HTM130 Topic 3 The Lodging Industry

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THE LODGING INDUSTRY HTM130 Introduction to Hospitality and Tourism Industry

Transcript of HTM130 Topic 3 The Lodging Industry

  1. 1. THE LODGING INDUSTRY HTM130 Introduction to Hospitality and Tourism Industry
  2. 2. Lodging Lodging: place to sleep for one or more nights Accommodation: another word often used to mean a place to sleep Lodging Industry: consists of businesses that prove overnight accommodations. Lodging Property: business that provides overnight accommodations Lodging businesses vary from expensive resort hotels to budget motels Accommodations can be found to fit any price range and level of service
  3. 3. Outline Hotel development and ownership Classification of hotels and motels Trends in hotel development
  4. 4. HOTEL DEVELOPMENT THE LODGING INDUSTRY HTM130 Introduction to Hospitality and Tourism Industry Test Book Page143 Hotel development begins with a perceived opportunity when a person or firm consider building a hotel
  5. 5. An Overview of the Process 1) Conceptualization Once the preliminary development concept is clarified, ideas, goal, objective and develop team will easily form 2) Feasibility Analysis Study of the factors involved in opening and operating (such as financial, investor expect repayment) a successful hotel 3) Commitment Critical turning point for the project, secure funding that cover more than cost construction expenses of operating until hotel reach viability 4) Design and Construction Designed, built and equipped according to recommendations of the feasibility study and goal of developer. Preliminary marketing and personnel training usually begins during this stage. 5) The Opening Final stage. Project up and running by scheduled opening date, hotel staffs are fully operational, ensuring hotel ready to serve guest for the first day.
  6. 6. Once the preliminary development concept is clarified, the ideas and goals can be formalized into concrete objectives. Name Dcor/ ambiance No of Rooms Type of hotel Type of ownershipRoom rate structure Concept Location
  7. 7. Is to determine whether the project is a feasible or capable of being carried out successfully. Based on a detailed study of the opening and operation factors. Success is measured financially, because hotel investors expect repayment of, as well as invest on , the money they invested Will the proposed hotel generate enough profit to meet the expectations of its investors? The study also projects the hotels rates and occupancy level and estimates its operating expenses. This stage is a critical turning point for the project. The developers must secure funding and begin negotiations with construction and management companies. Funding must cover more than the cost of construction and the expense of operating until the hotel reaches viable. Ways of controlling operating costs must be decided during this phase in order to be included in the design phase.
  8. 8. The actual design and construction of the hotel is now begin. The project is designed, built and equipped according to the recommendations of the feasibility study and the goals of the developers. Management or franchise agreements are formalized Preliminary marketing and personnel training usually begin during this stage. The sales and marketing staffs are fully operational, ensuring that the hotel will have guests from the first day. All front- and back-of-the-house staff are trained and prepared to welcome guests. Facility opens for business.
  9. 9. Choosing the Right Location 1) Airport Properties Originally built to house airline flight crews and those travelers whose flight were postponed, canceled, or delayed overnight. Now invented to private sector nearby airport mostly with airport transfer 2) Downtown Properties Located in major city area. Tend to have higher occupancy rate on weekdays and lower occupancies on weekends. In small city play an important role in social structure. 3) Suburban Properties For travelers who wanted to quick access to the downtown area for events but did not want to spend a night there. Owner benefit from lower taxes and land costs. 4) Highway Motels Simple design, provide free surface parking and recreational facilities for business and leisure travelers. Public space and registration areas may be separate from guest room. 5) Resort and Attractions Located near particular attraction, ability attract guest and built away from population center and transportation routes. Create destination for one-stop vacationaing (exp: Penang-Batu Feringhi)
  10. 10. Lots of factors contribute to the hotels potential success, but the location is the most influential. This formula for success is supported by studies showing that most guests rate proximity high on their list of deciding factors when choosing a place to stay. Lodging facilities may even be classified according to their location, that is airport, downtown, suburban, highway, or resort. Were originally built to house airline flight crews and those travelers whose flight were postponed, canceled or delayed overnight. Provides food and beverage services to passenger waiting for flight together with banquet, meeting and convention facilities. Usually offers quick and easy transportation to and from the airport, ranging from underground moving sidewalks to shuttle service.
