INFLUENCES - Hotel Management and Operations

Like many other American businesses, hotels have been affected by shifts in emphasis and its children mature, the population of the country will for many years be older, healthier, and better educated than previous generations. These facts will present new challenges and opportunities to all business managers.

  • Technology in the form of computers, communication, personal devices, and laborsaving mechanical equipment—has had and will have a major effect on the way in which hotels are managed and operated.
  • The speed with which information is accumulated, stored, manipulated, and transferred is such that today most travelers expect that the hotel rooms they rent will allow them to be as productive as they are in the office or at home. Increasingly, with portable computing, personal data assistants (PDAs), wireless communication, and virtually everything somehow connected to the Internet, hotels must provide services and access that allow guests seamless transition from the business, travel, or home environment to that of the hotel. Increasingly, entertainment must be fused with communication and productive processes.

  • The concept of market segmentation, or ever-increasingly finely tuned market definitions, will dictate hotel structures and organizations, and management tactics designed to address those market segments have become even more important to the management of hospitality service businesses. With the increased power in the information and data manipulation realm, hotels have available to them ever expanding databases about guests and are creating new products to attract those markets.
  • One of the effects of the aging demographic is the emergence of vacation resorts—a modern incarnation of the timeshare properties of several decades ago. Because these are being developed and operated by name hotel companies and are marketed to the affluent, healthy, well-educated population segment, resort managers have had to absorb new managerial realities.
  • The well-documented change in the complexion of the national economy from one that emphasizes goods and, to a lesser extent, natural resources to one that emphasizes services has kindled new ideas about the way in which we manage the design and delivery of these services. Hotels, restaurants, and travel services are now seen as unique entities that dictate special kinds of managerial techniques and strategies.
  • Changes in people’s travel patterns have altered the way we manage our hotel properties. Deregulation of the airlines has driven a change in the way millions of people travel each year, given the hub and- spoke design of airline services. Many hotel companies are now locating major hotel properties adjacent to hub air transport facilities, taking advantage of the fact that business travelers may not need to travel to a central business district (CBD) to accomplish their purpose in a given area. Meetings and conferences can now be scheduled within a five-minute limousine ride from the air terminal, and the business traveler can be headed for his or her next destination before the day is over without having to stay overnight in a CBD hotel.
  • New patterns of investment in hotel facilities have emerged in the last two decades, and more attention is now paid to achieving optimum return on investment. Be- cause people from outside the hotel industry are now participating in its financial structuring, hotel operations are no longer dependent on the vision of a single entrepreneur. Managers now must design tactics and strategies to achieve heretofore unanticipated financial goals. The same trend has also altered the complexion of management and organization of the modern hotel. This is especially true of publicly owned hotel firms, where Wall Street stock analysts heavily influence stock prices through expectations of quarterly revenues and profits. This puts pressure on hotel companies and their operations managers to perform, on a quarterly basis, in a way contrary to many managers’ instincts.

Most of the foregoing issues and influences still operate (to a greater or lesser extent) on the organizational structures and strategies of the modern hotel. Since the last edition of this book, however, other phenomena of an economic, cultural, and social nature have come to the fore, complicating our view of hotel management. This furthers the argument that the hotel industry is a part of the greater economy and at the mercy of elements often completely out of its control.

In early 1993, for instance, employment growth was stagnant; corporate profits were low; the expansion of the gross national product (GNP) was only a marginal percentage above previous years; and travel in most segments was down due to corporate restructuring, downsizing, or reorganizing. Vast layoffs in the hundreds of thousands had been announced every month. While fuel prices continued to be relatively stable, consumer spending patterns and high employment growth had not materialized, particularly in light of corporate layoffs and the ongoing nervousness of consumers about whether or not their financial wherewithal was safe.

Now consider late 2000, Unemployment was at an all-time low; the Dow Jones Industrial Average was between 10,000 and 11,000; hotel occupancies had stabilized nationally in excess of 70 percent; and the federal government was running a surplus for the first time in the memory of most.

The terrorist attacks in New York and Washington, D.C., in 2001 changed the face of all business and travel, immediately and probably for the foreseeable future as well. Major airlines are in bankruptcy; hotels are struggling to achieve profitable occupancies; business travel is down; the high-tech stock market bubble burst; the country is at war in a number of locations; security has made travel more difficult, if not actually annoying; and people are nervous. Join this with an imbalance of trade, the outsourcing of jobs, and the largest federal deficits in history, and the face of the economy is challenging. This translates directly not only to business travel but personal and recreational travel as well. Finding ways to operate profitably in such an environment is the job of the next generation of hotel operators.

Among the predictions I made in the preceding edition was that cultural diversity will play a role in the management and organizational structure of the modern hotel in the United States. As surely as living patterns, economic cycles, and market segmentation have influenced the hotel industry, so will the change in ethnicity of the workforce. The cultural backgrounds that an increasingly diversified workforce will bring to hotel operations may be seen as a problem or a challenge—or both. To most operators, it will be seen as an opportunity to demonstrate to an increasingly diverse clientele that hotel companies are committed to hiring and training a workforce structure that mirrors society. I see no reason to change that prediction now; if anything, acculturation of the hospitality business will accelerate.

The legal and regulatory environments are increasingly important to all business managers, and hotel operators are no exception. Increasingly, operators must be aware of and alert to realms of risk that can engender lawsuits against them. Several articles and essays in this edition highlight these threats to hotels and their guests. It should be noted that present-day security concerns also have significantly affected the ways in which hotels are operated. Awareness of the risk environment and the regulatory realm are factors that affect a hotel’s ability to compete in the early part of the twenty-first century.

Because new construction of hotels diminished greatly after 9/11 but firms still needed to grow, rebranding existing properties generated a lot of growth activity. Rebranding is a complicated process that must be accomplished within critical time frames to coincide with marketing, financial, and operational variables. Tom Dupar is a seasoned veteran at this fascinating and important activity and has participated in rebranding operations around the world. His essay on the intricacies of rebranding was a mainstay in the previous edition of this book. Today’s economic circumstances are different, and Dupar’s business has changed its focus to opening new major projects. His piece serves as a useful companion to that of John Dew, and the two should be read together, with an eye toward comparing Dew’s smaller project focus and Dupar’s large projects.

Perhaps proving the axiom that “everything old is new again,” the concept of health and wellness spas as a hotel and resort product has enjoyed a resurgence. Once the province of high-end hotels and resorts, the idea of being pampered in a spa has been added to the service mix in many more modest hotels and resorts. While the big-name spas at five-star properties still set the standard for pampering and pricing, the comfort of personal service in less lavish spas seems to appeal to the modern traveler as well. Peter Anderson’s overview of the spa industry provides insights into this fascinating service product.

In addition to products, building, and rebranding, I have also chosen to include in the section two recently reviewed and studied ideas that may or may not be adopted across the industry. At the end of this section are a number of suggested readings for the student who would like to gain more in-depth knowledge about the hospitality industry as a whole and specific historical antecedents. In particular, the books by Hilton and Jarman look closely at the inter machinations of the establishment by two early pioneers of the industry, one of whom, Conrad Hilton, lives on in an international, publicly traded company operated by one of his sons. E.M. Statler’s contributions to the modern hotel business are legendary in that he is generally credited with founding and operating the first commercial hotel concept that recognized the realities of the early business traveler at the beginning of the twentieth century. The suggested articles are drawn from recently published historic overviews of the hotel side of the hospitality industry in the United States. They also highlight other major forces in the development of the modern hotel business.

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