MS3304 --- Buddies' WIKI: lecture 3 hotel business

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Q4) Choose One Topic from Today's Lecture that You're Interested; Do further Research and Provide Real Life Examples

Vacation ownership, also called timeshare. It is the fastest growing segment of travel industry. This is mainly about the usage of a property, and usually, that property is a resort condominium. The right of using that property is separated and be held by several parties, and each holder is assigned for the usage of a period of time. Customers can pay an one-off payment and yearly maintenance fee to gain the access to that resort. Inside this system, every time when a customer pays, the account he owns gain points, those points serve the purpose of money and can be used to make purchases.

There are a lot of advantages of paying for vacation ownership, including high-quality accommodations, flexibility and etc. Also, the best thing of vacation ownership is that the wide range of vacation ownership products can suit many different kinds of people’s needs. There are different types of purchasing about vacation ownership, customers can buy a timeshare, rent a timeshare, and even sell his timeshare.

Renting timeshare

This method allows the owner or owners to rent out the right of usage of the property to someone else for money as return. As there may be many renters looking for the suitable period of time and place to spend their holidays, there are many agents(referring to vacation ownership websites) to act as the ‘middle guy’ to arrange for both of the owner and the renter, work exactly the same as travel agents.

Buying and selling timeshare

Timeshare is always considered as a real property and the ownership of it can be transferred. Surprisingly, many owners of timeshares do not think the value of their properties are growing and therefore a lot of timeshares reselling prices are deep low but come along with a relatively high maintenance fee. As rental of timeshares, there are agents who assist their clients in reselling timeshares. Those agents make profit from the commission of every successful case of the timeshares reselling.

Real life example

Vacationownership.com is one of the most popular website that people search up and make purchases. They provide customers with service from licensed real estate agents. Their selling point is that they do not only know how the process should go, but the uniqueness of every product which fits their customers and which does not. As mentioned in the above paragraph, most of these websites provide the three kinds of ownership transferal services, and this is no exception for vacationownership.com.

This website mainly focuses on the customers from North and South America. According to statistics, Americans and Canadians are the main source of tourists who visit countries in the North and South America. In the tab of Destinations, the popular cities include Orlando, Las Vegas, and Cabo San Lucas. Most of the functions from it are the same as websites such as Priceline and Zuji, however; there is a distinctive function that distinguish it from those websites, which is the Usage Type. Browsers can choose from the range of once a year, up to 4 times a year, or even once every three years. After choosing from this filter, the website will automatically filter the resorts which fit into.

References

http://www.arda.org/uploadedFiles/ARDA/News_and_Information/Industry_Information/VacatonOwnership[1].pdf
http://www.vacationownership.com/search/rentals/
http://www.starwoodhotels.com/promotions/promo_landing.html?category=SVO_main
https://www.myclubwyndham.com/ffr/inside/products.do
https://www.marriottvacationclub.com/timeshare-ownership/
https://en.wikipedia.org/wiki/Timeshare

Q3) Latest Trends and New Development about Hotel Business

Fast Growing Customer Segment - Millennials

The millennials, which people also called generation Y has grown up and become one of the major customers of hotel business in recent years. According to Cornell Center for Hospitality Research, millennials represents 32 percent of all US travelers nowadays, and it will be increased to over 50 percent of all travelers by 2025. These reveals that the millennial is a potential market with high profitability for hotel business. Instead of focusing only on enjoying a cheap trip for travelling, millennials ask for exploration, interaction and experience for their lodging at reasonable price. Millennials prefer hotel with practical uses than the one with many useless luxury items because they would like to spend more on adventure and exploring the places they traveled to. Hotels change their service and design on facilities in order to fulfill their needs in the above 3 aspects. For example, new hotels focus more on building more common areas such leisure rooms, bars and lounges for the millennials to interact with traveler around the world in the same hotel. Instead of providing luxury furniture and room design, hotels target more on providing basic needs for millennials travelers in the hotel rooms like beverage outlets, grab-and-go food, etc. Millennials also expect services provided by hotels to be supported with high technology, so they can easily access to hotel services or information by scanning QR code or using Apps on their own devices such as tablets and smartphones. Some hotels even provided service of lending of free bicycles for millennials to explore the area around hotels. Hotels aim to provide a more comprehensive experience to achieve higher customer satisfaction of the fast growing generation Y.

