Pearson New International Edition International pcl tp indd 1

Broad-Based Challenges (All Segments)
Operating Issues
•
Labor shortages. Hoteliers in almost every geographic location consider labor
shortages among the most difficult challenges they face. In some instances,
hotel expansion is limited not by capital (money) but by human resources.
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OVERVIEW OF THE LODGING INDUSTRY
Objective 5
Review the many
challenges confronting
the lodging industry in
general and its
segments more
specifically
Objective 3
Discuss how hotels are
organized
Objective 2
Provide an overview
of common ways to
classify hotels
Objective 4
Describe the most
common structures 
of hotel affiliation,
ownership and
operation
Objective 1
Explain how the
lodging segment is
integral to the travel
and tourism/
hospitality industry
Hotel Ownership
and Management
Alternatives
Organization 
of Hotels
Classification 
of Hotels
Lodging as Part of the
Travel and Tourism/
Hospitality Industry
Lodging Industry
Challenges
ROADMAP 5
FIGURE 10
Challenges confronting the lodging industry.
Type of challenge
Operating
Marketing
Technological
Economic
Specific concerns
• Labor shortages
• Cost containment
• Increased competition
• Market segmentation and overlapping brands
• Increased guest sophistication and desire for amenities
• Third-party wholesalers
• Interactive reservation systems
• Guestroom innovations
• Data mining
• Yield management
• Dependence on a nation’s economy
• Globalization
• Terrorism and safety
•
Cost containment. Hoteliers are increasingly challenged to find ways to reduce
costs without sacrificing the quality standards that have been established to
meet their guests’ expectations. The challenge to “do more with less” requires
managers to think about ways of operating more effectively and to examine
possibilities for cost savings that do not affect guests’ perception of value.
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•
Increased competition. Hoteliers everywhere indicate that their community is
overbuilt: There are too many hotel rooms available relative to the guests desir-
ing to rent them. Tactics that involve price-cutting to provide greater guest
value reduce profit further.
FRONT OFFICE SEMANTICS
Overbuilt:
Condition that exists when there are too many hotel guestrooms available for the number of
travelers wanting to rent them.
Marketing Issues
•
Market segmentation and overlapping brands. Market segmentation is increas-
ing as lodging chains focus on ever-decreasing niches of travelers. Additionally,
brands overlap. Some observers are concerned that franchisors may expand their
number of brands to the point that investors who purchase from the same
franchisor may be in direct competition with themselves! Also, as the number
of brands increases, the ability of consumers to differentiate between them
decreases.
FRONT OFFICE SEMANTICS
Market segmentation:
Efforts to focus on a highly defined (smaller) group of travelers.
•
Increased guest sophistication. Consumers have become more sophisticated,
and so have the types of products and services that they desire. Amenities such
as business centers, exercise and recreational facilities, and guestroom innova-
tions increase costs. If amenities are not selected carefully, they may not appeal
to the guests being served by a specific property.
MODERN FRONT OFFICE ISSUES AND TACTICS
Whose Hotel Is That, Anyway?
Hotels offer frequent-guest programs to encourage travelers to return to the hotels’
brands. However, a study by Phoenix Marketing International has indicated that no
member of the Hilton H. Honors, Radisson Gold Rewards, or Starwood Preferred Guest
Programs could identify all of the Hilton, Radisson, or Starwood hotel brands participat-
ing in the respective programs. By contrast, organizations with greater member awareness
were LaQuinta, Red Roof, Wyndham, and Hyatt. Perhaps by coincidence, the latter organ-
izations have fewer brands than the previously mentioned groups. According to this
study, 32 percent of the 4,000 hotel frequent-guests surveyed indicated that the hotel fre-
quent-guest program influenced them all most or some of the time. Therefore, it is impor-
tant for hotel frequent-guest programs to effectively communicate the lodging brands that