LECTURE NOTES 7

OWNERSHIP AND MANAGEMENT OF

ACCOMMODATIONS
1. The Emergence of the International Hotel
Historically hotel companies first focused on their own region and within their
continental boundaries. However, as international travel increased in the late 1950s,
more and more hotels began to look at expansion into international markets.
One of the major catalysts in the international hotel development arena was the
former Pan American Airlines. As air travel developed, Pan Am discovered that
many locations did not have adequate hotel accommodations. In order to better serve
international travelers, Pan Am formed the Inter-Continental Hotels Corporation
(IHC) as a wholly owned subsidiary in 1946. Soon Pan Am acquired its first hotel in
Brazil in 1949 (Gee, 1994, p. 30). Inter-Continental Hotels and others were
established with the international business traveler as a primary market, and this
segment remains important representing approximately 60% of Inter-Continentals
sales.
Other airlines followed the Pan Am example including United Airlines which
merged with Westin Hotels and Resorts in 1978. Although United Airlines has since
divested itself of hotel ownership, many major airlines of the world continue with
either ownership or arrangements to promote certain hotels through their
reservation systems such as Japan Airlines with its international network of
affiliated Nikko hotels.
Although the hotel market generally is dominated by U.S. multinational
corporations and chains, European chains such as Forte PLC, Club Mediterranee,
Accor, and Meridien, and Asian chains such as the Taj Group, Oberoi, and the
Mandarin-Oriental hotels have properties on more than one continent. The following
table lists the 10 largest corporate chains in the world.
1
Top 10 of worldwide hotel groups as of 1 January 2013
2. Hotel chains
It is important to understand that hotels are managed and operated under different
systems around the world. There are many models, including:
Independently owned and operated properties (independent hotels)
Properties that are independently owned and operated with chain affiliation
(consortia)
Chain-owned and operated properties (hotel chains)
Franchised properties.
Independently owned, chain-operated properties (management contracts)
Independently-owned and operated properties outnumber chain affiliated properties,
but in terms of number of rooms, hotels owned and operated by chains are dominant
worldwide. In different parts of the world, expansion has taken place differently. In
Asia, equity investments are preferred, whereas in North America franchising and
management contracts tend to be more popular. In reality, there are many
combinations and arrangements for managing hotels.
There are two main kinds of hotel chains: hotel consortia voluntary associations,
which group together independently owned and operated hotels, that join together
primarily for marketing reasons, and integrated chains, chains or corporate hotel
chains, which are made up of homogenous units and can be managed by the
corporate chain or by a conglomerate
Conglomerates are companies that manage corporate brands and independent
unbranded hotels
2.1. Hotel consortia - membership affiliations
The consortium is a group of independent hotels or small properties that share the
same marketing policy and the same reservation system. Independent hotels are
grouped together by hotel consortia, in order to compete with integrated chains.
They promote themselves under a single brand and try to convey a recognizable
image to the public, comparable standards of service, buildings and furnishings in
order to build up customer loyalty. For these services, the members pay initial entry
fees and annual membership fees to the consortium. The participation to a
consortium can be limited in time.
Hotel consortia benefit from economies of scale when it comes to purchasing and
marketing.
The main benefits of joining a consortium are:
- joint production of guides and brochures, which advertise all hotels in the
chain
- joint national and international advertising campaigns
2
- links into CRS
- centralized purchasing of hotel equipment
- technical assistance and management consultancy
- freedom to make operational decisions
- flexible contract, short-term
- no obligation for operational standards compliance
- greater company exposure to the market
The disadvantages might be that:
- some consortia require members to comply with some rules regarding quality or
image
- members risk diluting their own image while part of the consortium
The cost of membership of a large international hotel consortium is about 1% of
turnover after tax.
Major hotel consortia
Rank 2012
Rank
Company Headquarters 2011
Rooms
2011
Hotels
1 1 Utell/Unirez
Representation Services
Dallas, Texas USA 13813! 11282
2 2 Supranational Hotels
Ltd.
