Definition of hotels and general ways of classifying

1. Definition of hotels and general ways of classifying

The word hotel is a general term for motels, hotels, suite hotels, convention hotels and other types of lodging properties. Hotels offer overnight accommodation, food and beverage service and recreational facilities to their guests. Hotels are usually classified according to four general criteria namely:

·         Size           : typically grouped into four categories

o       Under 100 rooms

o       100 – 299 rooms

o       300 – 600 rooms and

o       More than 600 rooms

·         Target Markets

·         Levels of service and

·         Ownership and affiliation

2. Target Markets and classification based thereon

Target markets are distinctly defined groups of people which the hotel hopes to attract or retain as its guests. Based on their target markets hotels may be classified as commercial hotels, casino hotels, resorts etc.

Commercial hotels:

Target Market   : Mostly corporate business travelers. Tour groups, individual tourists and small conference groups also patronize these hotels.

Location             : Located in the heart of the city or business district.

Reservation lead time: 2-3 days to a maximum of a week

Basis of charging room tariff: 12 noon check-in and check-out system

Duration of guest stay: usually not more than 2 - 3 days

Facilities provided:  Most commercial hotels have conference rooms, guestroom suites and banquet meal service. They may offer uniformed services as well. Swimming pools, health clubs, tennis courts, saunas and jogging areas may also be provided.

Resort Hotels

Resort hotels offer breathtaking scenery and a leisurely and relaxed atmosphere that sets the apart from the other types of hotels.

Target Market   : Holiday makers, vacationers

Location             : In the mountains, on an island, or in some other exotic location away from crowded areas.

Reservation lead time: varies from a few weeks to even unto a year in advance

Basis of charging room tariff: Most of these hotels use the 12 noon check-in and check out system whilst some prefer the 24 hrs check in and check out system

Duration of guest stay: Usually 1-2 weeks.

Facilities provided: The recreational facilities provided are extensive. Most resort hotels provide extensive food and beverage services. They also provide special activities for guests such as golf, horseback riding, nature hikes etc.

Airport Hotels

Target Market   : Business clientele, airline passengers with overnight travel layovers or canceled flights, and airline personnel.

Location : In proximity to airports

Reservation lead time: Most guests are walk ins and hence the lead time may be 1-2 days to zero.

Basis of charging room tariff: These hotels are ideal candidates for the 24 hrs, check in and check out system but most prefer using the 12 noon check in and check out system as it is more lucrative.

Duration of guest stay: Ranges from a few hours to a day or two.

Facilities provided: The courtesy van facility between the hotel and airport is a facility seen in almost all airport hotels. Conference rooms are a feature added to attract those guests who travel to a meeting by air and wish to minimize ground travel. In the Indian context, most airport hotels offer services similar to that of commercial hotels and are directly in competition with them.

Bed and Breakfast Hotels

B & B hotels range from houses with a few rooms to small commercial buildings with 20 to 30 guestrooms.

Target Market: Budget conscious travelers looking for clean and comfortable accommodation

Location: There is no specific characteristic as regards location

Reservation lead time: Mostly walk in guests

Basis of charging room tariff: mostly use the 12 noon check in check out system

Duration of guest stay: Mostly overnight stay

Facilities provided: The owner usually lives on the premises and is responsible for serving breakfast to the guests. Meeting rooms, laundry, recreational facilities etc are not offered. They offer lodging and limited food service and are hence able to price their rooms at highly competitive rates.

Residential Hotels

Residential hotels provide long-term or permanent accommodations for mainly single people in urban or suburban areas

Target Market: Mainly single people looking for long term accommodation.

Location: They are generally located in suburban areas.

Reservation lead time: May be a month or even more since the stay is planned well in advance.

Basis of charging room tariff: The charges for accommodation and other services contracted are usually settled on a monthly basis.

Duration of guest stay: 6 months to a year or more.

Facilities provided: The accommodation usually consists of a sitting room, bedroom and small kitchenette. Residents may choose to contract for some or all of the services provide to guests in a commercial hotel. A residential hotel may provide daily housekeeping, telephone, front desk, and uniformed services. A restaurant and lounge may

All Suite Hotels

Target Market: People who are relocating, frequent travelers who do not like the idea of staying in a single room, and vacationers who prefer the privacy and convenience of non-standard hotel accommodations for extended stays. Professionals such as accountants, lawyers, and executives find suite hotels particularly attractive since they can work or entertain in an area besides the bedroom.

