UNDERSTANDING THE HOTEL INDUSTRY

What is meant by a cyclical industry in hospitality?

The hotel industry follows economic cycles, experiencing both profit peaks and low periods of distress.

Give 4 historical examples of downturns in the hotel industry.

1973 oil embargo, 1980s income tax laws, 9/11 tragedy (2001), 2008 global recession.

Why is "perishability" a key feature of hotels?

Vacant rooms cannot be sold the next day—lost revenue forever.

Why is location critical in the hotel business?

Location determines access, visibility, and desirability. It's hard to acquire a great location.

What does "fixed supply" mean in the hotel business?

Room count and location can't easily be changed, unlike other industries.

Why do hotels have high operating costs?

They are both capital- and labor-intensive, with high break-even points.

How does seasonality affect hotels?

Hotels are open year-round but have demand fluctuations—resorts have weak weekdays, city hotels have weak weekends.

What are traditional hotel classifications based on?

Size, class, type, and plan.

Name common hotel types based on new terminology.

Hostel, tavern, public house, inn, guest house, hotel, resort, motel, motor lodge, B&B, timeshare, condo.

How is hotel size classified?

Small:

Name the world’s largest hotels.

First World Hotel (7,351 rooms), Venetian/Palazzo (7,117), MGM Grand Las Vegas (6,952).

What are "Mom-and-Pop Motels"?

Family-run motels that emerged post-WWII during the U.S. highway boom.

How is hotel class measured?

Price (Average Daily Rate) and rating systems (stars, symbols, etc.).

What’s the difference between full-service and limited-service hotels?

Full-service offers lounges, gyms, room service; limited-service offers basic needs like vending machines or nearby restaurants.

How does staffing relate to hotel class?

Higher class hotels employ more staff for personalized service.

Name the 5 WTO-recommended hotel classes.

Deluxe/Luxury, First Class, Tourist Class, Third Class, Fourth Class.

What is Europe’s hotel rating system like?

Uses 1–5 stars; 4–5 star hotels include restaurants and bars.

What does “Hotel Garni” mean in Europe?

A hotel without a restaurant but offers continental breakfast.

What are Spain's "paradors"?

State-owned luxury hotels in historic buildings, with standardized ratings.

What standards are used in Italy's hotel rating?

1–5 stars; includes room size and staff speaking foreign languages.

What are Japan’s traditional inns called and how are they rated?

Ryokans, rated by room quality, baths, and gardens.

What is a "yogwan" in Korea?

Budget lodging similar to ryokans; some hanoks (old Korean houses) now serve as boutique hotels.

What are the three traditional hotel types?

Commercial, Resort, and Residential.

What are commercial hotels?

Located in business areas; serve business travelers. Poor weekend occupancy.

What are residential hotels?

Offer long-term or permanent stays. Often include kitchens and offices.

What are extended-stay hotels?

Designed for long stays, includes kitchens, workspaces, laundry, even office support.

What are resort hotels?

Serve social guests and groups; large resorts offer everything on-site (Megaresorts).

What is a "Megaresort"?

A self-contained resort with enough entertainment and dining options that guests don’t need to leave the premises.

What does "Zimmer frei" mean in Germany?

"Rooms available" – a common sign for lodging.

What are "Minshuku" in Japan?

Family-operated Japanese B&B-style lodging.

What is Airbnb?

A peer-to-peer lodging platform with 350,000+ hosts in nearly 200 countries.

What is a boutique hotel?

A stylish, niche hotel known for design and personality.

What is a trophy hotel?

Iconic, historically significant hotels with luxury appeal.

What does “plan” mean in hotel classification?

The meal arrangement included with the room rate.

What is the European Plan (EP)?

Room only; sometimes includes continental breakfast (coffee, roll, cheese).

What is the American Plan (AP)?

Room + 3 meals per day (similar to Full Pension).

What is the Modified American Plan (MAP)?

Room + 2 meals (usually breakfast and dinner).

What is the Dine-Around Plan?

Guests dine at various AP hotels nearby, not just their own.

What are B&Bs?

Bed and Breakfasts—modern versions of tourist homes. Guests stay with families and receive a mandatory breakfast.