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2.2. Integrated hotel chains
Integrated chains develop and commercialize hotel products that are homogenous
and consistent. In terms of management arrangements, they can exert their
control either directly, by complete ownership of the hotel, or indirectly, through a
franchise system or a management contract. All hotels in the chain carry the name
of the chain.
a) Company-Owned and Operated Systems
In this system, the property is owned by an individual or a company The hotel can
be built, bought or owned as a result of taking over an existing hotel company.
It can be considered as an entry strategy suitable especially for developed markets.
The general advantages of this system are:
The owner has independence
There is more flexibility with decision making and thus decisions are often reached
more quickly.
Direct ownership allows the owner major, if not full, control of the operating
policies and procedures.
In case of acquisition, there is the advantage of an existing market, which can be
easier developed:
o Bass Plc . - bought Holiday Inn;
o Accor bought Motel 6 entry strategy for the US market
o Forte Plc . - bought Travelodge
o Marriott through the acquisition of Renaissance Hotels from New
World has consolidated its position in Europe and Asia
Since the owner and manager are the same, this individual or entity obtains the
full benefits of the profits.
The disadvantages in an owner-operated system can include:
Substantial investments needed
The owner has the full risk. In international settings, this can cause problems in
unstable political environments.
When there is only one or a few properties, the reservations and referral system
may not be adequate.
It is often more difficult to obtain capital for growth, especially if the chain is
small.
4
In case sole ownership is not permitted, another entry strategy that is frequent
especially in developing countries is joint ventures, thus sharing both risks and
investment efforts.
Marriott International was the first hotel company that entered into a joint venture
in Eastern Europe, in Warsaw.
Because of access barriers when buying abroad, another possibility which is largely
spread on the international market might be leasing the property and operate it.
When the ownership company has no experience in the hotel industry, it will
outsource the operating responsibilities.
REITS: ANOTHER WAY OF DOING BUSINESS
Over the course of the last decade, real estate investment trusts, or REITs, have
played a key role in the success of large hotel groups, particularly in the United
States and Canada.
Combined with other means of financing, REITs have fundamentally changed the
structure of hotel-related activities by dividing ownership and management. The
introduction of this new means of financing has created a new kind of hotel owner.
Hotel owners used to be hoteliers; today they are in real estate. This has created
two different kinds of hotel executives: hotel owners who are in business, and
businesspeople who work in the hotel industry. This difference gives rise to two
unique orientations: the first group develops long-term strategies and focuses on
customer satisfaction, while the second group makes decisions based primarily on
short-term financial considerations and focuses on investors.
REITReal Estate Investment Trust
In the early 90s, the American hotel industry created a new kind of financing called
REITs, or Real Estate Investment Trusts. This name designated a business
corporation that had beneficial tax rates with regard to ownership. The Real Estate
Investment Act was passed in order to allow small investors to invest in a variety of
real estate properties, such as office buildings, shopping centers, apartment
buildings, spas and hotels. In 1993, the first hotel REITs were formed and soon
became prolific financial vehicles for their investors, as well as providing a quick
source of income for REIT companies to acquire new properties.
Starwood Hotels & Resorts is an American REIT made up of real estate investors;
Starwood Hotels & Resorts Worldwide is the management company which the REIT
has hired to manage its real estate developments.
Although legislation varies depending on the country, this method of financing has
spread around the globe.
While many investors around the world have already discovered that REITs can
offer a good rate of return and help diversify ones portfolio, several Asian
governments are starting to consider them as a way to raise public capital and ease
the crushing debt that followed the Asian financial crisis. However, various attempts
5
to create REITs have ended in failure because of poor investments or a lack of
desirable assets on the market.