Location: All suite hotels are located in the heart of the city or business district.

Reservation lead time: similar to that of commercial hotels.

Basis of charging room tariff: 12 noon check in and check out basis.

Duration of guest stay: longer than that of commercial hotels but most often less than that of residential hotels.

Facilities provided: They feature guestrooms with a living room or parlor area and a separate bedroom. Some guest suites include a compact kitchenette with a refrigerator and in-room beverage service. Some suite hotels offer complimentary evening receptions, breakfasts, or evening hors d’oeuvre service. Suite hotels generally have fewer and more limited public areas and guest services than other hotels.

Casino Hotels

Casino hotels are known primarily for the gaming facilities they offer despite the fact that the guestrooms and food and beverage operations may be luxurious. Casino hotels attract guests by promoting gaming and headliner entertainment. They provide specialty restaurants and extravagant floor shows and may offer charter flights for guests planning to use the casino facilities.

Conference Centers

Conference centers are specifically designed to handle group meetings. Most full- service conference centers offer overnight accommodations. Because meetings are their focal point, conference centers typically place great emphasis on providing all the services and equipment necessary to ensure a meeting’s success-for example, technical assistance, high-quality audiovisual/equipment, business service centers etc.

Conference centers are often located outside metropolitan areas.

They provide extensive leisure facilities: golf courses, indoor and outdoor

swimming pools, fitness centers, spas, jogging and hiking trails, and more.

Conference centers typically charge meeting planners a single price, which includes attendee guestrooms, meals, meeting rooms, audiovisual equipment, and other related services. Guest amenities may not be as plentiful at conference centers since these centers focus more on fulfilling the needs of meeting planners and organizers than on meeting the needs of program attendees.

Convention Hotels

Convention hotels have a sufficient number of guestrooms to house all

the attendees of most conventions. Most of these properties house dining facilities ranging from self-serve restaurants or cafeterias to elaborate formal dining rooms. Convention hotels are primarily directed toward business travelers. A full line of business services are generally available, including teleconferencing, secretarial assistance, language translation, and facsimile machine. International examples of convention hotels are the Opryland Hotel in Nashville; and the Hyatt Regency in Chicago.

Convention hotels usually attract the convention market for state, regional, national, and international associations. They also attract regional, national, or international corporate meetings. While most hotels book the majority of their group business within two years of the meeting date, it is not uncommon for convention hotels to book their business up to 10 years in advance. In some cases, convention hotels do not have all the facilities needed, but are affiliated with a local convention center. Convention centers not only have space for meetings and conferences, they also have more than adequate space for exhibits and booths. Convention centers work with nearby hotels to assure guestrooms are available for convention attendees. Hotels, in turn, sell the convention center to appropriate markets to garner rooms business.

Time share Hotels

Time share properties involve individuals who purchase the ownership of accommodations for a specific period of time- usually one or two weeks a year. These owners then occupy the unit- usually a condominium (A unit consisting of a living room, dining area, kitchen, bathroom and one or more bedrooms) - during that time. Owners may also have the unit rented out by the management company which operates the hotel. These hotels are very popular in resort areas.  Time share owners receive revenue from the rental of their units and pay the management company a fee for advertising, rental, housekeeping and maintenance services.

Condominium Hotels

The difference between the time - share and condominium hotels lies in the type of ownership. Units in condominium hotels (A condominium is a unit consisting of a living room, dining area, kitchen, bathroom and one or more bedrooms) only have one owner instead of multiple owners. In a condominium hotel, an owner informs the management company of when he or she wants to occupy the unit. The management company is free to rent out the unit of the remainder of the year. Condominium owners receive revenue from the rental of their

units and pay the management company a fee for advertising, rental, housekeeping and maintenance services.

