Independent and International chains Hotel
There are many different kinds of hotel but they are classified into independent hotels and international chains hotels.
Independent hotels are hotels that are owned and managed by sole trader who is the owner of the hotel or partnership that is owned by a group of few people. It does not allow any other owners to use their brand name but they may operate at different locations with the same name. This kind of hotel will have limited sources of finance, they have a large number of debtors owing, extend credit to operate so there will be a problem to raise their profit. Also are more likely to face the problems regarding the market. The theory of this hotel is that they are more toward to the meaning of travel, travel is about making a change leaving your own lifestyle to visit some new places, meet some new people and try some local things. By living in this hotel customers can meet all this travel conditions as they will build in a place where is more in a local society. Every independent hotel in village, town or city is extremely different, if we lose this kind of hotel one day travelers will find out other countries look so much like their home. And according to the American Independent Business Alliance, they are very support their local products than international chain hotels such as using local crops to make meals for customers and request some employees that are indigenous for tours. Travel can be a way to learn new things like their language and culture for travelers to be eye-opening so staying in an independent hotel is more able to enhance culture exchange between travelers and locals. Finally, I still have to mention that independent hotels are better in making eco-friendly to the environment, because they are a small business and rely on local suppliers but people as a traveler will never thought about this. Again, the entire situation that had mentioned above can clearly prove the theory of independent hotels is all about travelling. Thus, people choose to stay in independent hotel is because it make you feel like you are part of the local community not just being a traveler and it make travel more personalized. Furthermore, the advantages of independent hotel are they can well adapt to the market change and communicate with clients to get support and feedback from them easier then chain hotel as they have a very close relationship with their customers. This hotel would not have financial pressure as much as chain hotel since they don’t require certain performance for customers. In addition, their price are fixed so the set pricing policy will be somewhat change to ensure a constant revenue. However, there are also some disadvantages for being an independent hotel like: they don’t have connection with travel agencies and internet booking system to increase their sales volume and a broad promotion system.
International chain hotel, whether it is franchised or subsidiary, is the kind of hotel established in different areas under the pilot officer of a hotel group. These hotels are the main type in the global hotel industry and it is mandated under certain standard rules, policies and procedures. Most of the chain hotels have official approvals from tourism authorities, but some may not be approved because of specific local conditions. The principle of this hotel is totally different from independent hotels as they are more concerned about the feeling of customers and try their best to make customers comfortable because this kind of hotel has much more facilities and a high quality service than independent hotel, so customers choosing this hotel are more about relaxing and indoor activities like swimming pool, fitness centers, hot tubes saunas etc. They use their brand name to attract customers since they are well-known hotels in all over the world. They are usually located near a highway or in the center of the downtown area and always located in the nicer part of the city. Customers can pretty much expect what they can get from the hotel because every hotel that is in the same chain has the same facilities and the same type of service. So choosing to stay in chain hotel clients can be sure they will have a nice place to stay such as the room is clean, the bedding is tidy and neat all those things that chain hotel should be offer. So that clients will not get very disappointed when they arrive to the hotel. In addition, chain hotel is placed all different area, if they mess up anything. There will be a serious consequence because it will not only spoil the local hotel’s reputation but the whole chain hotel. Moreover, the best reward progamme of hotel are all in chain hotel such as Hilton, Marriott and Wyndham etc, according to Business Travel article “Best Hotel Rewards Programs”. They using this method allow business to collect information of their customers, get to know more about customer’s buying habit in order to improve hotel service and to create loyal customers which increase sales. Nowadays, people are very care about protecting the environment. Hence, many large hotels chains have worked very hard to set up their green certificate to stimulate customers to re-use their towels, printing their pamphlets on recycled paper and using biodegradable shampoo containers. But this is still not working as good as independent hotel, even without encouraging customers, because they have smaller scale and relies on local suppliers. Overall, is not saying that all customers choosing to live in a chain hotel are not eco-friendly, is just that some people are stealing stuff from the hotels such as towel, coffee sachets, shampoo etc. “A survey from last year found that 86% of hotel guests had taken toiletries, as opposed to a mere 3% who admitted to stashing away bathrobes in their suitcase... and then there's the hard-core 1% who confessed to stealing electronics, silverware” according to the Yahoo UK travel ‘Things People steal from hotels’. There is a fact that people stealing stuff from Transcorp Hilton Abuja Hotel, according to the ABC newspaper article “3 Months in Jail for Stealing Hotel Towels”. The advantages of this kind of hotel are in their size and their brand name, more customers which means more profit because of the economics scale. They have high technology system called yield management, this can improves benefits through the calculation of supply and demand. Better advertisement to handle the whole chain hotel and make contracts with travel agencies to increase clients.
