Hotel Ops Notes Week 1 PDF

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Week 1 Lecture notes...

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Week 1 Hotel – an establishment providing accommodations, meals, and other services for travelers and tourists. synonyms: inn, motel, boarding house, guest house, bed and breakfast, B&B, hostel, lodge, accommodations, lodging Occupancy - The relationship between demand (the number of rooms actually sold) and supply (the number of rooms available for sale) ● Measures the hotel’s “share of the market”, so it measures quantity ● Occupancy Rate in % = Rooms Sold / Rooms Available for sale Sales per Occupied Room (Average Daily Rate, ADR) in $ ● The dollar amount received for each room sold ● Measure the quality of the business. ● Average Daily Rate = Room sales (measured in dollars) / Number of rooms sold

•REVPAR (Revenue per Available Room) in $ ● The relationship between revenue per room and the total room inventory available ● Measure how well management fills rooms, without cutting prices ● REVPAR = Room Revenues/Sales in $ / Number of rooms available for sale Double Occupancy ● Refers to any room in which there is more than one person ● Double occupancy increases per-room revenue, if rates are per-person ● In full-service hotels, double occupancy leads to more additional sales

What is the biggest hotel in Canada? Eaton Chelsea – Formerly a Delta 1590 Guest Rooms, 18 elevators, 26 Floors, 5 basements

Special Characteristics of the Hotel Business Perishability ● At midnight, value of unsold inventory is $0 ● An unsold room tonight can never be sold again

Location ● Fixed ● Cannot move or “deliver” to high demand areas ● Changing value of fixed location ● Re-routing of highway could devastate business ● Location, Location, Location! Fixed Supply

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Just like location, so is the supply of rooms.

Example: Our hotel only has 100 rooms ● Today only 50 are sold, revenue is lost ● Tomorrow, Super Bowl in town, and sold out ● No way to make up lost revenue ● No way to increase production to meet increased demand High Operating Costs ● Capital Intensive ● Labor Intensive ● High Fixed Costs – Low Variable Costs ● Even at low/no occupancy we incur fixed costs ● Mortgage, utilities, salaries, marketing etc ● Variable costs per occupied room are low ● Cost of cleaning, replacing linen, utilities used etc., Seasonality ● Within Year ● Business fluctuates from winter to spring to summer to fall in most hotels – Toronto has 3 seasons ● Within Month

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Business fluctuates from early to mid to late part of the month and around Holidays Within Week Corporate/Downtown hotels busy on weekdays, empty on weekends Leisure hotels busy on weekends, empty on weekdays

Traditional Classifications - 5 Types Size ●

The number of available rooms is the standard measure of size ● ● ● ●

Megahotel: 1500 rooms or more Large hotel: 300 rooms or more Medium hotel: 100 to 300 rooms Small hotel: 100 rooms or less

Mom-and-pop motels: Small independent roadside “motels” family owned and operated ● Declining in numbers from a high of about 60,000 in the 1960s First World Hotel ● ●

Genting Highlands, Pahang – Malaysia 7351 Rooms!!!

Traditional Classifications – 5 Types Class ● Average Daily Rate ● More expensive the hotel, better it is…. ● Not always true! ● •$200 will get a small/medium room in Paris, France, but a great room in Paris, TX, USA!! ● Room rate may be a function of location/real estate value, not room itself! ● Rooms are more expensive in core downtown areas Full-Service to Limited Service ● More the services, better the hotel, higher rated ○ Not true always ○ More services are offered where labor costs are lower ● Even small, cheap hotels in India offer room-service and money changing service! ● Number of Employees ○ Number of Employees on Staff / Number of Rooms Available for Sales = Numbers of Employees per Guest Room (Luxury) Rating Systems

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A standardized rating system allows the guest to make an informed decision ○ Systems of stars, diamonds, etc. ○ Authors rating system for hotels in the USA ○ More the stars or diamonds, better and more expensive the hotel ○ Ratings are valid only within system or country

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A “Five Star” hotel in India is not the same as a “Five Star” hotel in France. Look for amenities/level of service needed to qualify!

Classification – Type Type ● ● ● ● ●

Commercial Hotels – Traditional Hotels Residential Hotels Landlord/tenant relationship between hotel and guest Extended-Stay ○ More home-like with kitchenettes, fireplaces, laundry facilities ○ Extended Stay America, Residence Inns (Marriott) Resort ○ The Megaresort- large, self-contained resorts. Multiple entertainment, recreational facilities and conference centres. ○ Guests need not leave the property during their entire stay!

Meal Plans (for room rates) Plan ● ● ● ●

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European Plan (EP) ○ Room Only Continental Plan (CP) ○ Room + “Light” Breakfast ○ Continental Breakfast = Juice + Pasteries + Tea/Coffee Bed & Breakfast American Plan (AP) ○ Room + B/F + Lunch + Dinner ○ No credit for meals not consumed! Modified American Plan (MAP) ○ Room + B/F + Dinner or Lunch ○ May need to specify which one in advance ○ May use coupons for either meal ○ Always check what you will get in advance!

Themes Variations on the Themes ● Bed and Breakfast (B&B) – NOTL ● Airbnb ● Boutique Hotels – Toronto Thompson ● Trophy Hotels – Fairmont Royal York Built in 1929...