3. World class, Mid range and limited service hotels

World class hotels target top executives, entertainment celebrities, high ranking political figures, and wealthy clientele as their primary market.  World-class hotels provide upscale restaurants and lounges, exquisite décor, concierge service, and opulent meeting and private dining facilities. Guests may find oversized bath towels, soap bars, shampoo, shower caps, clock radios, and more expensive furnishings, decor, and artwork in the hotel's guestrooms. Bath linens are typically replaced twice daily, and a nightly turn-down service is usually provided. Magazines and daily newspapers may be delivered to each guestroom.

The public areas of a world-class hotel may be large and elaborately decorated and furnished. Several food and beverage outlets are frequently available to cater to the tastes of the hotel's guests and visitors. Guests and visitors may also enjoy a variety of retail outlets, such as gift shops, clothing and jewelry stores, specialty retail shops, and international news stands.

World-class hotels stress personal attention and maintain a relatively

high ratio of staff members to guests. This ratio enables the hotel to offer a

wide variety of guest services and responds quickly to guest requests.

World-class hotels frequently employ a multilingual concierge who pro- vides extra help for guests. Among their many activities, concierges may

help guests register, obtain tickets for transportation or entertainment, or arrange for secretarial or business services.

Executive Floors: In some hotels, certain floors are designated to provide some of the hotel's guests with world-class attention. Hotels offering executive floors or a tower concept provide non-standard guestroom furnishings and additional guest services in these areas of the hotel. Executive floors usually consist of very large, deluxe guestrooms that may contain a number of amenities. The guestrooms or suites might have a refreshment center and may be stocked with bathrobes, fresh fruit, and fresh-cut flowers.

Usually, the luxury services offered by executive floors are not confined to the guestroom. A concierge may be stationed on each executive floor. Access to these floors may be restricted by the use of special elevator keys that allow only authorized guests to enter. In many cases, the executive or towers floors contain a private lounge. Special food and beverage services may be offered in the evening, and a continental breakfast may be served in the morning. Conveniences such as secretarial services or special check-in and check-out arrangements may also be available.

Hotels offering mid-range services appeal to the largest segment of the traveling public. Mid-range service is often modest but sufficient. Although the staffing level is adequate, the mid-range property does not try to pro- vide elaborate services. A mid-range property may offer uniformed guest services, airport limousine service, and food and beverage room service.

The property may offer a specialty restaurant, coffee shop, and lounge that cater to visitors as well as hotel guests. The lounge may feature entertainment on the evenings when the hotel is expected to be most busy. Guests likely to stay at a mid-range hotel include businesspeople, individual travelers, and families. Rates are lower than world-class or first-class hotels since the properties offer fewer services and a smaller range of facilities. This often makes these properties appealing to travelers who want some services, but not all the luxuries of world-class or first-class properties. Since meeting rooms are usually found at mid-range hotels, people planning small conferences, group meetings, and conventions may also find these hotels attractive.

Economy-or limited service-hotels are also a growing segment of the hospitality industry. These properties provide clean, comfortable, inexpensive rooms and meet the basic needs of guests. Economy hotels appeal primarily to budget-minded travelers who want rooms with the minimal amenities required for a comfortable stay, without the extras they don't feel they need or desire to pay for. Since a large proportion of the population travels on limited funds, economy lodging properties have a large market from which to draw. The clientele of economy properties may include families with children, bus tour groups, traveling businesspeople, vacationers, retirees, and groups of conventioneers.

Most economy properties now offer cable or satellite television, swimming pools, limited food and beverage service, playgrounds, small meeting rooms, and other special features. What most economy properties do not usually offer is room service, uniformed guest services, laundry or dry cleaning services, or any of the other elaborate amenities found at world class and mid range properties.

4. Ownership and affiliation- features, advantages and disadvantages

Ownership and affiliation provides another means of classifying hotels. Two basic structures exist: independent hotels and chain hotels. An independent hotel has no affiliation with other properties. Chain hotel owner- ship may take a number of forms, depending on the association that the chain organization has with each property.  

Independent hotels have no ownership or management affiliation with other properties. They have no relationship to other hotels regarding policies, procedures, or financial obligations. A typical example of an independent property is a family-owned-and-operated hotel that is not required to conform to any corporate policy or procedure. From a business perspective, some independent properties are organized as sole proprietorships or partnerships, while others are incorporated by their owners to limit their insurance risks and personal liabilities.