Stable and Free WiFi

Providing a stable and free Wi-Fi everywhere in a hotel become an importance element for customers to choose a hotel for lodging. According to Amba hotel, two thirds (67%) of interviewees said free Wi-Fi would make them more likely to choose accommodation, followed by location (65%), fast Wi-Fi with unlimited downloads (34%) and near to travel hubs (34%). The survey conducted by Thistle Hotels Group also revealed that lack of free WiFi ranked third for annoying the travelers the most about a hotel. People want WiFi to keep their connection with friends and family even when they travel to different part of the world. They also need WiFi to enjoy videos online in the hotel or search for different kind of information for traveling such as attractions and transportation for the place they stay. Businessmen also need good connection to WiFi with their phones, tablets or notebook for video conferencing or handling business issues. Customers, especially for the young generation avoid to choose hotel without free WiFi or with poor WiFi service because they consider it as extremely inconvenient.

Increased Importance of Reputation Management

In recent years, reputation management becomes a crucial issue for hotel management. Social media become a common and popular platform for people to share their review on hotel service during their travelling. There are also more traveler sites for people to communicate their experience on various hotels and hostels. If the hotel performs well and fulfills the customer expectation, their praise will help the hotel to attract their friends or readers to become the hotels' customers. If not, travelers’ poor word of mouth will spread over the Internet and discourage other travelers from choosing the hotel for stay, which become a nightmare for the hotel. Hotel’s management level thus pay more focus on reputation management for hotel especially on Internet to grab more business opportunities or to avoid loss of customers.

There are many different social media such as Twitter, Facebook, Weibo for people to publish their comments online and it is difficult for people to manage all these platforms at the same time. Therefore, they try to seek help from some reputation management Software-as-a-Service, like Revinate, TrustYou. These company provides different review monitoring service which helps hotels over the world to do reputation management. For example, one of the service Revinate provided is social media monitoring, which means hotels are able to know how customers comment on their service once related comments have been posted on any social media platform. This service enhances the efficiency for hotel to manage their social media account and give responses to comments on online platform.

Poshtel

Poshtel is a new type of hostel with luxury amenities which arise in Europe recently. Poshtel is a combined word of Posh and Hostel, which means a deluxe edition of hostel. As more young travelers want to have fun and stay in unique accommodation with a limited budget during their travel, they choose to stay in Poshtel which provides travelers with 6- to 18-beds dorm and ensuites with relatively low and attractive price. Different amenities such as swimming pool, parties, free WiFi provided by Poshtel is another attraction. Poshtel usually located in the central area which give great convenience to their customers for shopping, finding a restaurant for their breakfast or visiting different attractions around the city. They always provide their customers with high-tech key and equipment. The design for Poshtel is fashionable and charming, which gives surprise to their customers. More and more young travelers aims on choosing these hotel as their accommodation during traveling.

Here are some examples of popular Poshtel in Europe.

GENERATOR in Paris

Clink78 in London

King Kong Hostel in Netherlands

Evaluation:

Although many different kinds of hotels were already introduced in the lecture, I still find there are many different style of hotels around the world. I believe that there will be much more different kind of hotels appears according to the changing of demand and needs of the coming generations. It is interesting to know new type of hotels and I think it will be a new and fun experience for staying in those hotels.

Reference:

Q2) Agreements of Franchising, Management Contract and Vacation Ownership of Hotel Business: Details and real-life examples

Franchising

Franchising allows a franchisor or hotel group to expand their market share and brand name by using franchisees' monetary assets. The franchisor grants the rights to their franchisees, such as rights to use its trademark, signs, operating systems and procedures, reservations system, etc. The franchisees would sign the franchise contract and follow the guidelines set by the franchisor, to operate the hotel business and/ or franchised outlets.

Franchising is one of the win-win solutions for both franchisor and franchisees.

For franchisor, they can expand the business rapidly, increase market share and recognition, and receive up-front fees.

For franchisees who have sufficient financial support but lack technical expertise and recognition, they could gain exposure to potential customers by listing in the franchisor's directory and through international advertising. Moreover, there would be a set of plans and specifications, and centralized reservation system for them to follow and apply, which make the operation process more efficient. They can also gain volume discounts for procurement and enjoy low fee percentage charged by credit card companies.

