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HOTELS AND LODGING

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Kayla Sattler

on 13 December 2013

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Transcript of HOTELS AND LODGING

A Little History ...
BARGAINING POWER OF SUPPLIERS
Bargaining Power of Buyers
Threat of New Entrants
Substitute Products
Rivalry Among Competitors
1794 - First Hotel built in New York City, the "City Hotel" that possessed 73 rooms

1945 - Sheraton is the first hotel corporation to be listed on the New York stock exchange

1946 - The first casino-hotel, the "Flamingo", makes it's debut in Las Vegas

1947 - New York City's "Roosevelt Hotel" is the first to install TV's in every guestroom

1949 - Hilton becomes the first international hotel chain with the opening of the "Caribe Hilton" in Puerto Rico

1970 - Hilton becomes the first billion dollar lodging corporation, and the first corporation to enter the Las Vegas market

2000 - Hilton unveils plans for the first luxury hotel in space, leading to competition in the industry asking who can achieve this first amazing feat first
What's Changed
Average Daily Rates:
1930's - $5.60
1950's - $5.91
1960's - $10.81
1970's - $19.83
1980's - $45.44
1990's - $58.70
2000's - $85.89
2010's - $98.06
Currently - $106.15

Financial History
What this really means ..

Even though the number of properties have stayed about the same, the number of rooms have over doubled in the last few decades

Although the average occupancy rate has been inconsistent, the average room rates as well as the revenue per available room have both consistently increased



*Statistics for U.S. industries only
Some Setbacks Along the Way
Between 1929 and 1936 The Great Depression caused 88 percent of hotels to go into some form of receivership or closing
This resulted in the lowest average occupancy rate on record, of 51% (Highest 93% in 1946 / Currently 63%)

In 1974 "The Energy Crisis" hits the industry - hotels dim exterior signs, cut heat to unoccupied rooms, and ask guests to conserve electricity whenever possible

In 2001 the industry was racked again by the 9/11 terrorist attacks, losing over $700,000,000 in revenue in just the 2 weeks following
After this devastating event Americans didn't feel as safe traveling, resulting in the industry unable to return to growth until year 2004
Current State of the Industry
According to statistics from the American Hotel & Lodging Association (AHLA) in 2012 there were 52,529 properties currently listed in the industry
.. totaling around 4,900,000 guestrooms nationwide
These properties achieved 155.5 billion dollars in revenue in 2012, an 8.1 billion dollar increase from 2011

What does this mean..? You should invest!!

Over the past few decades the Hotel and Lodging industry has grown rapidly, and looks to keep doing so for decades to come
Hotels: 4,643
Rooms: 677,966
Countries: >100
Employees: >335,000
Hotels: 3,392
Rooms: 424,612