  11. 11. Due to the limited availability of land in the inner city and the high cost of developing in densely populated areas, downtown hotels usually are high-rise structures Tend to have higher average room rate than other types of hotels because of the expense of real estate and of doing business in a city. Serving predominantly business travelers and conventioneers. Higher occupancy rate on weekdays and lower occupancies on weekends. Normally offer flexible meeting, banquet space and limited recreational facilities. Originally provided lodging for travelers who wanted quick access to the downtown area, but who did not want to spend the night there. May benefit from lower taxes and land costs, they are frequently restricted by other regulations including height and size-zoning guidelines. These regulations limit most suburban hotels to mid-rise with two hundred to five hundred rooms.
  12. 12. Developed with the growth of transportation. Serving transient guests who stay an average of one night, facilities are generally very simple one or two storey, exterior corridor structure with less than 200 rooms. Provide free surface parking and outdoor or enclosed recreational facilities for both business and leisure travelers. Located near a particular attraction or are attractions in and of themselves. Location is essential to their success. Often built away from population centers and transportation routes. Normally resort must compensate for any lack of infrastructure. Roads and utility systems may need to be developed, some resort even provide employee housing and off-duty employee recreational facilities. Some resorts were originally designed for the upper-middle class and very rich, creating destinations for one-stop vacationing. To survive, some resorts provide meeting and banquet facilities in order to stay profitable all year round.
  13. 13. Accessing Feasibility Feasibility Study SECTION INFORMATION MARKET AREA Geographic and economic: available market and workforce, channel of distributions Who live in the area? Does this area already attract the desired market segment? Can this area support a new facility? COMPETITION Competitors: Competitions concept, currents operations, and future goals SITE Geographic and legal: infrastructure, zoning regulations, environmental measures - Hotel around should be safe DEMAND Target market and demographics: market share, trends, pricing strategies FACILITIES AND SERVICES Hotel type and design: layout, construction, efficiency and cost of equipment, availability and cost of raw materials FINANCIAL ESTIMATES Economic feasibility: proposed budget, start-up costs, projected revenues
  14. 14. Fiscal Commitment to the New Hotel 1) Finding Investor Investment practices change with economic tide. Management contract increasingly popular. Many owners can earn fair return by renovate the property because value increased, renovate easy to get potential buyer as well 2) Determining Cost Develop and Preopening Costs - Examining type of expenses during development helps explain the cash outlays involved in development - Money must set : Debt Service and Preopening Service Operating Costs Hotels need a constant supply of working capital beyond the development phase. Often the most significant expense in hotel operation involves wages, salaries and employee benefits. 3) Controlling Costs (eliminate unnecessary cost) Energy Efficiency - Efficiency Engineering Systems - Latest energy-efficient equipment Security and Loss Prevention - Theft raise cost of operating a hotel property - If affect guest, can irrevocably (tidak boleh ditarik balik) damage a hotels reputation
  15. 15. Once financing for construction has been obtain and all involved parties have committed to the project, construction planning begins. Owners and managers must be involved in this planning process because they are most familiar with guests needs, and because they will be the ones charged with making the facility profitable once it opens. The hotels design must satisfy two essential needs; ___To provide guests with a comfortable, safe environment in which they can enjoy their stay, and ___To allow hotel staff to keep the hotel operating efficiently to meet the needs of those guests.
  16. 16. Design of the New Hotel 1) Basic Lodging Design Front of the House - All area the guest will contact, all guest can see - Depend upon the smooth operation of back of the house - Should be calm, collected and efficient satisfy guests desire - Affect guest impression of a particular area Back of the House - Important part of the hotels structure, support areas - Without revealing its working to the guests - Exp: Receiving area, housekeeping, storage, Laundry, Kitchen and etc Guest Room Floor plans - Architects charges with the task of designing an original facility with the maximum possible guest room - Also determine how to make the corridor reach corner room and how many guest room will surround the core on each floor
  17. 17. Front Of The House Back Of The House Comprises all the areas the guests will contact, including the lobby, corridors, elevators, guest rooms, restaurants, bars, and restrooms. It must be designed to sell the hotel to potential customers. The architecture of the lobby may grab their initial interest, but its the guest room that keeps them coming back Other areas in the front of the house must be just as well planned. Hotel meeting facilities must also be carefully design to meet the conventioneers needs for audiovisual equipment, large exhibition space and variety of meeting rooms. These are the support areas. (eg; kitchen, housekeeping areas, laundry and etc.) The front of the house is completely dependent upon the smooth operation of the back of the house. Efficiency and control are the main objectives for the back of the house. Architects must plan for the smooth operation of the hotel without revealing its working to the guest. The plan must also enable employees to enter and exit the building as well as to perform their work out of sight of hotel guests.