Operation Structure of Independent and International Chain Hotel
Hotel can be classified into independent and international chain hotel but it can also classify into the size of the hotel. In here, because there are many types of independent and chain hotels so in order to know their operation structure, I will be assorting it into the size: large, medium and small. kkm
Operation of Independent and International Chain Hotel
Different kinds of hotel will have different methods to operate their hotel, and different methods will have their own benefits for the hotels but also disadvantages.
On the other hand, chain hotel is classified into management company, franchise and referral group to operate. Management Company is an organization that operates any kind of hotels for a fee under the management contract between the hotel and the organization, whether the hotel is profitable or not. Management company not just selling a method of doing things, they are actually doing them. Hence, they will have to take the responsibility of day-to-day operations of a hotel. In this case, hotel profits or losses is depending on the management company but no matter what the result is, owner will still need to pay them. The advantage of using this method is that they are professional in operations, financial management all those things. Many hotels are using this method because it is more easily obtain economies of scale, a global reservation systems, and brand recognition like Holiday Inn. and Langham hotel. The disadvantage of this method is that the changing the management might affect department managers and other senior executives working or even departure. This is a component of an organization's risk management strategy and the main part of the business so is very important to monitor its effectiveness otherwise it will affect the business so badly.
Franchise is an arrangement that the brand allows other hotels to use its logo, name, system and resources for operation in exchange for a fee. Those who own the hotel from buying the right to use the brand name for a fixed period of time is called Franchisee and the one who manages the brand and sells the right to them is called Franchiser. How this operation work is that the franchisee must follow the rules and guidelines already published by the franchiser even the pricing so the franchisee will not have much control on the business as they would own by themselves. Hence, the franchisee and the parent company will not have much difference that the customers can distinguish between this two. The only two differences are that the franchiser does not own and manage the franchise property but the franchisee does. And the franchisee has to pay royalty fee, one-time franchisee fee, training and equipments that they required from them. Franchise hotels are usually the chains with the greatest name recognition such as Hilton, Sheraton, Hyatt hotel sells certain right to a franchisee, for example: to use the name to connect to the national reservation system and to use proven operating procedures. The advantages of franchise are the corporate image and brand awareness of the hotel is already well-known and consumers always choosing by the hotel’s reputation or hotel they trust. The franchiser usually provides a successful methods, wide training and support to the franchisee. Franchiser save a lot of time for franchisee to focus more on running a successful hotel as the franchise company already has the business model. The disadvantages is that you have to follow their rules, these will limit everything like how you can advertise, what you must charge for the products you sell, and how much of an ingredient you can put on a food product.
Referral group is several independent hotels have combined together for some common purpose. Referrals are a form of marketing cooperatives to provide only one service. There is no interlocking management, mass purchasing or common financing except a unified sales effort. Standardized quality, joint advertising and recognizable logo are the goal for most referral groups. This method is very popular for small motel operators. The benefit for joining a referral group is that you can get more clients in your business as they had combine few hotels together. Disadvantages
Research before the Operation
As hotel industry is count as hospitality so no matter what kinds of hotel is it either international chain hotel or individual hotel, clients will choose to stay by the quality of service so a high quality of service is very important in hotel industry. Besides it is also ensure to achieve successful when competing with other hotel company. In order to do that, the hotels will need to do market research to find out what kind of customers they will meet to determine the customers’ demands require. This is the marketing planning process to achieve their goals, it involve collecting and analyzing information about a particular market. Also called research and development as this is the very first stage when starting a business as well the most linchpin part. There will be no profit, highly negative in cash flow and high risk attends in this stage. Marketing mix is the major part of marketing planning and it is needed to be a successful market. There are four P’s that is very common: Product, Price, Place and Promotion. But since hotel industry is a service business so there will be 7 P’s in the marketing mix including product, price, place, promotion, people, physical environment and process. However, marketing mix from independent hotel and international chain hotel will be different as their serving is very different from each other.