In May 2000, the Japanese government passed legislation adopting the J-REIT. This
closely resembles the Australian model (Australian LPT), which was, in turn, based
on the American REIT (U.S. REIT). The J-REIT offers tax transparency but also
allows foreign firms to manage the hotelsunlike the U.S. REIT. At the same time,
with economic growth boosting real estate prices and demand, the Monetary
Authority of Singapore (MAS) drafted guidelines for a REIT without providing for
tax breaks, a move that could inhibit the creation of the new market.
These developments spurred both Korea and Indonesia into seriously considering
REITs.
In Europe as well, some real estate companies are entering the market and pension
funds are buying hotel properties according to contracts similar to U.S. REITs. In
several recent large scale transactions, banks have also played a major role in
financing.
A brief look at these systems of management underscores the varied issues of hotel
management. There is no one type of management arrangement that is best. The
individual arrangements that are agreed upon always involve the weighing of the
advantages and disadvantages for a given situation.
In recent years, the industry has seen the emergence of larger and larger chains.
Beginning in the 1980s many hotel industry companies have sought to combine their
resources to gain stronger positions in regional, national, and international markets.
The emerging mega-chains have relied heavily on management contracts as one
means of expansion, in combination with buy-outs, acquisitions, mergers, and joint
ventures.
Increasingly, a large percentage of rooms worldwide are in the hands a few
corporations who market to multiple market segments. Smaller chains have also
formed strategic alliances with the larger mega-chains which has allowed many to
survive in a competitive global marketplace.
b) Franchising
A franchise is an arrangement in which the owner of a trademark, tradename or
copyright licenses others, under specified conditions or limitations, to use the
owners trademark, tradename or copyright in providing goods or services.
Is it the most frequently used entry strategy for quick-service companies.
Hotel franchising comes in many forms, but the basic premise is that the owner
remains in control of the management and the property, yet has the advantages of a
large chain in terms of trademark or tradename and marketing outreach. Most
franchise systems are set up with the owner of the property, known as the
franchisee, obtaining the right to use the name and to be part of the national or
international chain, belonging to the franchiser. Rights given to the property owner
include exclusivity of franchise rights to areas defined by the franchiser. Under
contract, the franchisee agrees to abide by the operating policies and practices as
defined by the franchiser in the agreement. The franchisee contributes personal
6
funds amounting to around 30% of the investment. He also undertakes the whole
financial risk of the hotel investment. He benefits from the standardisation and the
profitability of the group and from the commercial and promotional advantages
brought by belonging to a group. In general, the franchisee will agree to pay a
membership fee (aprox. 10% of the investment) and in most cases some percentage
of gross sales as defined by the specific contract (3-4%).
A separate company, called franchising organization is created to manage the
franchise system: McDonalds, KFC, Hilton International.
Master Franchising franchise granted to an already operating business right to
expand the franchise system - Dominos Pizza, Howard Johnson, Super 8 Motels.
In general, the advantages to the franchise system for an owner include:
The right to use the brand name.
Start-up costs are reduced
Being part of a reservations system which has international access.
The right to purchase supplies via the franchiser. In most cases this will afford
savings to the owner.
Professional managerial assistance. This is of obvious benefit to an owner who
may have limited experience in the hotel industry.
Among the disadvantages to the franchise system are:
The franchisee does not have complete management control. In general the policies
and procedures must be followed as set by the franchiser.
The franchisee must pay for the franchise rights and agree to pay monthly fees.
The highest risk is quality control
The franchisee is tied to the franchiser and how the brand name fares in the
marketplace tends to affect all parts of the system (Gee, 1994, pp. 242-243).
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c) Management Contract
This arrangement is favored in many international settings as it allows a hotel chain
to establish a presence without the investment of ownership. The concept was
developed by Inter-Continental Hotel Corporation. It is an entry strategy that is
encouraged by host countries, especially developing countries, as it represents a
technology transfer. The management contract allows for the separation of
ownership and operation. With such an arrangement, the owners act as investors
who allow someone else to manage the property. The exact arrangements vary
greatly between chains and within chains. There are numerous factors which come
into negotiation in a specific management contract. In general, the chain requires
fees to be paid for their management responsibility.