The unique advantage of an independent hotel is its autonomy. Since there is no need to maintain a particular image, the independent operator can offer a level of service geared toward attracting a specific target market. Moreover, the flexibility inherent in a small organization often allows the independent hotel to quickly adapt to changing market conditions. An independent hotel, however, may not enjoy the broad exposure or management insight of an affiliated property, and does not enjoy the purchasing power of a chain hotel.

Chain Hotels usually impose certain minimum standards, rules, policies, and procedures on their affiliates. In general, the more centralized the organization, the stronger the control on the individual property. Chains with less dominant central organizations allow individual hotel managers to exercise more creativity and solve more problems on their own.

A chain is usually classified as operating under a management contract, or as a franchise or referral group.

Management Contract: Management companies are organizations that operate properties owned by other entities. These entities range from individual businesspeople and partnerships to large insurance companies. They contract with a professional hotel management company to operate the proposed property, probably on a long-term basis. Assuming the hotel management company was acceptable to the lenders, a management contract would be drawn up between the developers and the management company.

Under this type of contract, the owner or developer usually retains the financial and legal responsibility for the property. The management company usually operates the hotel, pays its expenses and, in turn, receives an agreed-upon fee from the owner or developer. After operating expenses and management fees have been paid, any remaining cash usually goes to the owners, who may use this cash to pay debts, insurance, taxes, and so forth.

Management contracts have proven successful for many major hotel chains (for example, Hyatt, Westin, and Stouffer). In contrast, some management contract companies do not have a brand name. These companies operate hotels usually franchises or independents without a chain affiliation. The franchising company provides the purchasing power, advertising, and central reservation systems, while the management company provides the management expertise.

Management contracting is usually a means of rapidly expanding a hotel company's operations with far less investment per property than direct ownership requires. Hotel management companies are sometimes established just to manage hotels for other investors. These companies appear to offer a unique advantage to property owners and managers because of their expertise in operations, financial management, staffing, marketing and sales, and reservation services.

Franchise and Referral Groups: Some of today's best-known hotels belong to franchise and referral groups. They can be found in most cities and towns, and in resort areas. There is, however, an organizational distinction between these two types of chain hotels.

Franchising is simply a method of distribution whereby one entity that has developed a particular pattern or format for doing business-the franchisor-grants to other entities-franchisees-the right to conduct such a business provided they follow the established pattern. In the lodging industry, most organizations offering franchises have first established the quality of their product and expertise in operations by developing parent- company (franchisor-owned) hotels. Franchise organizations typically have set standards for design, decor, equipment, and operating procedures to which all its properties must adhere) This standardization is what enables franchise chains to expand while maintaining a consistent, established product and level of service. The franchisor usually provides the franchisee with other reasons for purchasing a franchise aside from a strong brand name-: these include national or international central reservation services, national advertising campaigns, management training programs, and central purchasing ser vices. Some franchisors also provide architectural, construction, and interior design services. Some of the better-known franchising companies are Holiday Inn; Choice International (Quality Hotels and Inns); Ramada, Inc.; and Days Inns.

Franchises are not necessarily right for all properties. Some operations are so distinct that belonging to a franchise system and conforming to a set of standards is perceived as harmful. For these operations, a referral group might be appropriate.

Referral groups consist of independent hotels which have banded together for some common purpose. While each property in a referral system is not an exact replica of the others, there is sufficient consistency in the quality of service to satisfy guest expectations. Hotels within the group refer their guests to other affiliated properties. Through this approach, an independent hotel may gain a much broader level of exposure. Best Western International-one of the largest hotel systems in the world- is an example of a referral group.

Belonging to a franchise or referral group provides several benefits, the most obvious being a more extensive reservation system, and expanded advertising through pooled resources. These advantages are so important that lending institutions may often be reluctant to loan money to potential investors unless the investors have established an affiliation with a franchise group or referral organization.

As with franchise organizations, referral groups provide central purchasing services. These services reduce expenses to the individual hotels since items are purchased in very large quantities. Owners can purchase interior furnishings, bath amenities, linen and towels, and restaurant items at quantity prices.