  18. 18. Front of the House
  19. 19. Back of the House
  20. 20. Design of the New Hotel 2) Accessibility Accessibility Design - Feel independent: Easy-to-turn door handles - Sense of Security : Guest Room Lock System - Safety: essential for guest and employee (nonslip bathing facilities, fire-safety equipment and etc) Disability Act - Wheelchair-accessible swimming pools and spas, special design restroom with handrest 3) Ambiance
  21. 21. The facility must be accessible both in term of its location, and it terms of the facility design, which include security, independence, safety and comfort. All guests want to feel a sense of security when staying in a hotel, they will also ultimately stay where they feel most secure. Guests also want to feel independent. Simple amenities like easy-to-turn door handles and lowered light switches may help youngsters and guests with limited mobility operate more independently. Safety, a third design consideration, is essential for both guests and employees, providing a well maintained property aid in the safety of all persons in the hotel. Finally, all guests expect to be comfortable. Attaining that comfort is really a combination of design elements and hospitality services, but care must be taken to ensure that all guests are extended such comforts equally.
  22. 22. Ambiance is the complete impression a lodging facility gives to its guests. When planning a hotel or its renovation, designers create an image that carries out the initial conceptualization. From the choice of building materials to the color of the carpeting or tile. This image will become the theme of the entire property. Ambiance tells guests whether they are in an economy or luxury property; it makes them feel at home or uncomfortably in new surroundings; and it can make the difference between whether a guest returns to the property or stays somewhere else.
  23. 23. HOTEL OWNERSHIP THE LODGING INDUSTRY HTM130 Introduction to Hospitality and Tourism Industry Test Book Page121
  24. 24. Hotel Ownership Independently owned and operated These can be independent hotels,with no affiliation, that are being managed by the -owners of the properties, completely responsibility for the hotels success or failure Advantages Make use of their first hand knowledge to attract guest, obtain investor, garner community support for new ventures and negotiate discounts from supplier. Operating freedom owner implement their own idea Disadvantages Confront the most difficult financial challenges, independent own faced highest failure rate during recreation. Develop all of their own operations systems, succeed or fail based in the success of these system.
  25. 25. Hotel Ownership Chain Ownership 1) Parent Company-Owned and Operated by Brand Name 2) Franchise licensed by investors and operated by management who contract to use the name and system of a brand 3) Management contract owned by an investor or investor and operated in contract by brand name
  26. 26. Company-owned and Operated Not franchiser or under management contract, give hotel more consistency chain-wide than other form of ownership. Shares many of the advantage and disadvantage of independents ownership Hotel Ownership - Chain Ownership
  27. 27. Management contract Management contracts are hotel management companies which operate properties owned by other entities. In some cases, the hotel owners may arrange to run their properties through a management contract with a company that specialises in managing hotels. The reason for this is that the owner may not -Have the necessary expertise -Desire to become involved in the operation of the hotel Benefits for the hotel management company -Little or no up-front financing or equity involved -Manage the property for the contract period such as five, ten or twenty years -Receive a management fee during the contract period Hotel Ownership - Chain Ownership
  28. 28. Franchise-Licensed Some investors prefer to use the franchising concept in running the hotel.Franchising in the hospitality industry is a concept that: Allows interested investors to use a companys (the franchisor) name and business format Is made up of properties where the franchisees agree to run the hotel in accordance with the strict guidelines set by the franchisor Allows a company to expand more rapidly by using others capital Hotel Ownership - Chain Ownership
  29. 29. Benefits for the franchisee: Obtain from the franchisor the expertise in doing business such as site selection, planning, pre-opening training, operations manuals, information management,central reservation system, field support, quality control, purchasing, advertising, marketing, new products and concepts The franchisee has complete control and responsibility over the daily operation of the property In return, the franchisor receives a joining fee and an ongoing fee from the franchisee. Hotel Ownership - Chain Ownership