In the international setting, management contracts are used widely by owners.
Financial institutions and lenders have historically favored management contracts
because of the lower financial risk for properties which are managed by experienced
hotel operators. At the same time, management contracts are a way for hotel
companies to expand.
There are two types of management companies:
- brand name hotel chains Accor, Sheraton, Holiday Inn management of their
own brands
- independent management companies second tier management companies most
of them in the US.
The commission charged by management companies includes:
- base fee 2-4% full-service hotels; 2-5% - economy/limited service hotels; 1.5
4% - luxury hotels
- incentive fee 15% of the increase in net operating income.
The management contract system affords the following advantages:
The investors are not required to become involved in the management of the
properties.
The brand name generally assists in the property marketing.
The management team is provided for the owners.
Financing is generally easier to obtain.
A management contract has the following disadvantages:
Certain fees must be guaranteed by the owners. Thus, the operational risk falls
more heavily on the owner than the chain.
Owners and chains often do not agree on daily management practices. Generally
the owners have less impact on operations than the operator.
8
Chains operate by standard management practices. These are often not flexible
enough in international settings.
Management contracts often result in strained relations between owners and
operators. Perceptions and communications often are stumbling blocks between both
parties (Gee, 1994, pp. 230-241).
Companies That Manage
The Most Hotels
Company Hotels Managed Total Hotels
Marriott
International
858 2,718
Extended Stay
America
475 472
Accor 475 3,894
InterContinental
Hotels Group
423 3,520
Tharaldson
Enterprises
360 360
Socit du Louvre 345 896
Westmont
Hospitality
332 332
Interstate Hotels
& Resorts
295 295
Starwood Hotels
& Resorts
Worldwide
243 738
Hilton Hotels
Corp.
206 2,173
Source: HOTELS' Giants Survey
Top 20 hotel brands, 2013
http://www.rankingthebrands.com/The-Brand-Rankings.aspx?
rankingID=28na!=ind"str#
3. Management Measures for Hotels
The hotel industry uses several key measures including room rates and
occupancy ratios to evaluate the business success of individual properties and
chains. These standard measurements are used by financial institutions and
worldwide consulting organizations to hotels.
9
3.1. Hotel Rates
Hotel rates can be one of the most confusing parts of hotel operational analysis.
The officially assigned rate for each type of room in the property is called the rack
rate. In reality, hotels have dozens of rates that are discounted off the rack rate.
The rack rate, which is based on the investment cost and required revenues to cover
fixed and variable operating costs, is generally the highest rate charged for a room.
Discounted rates are part of the marketing plan to attract various market segments.
Discounted rates can be offered to such groups as government employees, members
of the military, tour groups, senior citizens, and many others.
The most important measure regarding hotel rates is the average daily rate
(ADR), which is calculated by dividing the total room revenue by the number of
rooms occupied. Thus, heavy discounting will result in a lower ADR. In recent times,
the ADR is more often referred to as sales per room occupied. The need to generate
sufficient sales to get beyond the breakeven point has been a major factor in
discounting by hotel management. Progressive hotel operators today use forms of
yield management in room rate allocation. Yield management concepts were
pioneered by airlines attempting to maximize the passenger revenue per seat mile,
and the basic concept has been adapted to room sales by the hotel industry. A main
goal in yield management is to get the maximum rate for each room given the
existing demand at a given point in time. All discounted rate programs are reviewed
in relation to the room supply and demand analysis. Airlines and hotels realize that
airline seats and hotel rooms cannot be inventoried. Hence, any unsold airline seats
or hotel rooms will perish once the day ends.