Operating Issues
Following the marketing mix, there is still a useful tool before you operate a hotel, is to do a PEST analysis. It doesn’t matter what kind of hotel you want to function. This analysis is suitable for all types of hotel. It is very important to study the environment before you begin the business because this could influence the strategic development of a business and help business to deal with their situation. It is useful when trying to find out the advantages and disadvantages of a decision and to reduce the risk from fail operation. PEST is stand for political, economic, social and technological. Political includes government legislation such as employment law, consumer protection rights, copyright and trademark regulations, these are the boundaries that businesses can operate. And government intervention such as taxation and interest rate policies and economic stability of a country. Economic includes inflation, unemployment, economic growth and international trade. Social includes cultural that affect businesses from country to country. Technological includes the technology and work process that affect the efficiency of business.
PEST Analysis
Political:
Environmental regulations and protection – Environmental protection laws are regulated by the Environmental Protection Agency. Their mission is to protect human health and to maintain the environment air, water and land. So in this industry, reducing the amount of raw martial, energy and pollution prevention is very important, like monitor how much water and energy had spend and how much it should be reasonably spend and reduce waste at the sources.
Tax policies -- A Texas Hotel Occupancy Tax Exemption Certificate may be accepted in good faith when presented with support documentation required by the Comptroller. Good faith acceptance means a hotel owner or operator may be assured the exemption, with the proper proof, cannot be disallowed during an audit. The hotel owner or operator must be aware of the available exemptions.
Employment law –In the hotel industry, this law is inspected by the Mainstream Labour Legislation. Hotel owner should know the maximum working hours per week are 48 and 8 per daily, minimum payment for exceed work is 1.5 hours for every 1 hour of work, a minimum of 1 rest day per week, minimum annual day off is 20 days for a 5-day working week and 24 for a 6-day working week……if owner had break these laws, this will lead to a serious impact in the business such as decreasing public image.
Economic:
Dependence on the nation’s economy – when the nation economy is good then business travelers will increases as well as the hotel occupancy rates (the ratio of guest room sold to guest rooms available for sale in a given time period) and rack rates (The price a hotel charges for a room before any discount has been taken into account.) which will have a higher profit level. In the other hand, if the economy is bad then business travelers will decrease also the occupancy rates and rack rates, this will lead to have low revenue and profit decrease.
Globalization – this will obviously affect the hotel industry because this kind of industry is about connecting all different kinds of customers from the world so is not only the nation economy but also the economy from each individual’s country and this will increase the successful of the hotel business
Terrorism and safety – terrorist will have impact on economic and might destroy the economies. According to the event of 911, some major hotels revenues had sudden decreased. And this problem is still remaining haunting the industry. Hotels will not be able to continue their business once hotel had been target from terrorist because there is a law for hotel operator, is to protect their clients from harm and require innkeepers to prevent those activities which it should reasonably discover or anticipate but to prevent such this attack is a very difficult task.
Social:
Demographics, Population growth rates, Age distribution – it is very important to monitor these three factors. For demographics we can see the number of people who emigrate and immigrate so in this industry the problem might be the number of workers leaving the business might be more than those who entering. If population growth rate increase the problem above can be reduces and will have a high chances to increase the profit as consumers might increases and the wages will decrease because of the population increased according to John Stuart Mill’s Principle. And the age is also a problem for this industry because worker who moving into retirement will be a gap for the business.
Career attitudes – obviously a positive career attitude can lead to a successful business especially in this service industry. Every people have different personality and different ways to solve problems so when applying employees for this industry employees must be more flexible and open-minded because in this industry customers come from different places so they will have different needs and wants therefore things always change to deal with different customers and in this case employees must have a standard level on solving problems. Also, they must enjoying serving people and provide service that is more than customers expect to give a good image for customers to be repeat guests.
Technological:
Interactive reservation systems – increasing guests use the Internet’s interactive reservation systems and hotel companies are sometimes criticized for the large number of keyboard clicks required to make a reservation
Guest-room innovations – multiple telephone lines, interactive opportunities for ordering room’s service and guest-room check-out, these can increase the number of guests by speeding up the service but they are expensive to install
Data mining – allows marketing and saler to find new ways to use guest-related data to make better marketing decisions
Yield management – this computerized process allows managers to catch the time of high guest-room demand to maximize revenue. High demand means higher rates because of reduced discounts, low demand means higher discounts
operation structure website
marketing mix
operation method
- Analysis my survey (social class, survey my age to show that nowadays children like international chain hotel, western culture)
by
lucillemo (student)