  30. 30. CLASSIFICATION OF HOTELS AND MOTELS THE LODGING INDUSTRY HTM130 Introduction to Hospitality and Tourism Industry Test Book Page111
  31. 31. 35 Classification of hotels and motels Hotel Rating Services Rating Services AAA American Automobile Association Diamond Award Mobil Travel Guide Five Star Award
  32. 32. 36 Figure 4-5 Hotel Rating Guide by Mobil Travel Guide
  33. 33. Classification of hotels Criteria Location: e.g. city centre hotels, suburban hotels, airport hotels and highway hotels/motels Function: e.g. commercial hotels and convention hotels Market segment: e.g. resorts, health spas, timeshares/vacation ownership and casino hotels Distinctiveness of property: e.g. all-suite hotels, boutique hotels, extended- stay hotels, historic conversions and bed and breakfast inns Price and staff/room ratio Size: e.g. under 150 rooms, 151-300 rooms, 301-600 rooms, more than 600 rooms Rating (grading) : e.g. one-star to five-star or one-diamond to five-diamond
  34. 34. Descriptive labels(diskripsi tanda) 38 Hotel and motels can be found almost anywhere Hotels Most famous type of lodging Have > 2 stories. Guest room have bed, bath, phone and TV. Located near business district, travel destinations and airport
  35. 35. 39 Motels Fewer amenities and less expensive to build and operate than downtown hotels Lower rate, basic accommodation, roadway locations and lack of central lobby Less formal than hotels All suite-hotels Rent only suites combine living space with kitchen Small lobbies and no public meetings room, and some do not offer restaurant and bar But now, have hotels reintroduced the public areas and limited food services
  36. 36. Peninsula Residence All Suite Hotel, KL Chapter 4 - The Hotel Business 40
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  38. 38. Chapter 4 - The Hotel Business 42 Convention hotels Provide meeting and banquet facilities for large groups Need a large lobbies High percentage of double-occupancy rooms and emphasize F&B services May offer concierge floor Other lodging types Hostels Bed and breakfast Resorts Spas Casino hotels
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  42. 42. 46 Levels of service Luxury hotels and resorts Descendants of a grand hotels, featuring expensive, lavishly decorated public areas and the highest level of services Luxury resorts offer the finest entertainment and recreation facilities Eg. Four Season, Ritz-Carlton, Trump Plaza,NY
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  44. 44. Full service properties Eg. Hilton, Hyatt, Westin and Marriot Offer wide range of services in lower rate than luxury hotels Offer clean, well-decorated with meeting and restaurant facilities, a limited room service menu and variety of recreational activities Have large and attractive public areas Some all-suite hotel and extended-stay hotels with good-sized public areas also fit into this category 48
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  47. 47. Limited service properties Eg. Days Inn, Hampton Inn, Quality Suites & Inn Simple, clean rooms with telephone, free cable TV, pools and adjacent restaurants Staff services limited but offer extra few amenities : shampoo and lotion The remaining all-suite hotel may fit this category because of : limited services and amenities, and small public areas 51
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  49. 49. Economy properties Provide basic bed and bath facilities Focus on more values for the dollars with clean and low-priced lodging Did not offer meeting and recreational facilities or F&B Limited staff : Front office, security, housekeeping Eg. Econo Lodge, Motel 6 and Daystop 53
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  52. 52. 56 Hotels by Price Segment (market price levels) Budget - $29-$39 Economy - $40 - $60 Mid-price - $60 - $100 All-suites - $95 - $175 Up scale - $100 - $200 Luxury - $140 - $450
  53. 53. 57 City Center Hotels Public transportation available for business or leisure Could be luxury, midscale, business, suites economy or residential Range of accommodations and services Typically have a signature restaurant, coffee shop etc Were constructed in wave, stimulated by govt. regulation, investors develop hotel when the economic climate is right Eg. St. Regis Hotel, NY city centre luxury hotel
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  55. 55. 59 Resorts Originally began due to rail travel Became a part of pleasure experience Before this seasonal, but because of improvement in air travel / automobile, it become year-round activity Eg. Greenbrier in West Virginia and The Ritz Carlton Kapalua in Maui, Hawaii