Operating expenses = fixed costs + variable costs * L (no. of occupied beds)
Operating revenue = price/room* no of rooms
Operating revenue Operating expenses 0
3.2. Occupancy Rate
The occupancy ratio or rate is as important an indicator of profitability as is the
ADR. The occupancy rate is calculated by dividing the number of occupied rooms by
the number of rooms available for sale. Hotels rarely operate at 100% occupancy for
an entire year, and depending on its ADR, may need as low as 50% or as high as
80% to achieve profitability. As a general rule, hotels require at least 65-70%
occupancy for profitability.
There are many variables that affect the level of hotel occupancy. It is important to
know the occupancy rate of the hotel, but knowing how many people were in the
rooms is another important factor. Multiple occupancy tends to increase the revenue
for a hotel property. There are other variables such as the rate charged, but in
general the higher the percentage of double occupancy the more revenue. As
mentioned earlier, rates charged for rooms vary from the rack rate in accordance
with marketing programs. The average rate per room occupied is an indication of
discounting and multiple occupancy in the property. A higher average rate per room
10
will be achieved when there is less room price discounting and when there are more
guests per room.
3.3. Other Revenue and Cost Concerns
Although there are hotels which still provide rooms only, most properties and
property types have other sources of income that become part of the revenue and
cost picture beyond hotel rooms. Worldwide, room revenue does account for well over
half of total hotel revenue (aprox. 60%) but other sources of revenue are also
significant (food and beverage revenue account for about 30% of the total).
Hotel food and beverage revenue come from a variety of outlets including coffee
shops, buffets, fine table service, room service, catering, and banquets.
Hotels also offer a variety of meal plans.
The American plan (AP), also known as full pension in Europe, means that all
meals are included in the hotel room rate. Ironically, this rate is not often used in
American hotels except perhaps for resorts where it may assist in marketing value
vacation packages.
By contrast, the European plan (EP) normally provides no meals. This is the plan
that is most common in North American hotels, as opposed to the American Plan.
There are many variations to these two basic plans. The Bermuda plan normally
includes some type of breakfast. The modified American plan (MAP) normally
includes breakfast and dinner but not lunch.
While room and food and beverage revenues comprise the primary sources of income,
labor is the industrys single largest cost. In terms of hotel operations, food and
beverage is the highest labor cost area followed by rooms (PKF Consulting, 1994, p.
58). Certainly any analysis of revenue and costs needs to be done by country and
region, as many country-specific economic factors must be considered. Hotels are
learning that attention to food service can be a good source of additional revenue, as
many hotels have attempted to increase their revenue from food and beverage while
keeping the expenses associated with food and beverage fairly constant.
4. Food Service Management and Operations
Independent restaurants commonly owned and operated by individuals,
partnerships, or families are found worldwide. Because of the low ratio of profit to
sales, however, restaurants are especially susceptible to failure, with the majority
going out of business within 5 years (Coltman, 1989, p. 23). Because the profit
margin of a food outlet is dependent on food and labor costs, a number of critical
factors need to be considered in managing and operating a restaurant.
Since much of the success of a restaurant is dependent on the menu, menu planning
is basic to a restaurants success.
The menu is important not only in attracting customers, but also influences the
financial investment that is needed to start a restaurant since the menu can dictate
the needed equipment, food costs and labor costs.
Corporate-owned restaurants with multiple outlets or franchises have additional
advantages in terms of cost-savings that individually owned restaurants do not.
11
These include cost savings that may come with limited menus, greater purchasing
power and better market penetration through organized marketing efforts. For fast-
food outlets especially, franchisers provide training to teach operators ways to
control food cost through strict portion control, inventory control, avoidance of waste
and controlling labor costs by standardizing procedures and emphasizing continuous
training on the job.
5. Hotel Operations
Hotel Staffing
The staffing needs for hotels range from executive level positions such as general
managers to unskilled positions at lower levels. Jobs such as resident manager, front
office manager, director of sales, catering manager, reservations clerk, housekeeper,
doorman, chef, kitchen helper, and laundry worker represent only a few of the many
levels of employment in hotels.