Hotels: 392
Rooms: 108,307

Hotels: 304
Rooms: 29,083
HOTELS AND LODGING
Hotels: 191
Rooms: 20,874
Hotels: 4,056
Rooms: 668,225
Countries: 90
Employees: 300,000
Global Forces
Industry History
Macro Environmental Forces
Porter's Five Forces
Competitive Advantage
Economies of Scale
Brand Loyalty
Absolute Cost Advantage
Customer Switching Costs
Government Regulations
Major Suppliers
Labor Force
Information Technology and System Companies
TV and Appliance Companies
Food Companies
Ultimately, Suppliers Bargaining Power is MODERATE
Ultimately, Threat of Entrants is MODERATE
Major Buyers
Consumers
Travelers
Airlines
Businesses/Government
Lots of Buyers
Wants and Needs-Accommodation
Ultimately, Bargaining Power of Buyers is MODERATE
Great deal of substitute products
Casino Hotels
Bed and Breakfasts
RV Parks and Campgrounds
Lessors of Residential Buildings and Dwellings
Drinking Places
Usually alternative and cheaper accommodation
Ultimately, Threat of Substitue Products is MODERATE to HIGH
Industry Demand Structure
Fragmented Industry
Industry Demand
Economic determinants
Consumer spending
Tourism
Cost Structure
Exit Barriers
Assets specific to industry
Ultimately, Rivalry Among Competitors is STRONG
Financials
Revenue: 1.89 Billion
Profit Margin: 32.38%
Gross Profit: 1.06 Billion
Financials
Revenue: 11.81 Billion
Gross Profit: 1.88 Billion
THE INDUSTRY
Hotels: 23
Rooms: 9,949
Hotels: 3800
Rooms: 620,000
Countries: 74
Employees: 350,000
Hotels: 357
Rooms: 89,736
Hotels: 1,098
Rooms: 190,021
Hotels: 213
Rooms: 50,998
Hotels: 1,024
Rooms: 283,483
Hotels: 558
Rooms: 204,917
Hotels: 624
Rooms: 75,871
Hotels: 119
Rooms: 28,273
Hotels: 929
Rooms: 136,553
Hotels: 691
Rooms: 63,045
Overview
What is competitive advantage?
Company has greater profitability and profit growth than the industry average
Can achieve competitive advantage through many different ways
3 leaders in hotel industry
Marriott
Hilton
InterContinental (Holiday Inn)
Key Questions to Ask
Does the resource/capability have value?
Is the resource/capability unique?
Is there a substitute for the resource/capability?
Is the organization aware they have this resource/capability?
Is the resource/capability difficult to imitate?
Marriott
Sustain competitive advantage by
Having a superior technology
Focus on international clients
Work directly with suppliers
Youth career initiative
Amenities (taxi service)

Hilton
Ethical Leader
Focuses on ethics more than any other corporation
Hilton Worldwide University
Flexible Working Arrangements
Specifically developing areas
InterContinental
Cost Leader
Cut costs by dealing with local suppliers
Hire the best and brightest minds
Own Chinese brand "Hualuxe"
Bring technology and people together with IBM
Reserving rooms online
Macroeconomic Forces
Technological
Demographic
Social Forces
Political/Legal
1940 - Air conditioning is introdruced in some hotels
1947 - Westin establishes "Hoteltype" the first hotel reservation system
1947 - New York City's "Roosevelt Hotel" installs TV's in every guestroom
1960 - Siegas introduces the first minibar
1966 - Inter-Continental introduces ice and vending machines in guest halls
1969 - Westin is the first chain to implement 24-hour room service
1975 - Four Seasons is the first to offer in-room amenities such as shampoo
1983 - VingCard invents the optical electronic key card
1986 - Teledex Corporation introduces the first telephone designed for rooms
1993 - Radisson is the first to introduce business-class rooms
1995 - Choice and Holiday Inn are the first to introduce online booking capability

Strategic Groups
Competitive Environment
Industry Life-Cycle
Product Price
Organizational Structure
High
Low
Independent
Franchised
Luxury
Ritz-Carlton
Waldorf
Wingate
The Luxury Collection
Mid-Scale
Holiday Inn
Hilton Hotels
Double-tree
Embassy Suites
Garden Inn
Hampton Inn
Economy
Industry Summary
Industry Trends
Global outbound travel grew 5% in 2011 to over 750 million trips
Hotels are taking advantage of the internet more than ever
Social Media, Travelocity, TripAdvisor
Long-term accommodations are becoming more popular
Niche markets are starting to be targeted
Top Emerging Markets:
Dubai
China
Russia
South America
Super 8
Microtel
Days Inn
Motel 6
Small Corporation
Inn on Lake Superior
Rodeway Inn
AmericInn
Bed & Breakfast
Baptism River
A.G. Thompson
Independent Motels
The Lantern
The Casa Motel
New & Developing Markets
2008 Financial Crisis
Consumer Confidence
2008 Financial Crisis
US Debt Ceiling
Global Inflation
Central Reservation Systems
Key Cards for Doors
Time Locks
Operating Systems
Changes in Age-Breakdown
Increased Focus on Culture
Eco-Friendly Focus
Health Conscious
World Peace
Labor Laws
Zoning Regulations
Financial Reporting Laws
Revenue: 9.26 Billion
Full transcript