have pro-

fessional staffs that often include dietitians, therapists, masseurs, exercise physiologists,

and, in some cases, physicians. There are a number of categories of spas, including spas

with natural mineral hot springs, beauty spas, fitness spas, international-style spas that

emphasize health therapies, behavior modification spas, holistic spas, resort spas, and

spa facilities within hotels.26 Hotels providing spa and fitness facilities are now dedicat-

ing more space to comprehensive health facilities in order to remain competitive. With

an aging population of 80 million baby boomers, more health-oriented services are

expected as this segment focuses on improving the quality of life. Profits will also play

a very big part in fitness centers and spas, as resorts and hotels realize the significant

revenue potential. Industry Practice Note 9.2 describes several trends in spa services.

A prominent health spa in the United States is The Boulders Resort and Golden Door

Spa, Phoenix, Arizona.

VACATION OWNERSHIP. Vacation ownership, also referred to as timeshares and vaca-

tion intervals, involves a “type of shared ownership in which the buyer purchases the

right to use a residential dwelling unit for a portion of the year.”27 Major lodging com-

panies, such as Marriott, Ritz-Carlton, Four Seasons, Hyatt, Accor, Carlson, Starwood, and

Disney, are big holders of the vacation ownership market. In 2007, 4.4 million households

owned one or more U.S. timeshare properties. There are 154,439 timeshare units at over

1,600 resorts throughout the United States. Each condominium or unit of a vacation own-

ership resort is divided into intervals, typically by the week, that are sold separately.

The condominiums are priced according to a variety of factors, including unit

CH009.indd 285 24/12/10 12:55 PM

Copyright © 2012 John Wiley & Sons, Inc.

286

I N D U S T R Y P R A C T I C E N O T E 9 . 2

Trends in Spa Operations

According to the International Spa Association, spas are the fourth-largest leisure industry in the United

States. Not only are spas growing in number (13,757 in the United States) and locations (9 percent are

in hotels or resorts), but they are growing in the types of services provided. Some of the latest trends

include:

• Green. The predominant trend for spas is to embrace environmentally sustainable practices. A recent

International Spa Association (ISPA) survey showed that 76 percent of U.S. spas use such practices,

including building green facilities, maintaining organic gardens, and utilizing locally grown products.

• Authenticity. Destination spas and resort hotel spas are differentiating themselves with the types of

products and services of their region. For example, Cliff House Resort & Spa in Ogunquit, Maine, offers

body wraps made from Maine blueberries and wild roses or juniper berries. Le Spa at the Radisson

Plaza Resort in Papeeta, Tahiti, offers treatments featuring the traditional monoi oil used by locals.

• Wellness. Canyon Ranch Resorts, in Lenox, Massachusetts, and Tucson, Arizona, are collaborating with

the Cleveland Clinic in Ohio to offer programs in weight control, stress management, and cardiac care.

Such educational programs are in greater demand than ever. The ISPA survey found that at least 51

percent of U.S. spas offer some form of educational programs.

• Medical tourism. This controversial field is booming and is increasingly using new technology, such as

DNA analysis, antiaging treatments, BOTOX, and laser surgery. Medical tourism agencies now exist to

help arrange the traveler-patient’s stay.

• Sleep therapy. Spas increasingly will be offering sleep techniques and treatments to a society that

generally is sleep-deprived.

• Men. The ISPA states that 31 percent of spa-goers are men. The Lodge at Woodloch, in Hawley, Penn-

sylvania, was designed with a male focus, including lodge-style architecture, a golf course, a full bar

with tapas, and a dinner menu that includes red meat.

• Labor concerns. Because of the high cost of labor, particularly in the United States, spas are increas-

ingly using “destaffed” spa treatments including heat and water experiences. Pricing will also become

more attuned to demand with treatments during busy time frames (e.g., weekends) costing more than

lower-demand times (weekdays).

• Fusion. Fusion treatments and techniques are on the increase. Examples include watsu (water and

shiatsu), yogalates (yoga and Pilates), neurobics (mind aerobics), and kinesis (mind-exercise).

• Services for children. The spa industry is responding to the growth in family travel with more spas add-

ing children’s activities. Children’s activities are being offered in many locations while parents indulge

in spa treatments. Spa services especially designed for children, such as chocolate manicures, are

also creative additions.