International hotels may face additional challenges in the human resources area at
all personnel levels. A new destination, for example, often does not have either the
trained labor force for upscale properties or local management expertise. It has long
been a custom of international hotel chains to recruit experienced managers beyond
national boundaries.
These expatriate managers bring with them the required hotel education and
training. At the same time, ideally these individuals must have the ability to
understand and work in the local culture. The successful expatriate manager can
often help in the development of middle management recruited and developed from
the local labor force.
Equally challenging for the international hotels is having an adequate labor force. In
general, an adequate labor supply for the hospitality industry is a global problem.
The service industry also has historically been one of compensation based on a mix
of pay (on the low side) and perquisites (on the high side), long hours, and high
turnover. In the international setting, the rules of hiring, supervising, appraising,
disciplining and training a hotel staff are also influenced by the local culture. For
the international manager, there are often no clear-cut guidelines and success has
often come through adaptation and integration of prior experiences with locational
realities, different approaches based on local advice and best judgment.
12
6. Alliances, mergers and acquisitions in the hotel industry
Following the lead of the airline industry and distribution network, the hotel
industry has also been swept up in a powerful wave of consolidation. By entering
into acquisitions, mergers and partnerships of various types, hotel groups are
showing unparalleled growth in the number of rooms, annual sales, and worldwide
presence on five continents. And even though the number of deals per year is
13
beginning to slow, it would appear that the consolidation of the sector is an ongoing
process and not a passing trend.
International growth has not prevented the emergence of new companies, some of
which have done quite well, nor has it inhibited the development of domestic groups
(Dorint and Maritim in Germany, Jolly in Italy, Fujita Kanko in Japan, Southern
Sun Hotels in South Africa, Scandic Hotels in Sweden, etc.).
Therefore, although the hotel sector is indeed experiencing consolidation, the
industry remains fragmented with independent hotels in the majority.
Hotel groups, large and small, get bigger
Unexpected vertical integration
Consolidation through market globalization
Travel & Tourism Analyst recently established an arbitrary yardstick for defining a
global company: presence in 125 countries, 250,000 rooms and 1,000 hotels. The
only groups truly positioned to achieve this status in the coming years are Accor,
Best Western, Carlson, Marriott and Starwood. With the exception of Carlson, Accor
and Cendant, the giant groups focus their activities primarily on the hotel sector and
their development strategies are essentially geared towards brand acquisitions,
franchising and geographic expansion. Each brand targets a specific market segment
and the stronger the chain, the greater the benefits.
In terms of global distribution, Cendant is number one in North America. In South
America, Inter-Continental is number one and Sol Meli is number two. In Europe
and the Middle East, Accor is the leader with Inter-Continental as number two. In
the Asia-Pacific region, it is the opposite, with Inter-Continental as number one and
Accor as number two.
Bigger giants
In the next few years, hotel giants are expected to get even bigger, primarily through
a significant rise in franchising. This trend will likely benefit American players, who
already dominate in this sector. However, in the United States, the consolidation
movement seems to be taking a different route: real estate investment trusts
(REITs) and management companies are merging, American hotel groups are
merging with international groups, various brand hotels are joining forces, etc.
In Europe, the major players are eager to expand by setting off a new wave of
consolidation. Bass, for example, sold off its breweries so it could double and
diversify its hotel activities in the next five years.
There will always be small companies who will emerge and expand by filling specific
niches.
Their success will then attract the attention of larger companies, making them
targets for takeover. The distinct trend towards consolidation will continue and
produce increasingly powerful global giants. According to some experts, gigantic
companies will eventually be so global that the geographic location of their
14
headquarters will not matter. In other words, there will no longer be major
American or European players, but genuine world players.
Associations: A way to compete with the giants?
Marketing associations of independent hotels are designed to give individual
members the kind of market visibility enjoyed by chain hotels. The phenomenon
began in Europe before spreading to North America. Rather than succumbing to
market pressures to franchise, some independent establishments prefer to affiliate
themselves with a type of voluntary association such as Relais & Chteaux. These
associations are usually based on members having a common strategy and image.