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  59. 59. 63 More on Resorts Captured Clientele Food service is unique, vary menu to cater the guest Resorts has diversified their marketing mix by include: MICE Spas Adventure and Eco-tourism Need attentive, well trained staff Resorts benefits : guest more relax, staff will enables to enjoy better quality life, returning guest tend to treat like a friends
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  63. 63. 67 Airport Hotels High occupancy due to location Guest mix : Business, group and leisure travelers Full service 200-600 rooms Convenient location Airport shuttle service to go town etc Convenient location, economical price, easy and less costly transportation Eg. Pan Pasific KLIA
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  65. 65. 69 Casinos hotels Heavy growth segment Low room rates Subsidized food and beverage Themes are popular 500 plus guest rooms Variety of food operations Contains a gaming room
  66. 66. 70Caesars Palace Hotel Casino
  67. 67. 71 Venetian Hotel Casino. LV
  68. 68. 72 Convention Hotels Meet the needs of large groups 500 plus rooms Larger public areas to accommodate greater public demand Banquet areas within and around the hotel High percentage of double occupancy, rooms have double queen-sized beds Full-service oriented Eg. Sheraton Doha Resort & Convention Hotel
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  70. 70. 74 Full-Service Hotels Typically Business Oriented Multiple food and beverage outlets Meeting and convention services Chain representation Doubletree www.doubletreehotels.com Sheraton www.sheraton.com
  71. 71. 75 Economy/Budget Hotels Represents 12 percent of total hotel rooms Accomplished 37 percent of industry growth Average room rate of $48.68 However, profit revenue is slow with an annual rate of 1 percent Also considered budget hotels Clean rooms Reasonably sized and furnished Continental breakfast
  72. 72. 76 All-Suite Cater to guests for an extended period Reduction in rate based on length of stay More space than typical hotel Examples Embassy Suites www.embassy-suites.com
  73. 73. 77 Bed and Breakfasts Began in Europe and started as overnight lodging in a private home A home away from home, prices $30 - $300 Accommodation with an owner who lives on premises Maintains a few rooms Offers breakfast Personable and quick service
  74. 74. 78 Vertical Integration Lodging companies meeting the needs of several types of guests based on price, facilities and amenities Choice hotels which have several chains that meet its diverse clientele Luxury - Clarion Mid-scale - Quality Inn/Suites Budget - Comfort Inn, Rodeway Inn Economy - Sleep Inn www.hotelchoice.com
  75. 75. 79 Marketing Consortiums Also called referral organizations Numerous independent properties unite to compete with the marketing power of chain operations Similar benefits as franchises, at a lower cost Provides incentives for clients
  76. 76. 80 The Best Hotels Some previous winners: Oriental Hotel in Bangkok, Thailand Regent of Hong Kong Bell-Air of Los Angeles Largest hotel Venetian Hotel, Las Vegas with 6172 rooms opened in 1999
  77. 77. Oriental Hotel, Bangkok 81
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  79. 79. 83 Unusual Hotels Ice Hotel in Swedish Lapland The Treetops Hotel in Kenya Underwater Hotel in Australia Capsule Hotel in Japan The Burj Al Arab in Dubai
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  82. 82. Inside Capsule Hotel, Osaka 86
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  84. 84. Classification of hotels Descriptive Level Luxury hotels Hotel, Congress hotel, All-Suite-Hotel Accomodation, breakfast, food and beverages offered International Standard, luxurious, modern Greetings of guests in front of the house High level of technical and personal services Meeting point, modern communication equipment Outside Germany often big shopping center included Price high First Class Hotel Convention hotel Accomodation, breakfast, food and beverages offered High Standard of comfort Good level of technical and personal services Price medium to high Mostly large number of beds, chain hotels 88
  85. 85. Classification of hotels Descriptive Level Pensions, Hotel pensions Accomodation and breakfast for longer stay guests, fixed menu food at specific times Simple, no special comfort, often close to spa institutions Without special services Prices dependent on length of stay Rural (Pedalaman) hotel Mainly restaurant, few beds mainly for restaurant guests Simple, rural, no special comfort Often family run with own butcher or fish farm Price low, except Star-restaurant places Motels Offer fewer amenities and less expensive to build and operate than downtown hotel Lower rate, basic accommodations, roadway locations and lack of central lobby Less formal than Hotel 89