Source: International Spa Association, www.experienceispa.com.

CH009.indd 286 24/12/10 12:55 PM

Copyright © 2012 John Wiley & Sons, Inc.

Classifications of Hotel Properties 287

size, resort amenities, location, and season. Purchasers of vacation ownership proper-

ties typically can travel to other destinations through vacation exchange programs

provided through the timeshare resort developers. The predominant type of timeshare

property, according to the American Resort Development Association, is a seaside/

ocean resort (31.9 percent) followed by regional resorts (13.7 percent) and golf resorts

(10.2 percent). Florida has three times as many timeshare resorts as any other state

with the number totaling close to 400.28 Marriott Vacation Club Sunset Pointe, Hilton

Head, South Carolina, is a good example of a Vacation Ownership facility.

O T H E R H O T E L C L A S S I F I C AT I O N S

Types of hotels classified by distinctiveness of style or offerings include all-suite proper-

ties, extended-stay properties, historic conversions, and bed-and-breakfast inns. Boutique

hotels can also be classified under this category.

A L L- S U I T E H O T E L S . All-suite hotels became known as a separate category in the

1970s. Guest rooms are larger than the normal hotel room, usually containing more

than 500 square feet. A living area or parlor is typically separate from the bedroom,

with some properties offering kitchen areas. All-suite hotels can be found in urban,

suburban, and even residential locations. The amenities and services (availability of

on-site restaurant operations, meeting space, and recreational facilities) can vary

widely in this type of hotel. Figure 9.2 shows a typical guest unit at an Embassy Suites.

1 2 '1

0 "

13'0" 15'0'' 8'4''

Figure 9.2

A typical guest unit at Embassy Suites. (Source: Embassy Suites.)

CH009.indd 287 24/12/10 12:55 PM

Copyright © 2012 John Wiley & Sons, Inc.

288 Chapter 9 Lodging: Meeting Guest Needs

EXTENDED-STAY HOTELS. Extended-stay hotels provide many of the same features and

amenities as all-suite properties, such as a stove and/or microwave in the guest rooms,

refrigerators, kitchenware or dishes, grocery shopping service, business services, and

limited housekeeping service. As compared to all-suite hotels, however, the extended-stay

room rates are often significantly less, with daily, weekly, and monthly rates quoted.

Restaurants may be located nearby; typically there are no on-site food and beverage

outlets in extended-stay hotels.29

H I S T O R I C C O N V E R S I O N S . Some hotel properties have historic significance and have

been renovated to their original splendor. These classic hotels have great appeal for

those wishing to experience some of the grandeur and elegance of earlier days with

the comforts of modern-day features.

B E D - A N D - B R E A K FA S T I N N S . A bed-and-breakfast inn (B&B) typically has five to

ten rooms with the average size being eight rooms. Breakfast is served and included

in the room rate for these properties. Most B&Bs are outside of urban areas with 29

percent being in rural locations and 52 percent being in suburbs/towns. The average

length of ownership of a B&B is 13 years, and most owners (88 percent) live on the

premises. The most recent data show that the number of B&Bs has increased from

fewer than 1,000 in 1980 to about 20,000 properties today, encompassing 148,000

rooms. The average occupancy for a B&B is 38 percent, and the average daily rate

is $163.30

BOUTIQUE HOTELS. Boutique hotels span all price segments and are noticeably dif-

ferent in look and feel from traditional lodging properties. Interior-design styles in

boutique hotels range from postmodern to homey. Soft attributes, such as image and

atmosphere, typically distinguish these properties. Travelers’ desires to be perceived

as trendy, affluent, and artistic tie into boutique themes. Starwood Hotels & Resorts

Worldwide has a version of the boutique concept with its W properties.31

Figure 9.3 displays types of hotels by location, rate, and size, along with

the approximate percentage of U.S. properties that fall into these categories. Of the

total number of lodging properties in the United States, it is interesting to note that

56.2 percent have fewer than 75 rooms and 31.9 percent have 75 to 149 rooms.

Although mega-hotels (which number about 1 percent of all hotels in the United

States) often garner much attention, the impact of small businesses on lodging is

extremely significant. 32