Best Western in the United States is the largest such association in the world. In
France, as of January 1, 2000, there were 26 voluntary associations, the largest of
which, Logis de France, boasted 3,650 hotels. In the coming years, in addition to a
brand image that accurately targets specific market segments, voluntary
associations will have to offer their members a high recognition factor and access to
all the latest technologies.
Associations can also take the form of marketing and reservations providers.
The largest such company in the world is UTELL in the United Kingdom, a
subsidiary of Pegasus in the United States. A brand-new addition to the list of top
groups and currently ranked 23rd globally, U.S.-based Design Hotels has
15
successfully established itself by offering clients a hotel experience typical of the city
visited. When in Rome
The number of associations has grown over the years and the phenomenon is now
subject to the trend towards consolidation.
7. Travel industry Linkages
For tourism to succeed, the hospitality sector must work together with other
segments of the travel industry. Over the years, the accommodations industry has
learned to work with various industry segments such as airlines, travel agencies,
and tour operators to assist in the marketing of the destination. During low season
especially, joint promotions of special value tour packages involving the cooperation
and contributions of different members of the travel industry, cooperative marketing
campaigns, and travel agencies familiarization trips all help to fill rooms and
airplane seats.
7.1. Marketing Partnerships
Working as partners in travel, many major hotels and airlines offer awards that
reward consumers for using specified hotels and air carriers. These arrangements
have now expanded to rental cars, attractions, and upscale restaurants. The various
award programs vary considerably within the industry. Frequent flyer miles and
frequent stay point awards at hotels are very common. In addition, there are
programs which reduce the price of rooms off the rack rate or the standard room rate
by offering free accommodation for every two or more paid nights.
The various programs are often confusing to both the consumer and the travel
agents as programs are continually modified. These programs, nevertheless,
generally build important partnerships within the industry and often develop
important consumer brand name loyalties (Kaiser & Helber, 1987, p. 179).
7.2. Hospitality-related Industry Organizations
In many countries, the members of the hospitality industry have organized business
or industry organizations which provide a variety of services to their members.
Among the services common to all such organizations is an organized approach to
promoting the use and development of hospitality facilities and services for the
traveling public.
These organizations attempt to help negotiate favorable laws and regulations that
affect the hospitality industry and tourism in general.
They may also play a valuable role in the resolution of conflicts that may result from
differences in goals and objectives with the public sector.
For example, the American Hotel and Motel Association (AHMA) is a federation of
hotels and motels whose membership accounts for well over 50 percent of all hotels
and motels, and in terms of revenue reflects over 80 percent of the revenue for the
entire U.S. hotel industry. The AHMA works for favorable laws that affect the
industry including such issues as taxation, liability, and advertising. Other regional
and international organizations which represent the lodging sector include the
European Motel Federation in the Netherlands, the International Hotel Association
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in Paris, France, the International Organization of Hotel and Restaurant
Associations in Zurich, Switzerland, and the Caribbean Hotel Association in Puerto
Rico. Specialized sectors of the lodging industry also have organizations to represent
them such as the International Youth Hostel Federation and the Bed and Breakfast
Reservation Services World Wide.
SUMMARY
The hospitality industry, representing the accommodations industry and the food
and beverage sector, comprises a major part of the global tourism industry in terms
of revenue and employment. The growth in global tourism has resulted in many
changes to the accommodation and food service industry in recent years. Hotels and
restaurants have increasingly become part of national, regional and international
chains.
Franchising has been used extensively in the accommodations industry as well as
the food and service industry, which allows a more rapid penetration of the
marketplace. However, the bulk of the global food service industry will likely remain
with independent restaurants, where the customer seeks a special or different
dining experience. New technologies, demographic changes, and economic and
political shifts will continue to impact the management and operations of hotels and
food outlets in the next century.
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