Franchising, began in 1907 by The Ritz Carlton, was the primary growth and development strategy of hotels and motels during the 1960s, 1970s, and 1980s. From 1960s, Hilton and Sheraton began to franchise their names. However, there are two main challenges for the franchisor, which are maintenance of quality standards and avoidance of financial failure on the part of the franchisees. Franchising is still a prevailing form of expansion in North America and other places, while there are examples that a few properties who lose their right to franchise by not maintaining standards.

Examples:
Wyndham Worldwide of Parsippany, New Jersey, is the world's largest franchisor of hotels, with more than 5,000 hotels.

Choice Hotels International, is the second largest franchisor of hotels with more than 4,500 hotels.

InterContinental Hotels and Resorts is the third largest franchisor with more than 3,000 hotels

Management contract

Management contracts have been a great trend in the hospitality industry since the 1970s because little or no up-front financing or equity is involved. Hotel management companies usually form a partnership of convenience with developers and owners who may not have the desire or are incapable to operate the hotel. The management company provides operational expertise, marketing, and sales clout, often in the form of a centralized reservation system (CRS). Some companies manage a portfolio of properties on a cluster, regional, or national basis.

The management contract would allow the hotel company to manage the property for a period of five, ten, or twenty years. The company would receive a management fee, usually a percentage of net operating profit, about 2 to 4.5 percent of gross revenues.

Recent management contracts have called for an increase in the equity commitment on the part of the management company. Owners have increased their operational decision-making options to allow them more control over the property.

Besides, management companies are seeking sustainability and a bigger share of the business. With international expansion, a hotel company entering the market might actively seek a local partner or owner to work within a form of joint venture.

Examples:

The largest management companies are:
InterContinental Hotels, with more than 500 thousands guest rooms
Wyndham Hotel Group
Marriott International
Hilton Hotels
Starwood Hotels and Resorts

Vacation ownership

The World Tourism Organization said timeshares/ vacation ownership has been the fastest growing segment of the US travel and hospitality industry, increasingly in popularity at the rate of about 15 percent each year.

Vacation ownership offers consumers the opportunity to purchase fully furnished vacation accommodations in a variety of forms, such as weekly intervals or in points-based systems, for a portion of the cost of ownership. For a one time purchase of a yearly maintenance fee, purchasers own their vacation either in perpetuity or for a fixed number of years.

Vacation clubs provide the flexible use of accommodations in multiple resort locations. The number of points needed to access the resort accommodation varies by the members' demand for unit size, season, resort location and amenities.

Examples:

Wyndham Vacation Ownership is the world’s largest vacation ownership company. It markets, sells and finances vacation ownership interests, provides property management services to property owners’ associations and develops vacation ownership resorts. It has more than 500,000 owner families around the world.

Interval World is a vacation exchange network formed by more than 2,000 resorts and more than 1.6 million member families worldwide.

Indiana-based Resort Condominiums International (RCI) has more than 2.8 million member families living in 200 countries.

Evaluation

What we have learnt from this lecture were the recent trends, challenges, and importance of franchising, management contract company, and vacation ownership. We realized the differences among these three types of hotel business, where vacation ownership has become more and more popular.

References

Walk, J.R. 2010. Introduction to hospitality management. Pearson Prentice Hall. New Jersey. 3rd ed.

https://www.myclubwyndham.com/ffr/inside/products.do

Q1) Real Life Examples of Different Types of Hotels and Unusual Hotels

Examples of hotels

Name: InterContinental Hotel

Location: Hong Kong

Type: Full-service

Name: The View Inn & Suites

Location: Bethlehem

Type: Economy/Budget

Name: Hyatt House

Location: California

Type: All-Suite Extended-Stay

Unusual hotels

Name: Treehotel

Location: Sweden

Description: Mirroring the final scene in E.T., this hotel is designed to be shaped like a UFO located in the pine forest with six unique ‘treerooms’.

Name: V8 Hotel

Location: Germany

Description: Designed for car fanatics, all rooms in this hotel are themed around the automobile, with features such as vintage cars, racing paraphernalia and drive-through cinemas.

Name: Beckham Creek Cave Haven

Location: USA

Description: Set in 530 acres of Arkansas rock, this cave hotel features central heating, whirlpool tubs and even serves as a wedding venue.

During the research for unusual hotels, I have broadened my horizon in terms of the creativity and high technology of the world nowadays. I also find most of them interesting and hopefully I may have the chance to experience a night in these unique hotels, though they would probably be quite expensive as compared to the regular ones.

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