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105prelim - 105 Prelim Great challenges facing Statler...

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105 Prelim Great challenges facing Statler Staffing (breaks/vacations) Scheduling Space to store supplies Training new workers Quality is an elusive, indistinct construct Intangibility Hard to evaluate performance Heterogeneity Performance varies/consistency difficult to assure Inseparability Production and consumption are inseparable Goods quality can be inspected Three stages of service encounter Coming together and acknowledgement puts parties at ease and allows encounter to move forward Some moderate feeling of emotion or inclusion even if only a feeling that attention is being given Service provider takes care of a need that the receiver has Mobile stars High-end full-service=4 or 5 stars Basic full-service=2 or 3 stars Limited-service=1 or 2 stars Product differentiation and market segmentation Service orientation segmentation Chain scale segmentation Market share by chain scale segment Customer base and clientele Industry terminology Supply of rooms=# rooms available Demand=rooms sold Occupancy=(occupied rooms/available rooms)*100 ADR=total room revenue/occupied rooms RevPAR=occupancy %*ADR or total room revenue/available rooms Typical lodging cycle is 9 years Early recovery Growth Peak Decline Periods of excess supply lead to lower occupancy rates followed by ADR pressure
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Periods of supply constraint lead to improving fundamentals, higher occupancy and ADR Demand growth outpaces supply growth=increased occupancy Supply growth outpaces demand growth=decreased occupancy Three main elements of hotel business Real estate (owners) Hotels are combination of real estate investments and operating business Owner of hotel real estate selects brand affiliation and management Types of owners: sole proprietors, public/private corporations, partnerships, REITs, institutional owners, public agencies Public hotel owners: Hilton, Host Marriott, Starwood, Extended Stay America Hotel revenues-expenses=profit to the owner Brand (franchisers) ~58% of hotels in U.S. are affiliated with a brand Trade name, affiliation, “flag” of a hotel Brand may belong to hotel owner (ESA), licensed from a franchisee (Comfort Inn), or be part of a management agreement (Marriott) Application fee Hotel revenues*franchise fee %=income to brand Management (operators) Responsible for overseeing day-to-day operations May come in conjunction with a brand affiliation or may be a separate contract Management companies with a brand: Marriott, Four Seasons Management companies without a brand: Interstate Hotels Hotel revenues*management fee %=base fees Hotel “profits”*incentive fee %=incentive fees C-Corporation is a legal, taxable entity chartered by a state and/or federal government and owned by stockholders Business activity subdivisions Franchisor Chain management company
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