  86. 86. Classification of hotels Level of Service Luxury hotels and resorts Offer finest accommodation and cuisine money can buy. Grand hotel featuring expensive, lavishly decorated public areas and highest level of customer service. Full range of amenities, private Jacuzzi Full Service Properties Offer clean, well-decorated hotels with meeting and restaurant facilities, limited room service menu and variety recreation activities. Good size public area. Exp: Hilton, Marriott, Hyatt Limited Service Properties Offer clean room with a telephone, free cable television, swimming pools and restaurant. Small public area. Limited service and amenities other than housekeeping. Economy Properties Offer basic bed and bath facilities, focus on more value for a dollar with clean and low-priced lodging. Did not offer meeting and recreational facilities or F&B services. Staff was limited
  87. 87. TRENDS IN HOTEL DEVELOPMENT THE LODGING INDUSTRY HTM130 Introduction to Hospitality and Tourism Industry
  88. 88. Trends influencing the hospitality industry Demand for leisure travel services will continue to outpace that for business travel There are now significantly more leisure travelers filling airline seats, checking into hotel rooms, and consuming other travel services than business travelers, and this gap will grow
  89. 89. Trends influencing the hospitality industry More leisure travelers will select cruises and timeshares as alternatives to vacations that include conventional lodging The popularity of cruising will continue to grow, driven principally by the construction and arrival of magnificent, new floating "resorts" (and remarkably attractive pricing), while timeshares will be in big demand as more savvy travelers discover both the value and flexibility of "owning" vacation time that reflects their lifestyles and travel habits
  90. 90. Trends influencing the hospitality industry Activities that promote stress reduction will gain in popularity Growing interest in "adventure" travel notwithstanding, the pursuit of stress reduction will remain the number one motivator for the one-half of all active leisure travelers who now feel they "dont have enough vacation time." This is likely to translate into growing patronage of both amenity and destination spas (by both women and men), as well as the growth of amenity spas in urban hotels that cater to business travelers and meeting attendees
  91. 91. Trends influencing the hospitality industry Meetings and conventions will drive the recovery of demand for business travel services Individual business travelers will continue to seek ways to do business without traveling, while demand for travel services from meeting and convention attendees will continue to grow
  92. 92. Trends influencing the hospitality industry Air travel will remain remarkably affordable Hard to believe given the unpredictable nature of the cost of jet fuel and the fact that half of all domestic airline seats are now operated by bankrupt carriers, yet unprecedented competition brought about by transparent pricing for "undifferentiated" brands will insure fares remain low relative to the escalating cost of other travel services
  93. 93. Trends influencing the hospitality industry Lodging rates will rise Hotel room rates will continue to escalate as operators manipulate yield to capitalize on growing demand. "Upscale" and "Luxury" operators are likely to be the biggest beneficiaries of this trend as consumers who traded up in the go-go '90s begin to indulge once again
  94. 94. Trends influencing the hospitality industry Consumers' utilization of the Internet will continue to reinvent the distribution and sale of travel services Although the actual percentage of business and leisure travelers who use the Internet to plan some aspect of travel is expected to remain flat if not decline, the percentage who go online to make reservations will continue to grow
  95. 95. Trends influencing the hospitality industry Transparent pricing will underscore the urgent need for brand clarity Techno-savvy consumers can now compare prices for airline seats, hotel rooms, car rentals, cruises, even complete vacations with just a couple of clicks, so the question arises: who will get the sale? The answer will be determined by the "value" ascribed to the proposed transaction which, in turn, will depend on the "clarity" of the brands under consideration. Those that stand for something relevant to the consumer will ascend to the top of the list.
  96. 96. Trends Affecting the Future of the Hospitality Industry -Increasing competition -Emphasis on service -Customers growing value consciousness -Changes in marketing and management made possible by technology -Increased responsibility for employees and managers through employment -Greater diversity of the workforce -Customers concerns with security -Consumers and governments concern with sanitation