3.1: In the Beginning...
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Ancient Lodging Establishments
The references to the earliest recorded lodging establishments may be dated to the prehistoric Lascaux caves in France. Inns were referenced in ancient China and Japan. But, it would not be until 1754 B.C. that the code of Hammurabi would memorialize the first legal reference to tavern and innkeepers.
The Roman Empire documents the best reference of lodging establishments that served travelers from ancient times. In the ancient city of Pompeii, the discovery of the Inn of Sittius—directly across the street from the Lupanar (brothel)—provides a glimpse of the accommodations travelers experienced in these times.
Other lodging establishments appear throughout Pompeii with rates for the use of a room posted on the walls. These establishments provided a single room with an adjacent stable for the traveler’s horse or donkey. Dining was not included in establishments because the city had tavernas offering food and drink 24 hours a day. Bathing was available in the public baths for a fee and bathroom facilities were a modest septic tank arrangement in the inn or a public facility.
The most interesting but inclusive early lodging establishment is in the town of Herculaneum—up the road from Pompeii. On the shoreline at the edge of this ancient city there appears to be a resort hotel where guests could recline and relax. Unfortunately, we cannot say for certain if it was a resort; it may well have been a luxurious villa.
During the Middle Ages, the most significant historical development in the lodging industry would happen in England during the Middle Ages with the introduction of the common law of infra hospitium.
This legal doctrine held that innkeepers were strictly liable for the loss of a guests’ valuables or personal injury whether the innkeeper was guilty of negligence or not. State legislatures have lessened this law and have passed laws that removed this high standard of liability. It is important to note the state statutes have requirements for posting and notification of the limits of the hotel’s liability. Failure by the lodging establishment to adhere to these legal requirements will nullify the statute and the common law of strict liability will once again become the applied legal principle.
During colonial times, American inns and taverns became common in cities and towns. These establishments—some of which are still in operation—became local meeting places as well as serving the traveling public. The oldest hotel in America is The Kelly House Hotel in Edgerton Massachusetts founded in 1742. Formerly a tavern, this hotel remains in operation.
The truly first modern hotel chain in America was founded by Ellsworth Statler with the construction of the Statler Hotel in Buffalo New York in 1907. Ellsworth Statler passed away in 1927 but the Statler hotel chain continued to open and operate hotels until 1954 when Hilton hotels purchased the chain for $111 million dollars—the largest real estate transaction on record at that time.
Ellsworth Statler and the hotel chain he developed was designed along the lines of a centralized management system. This system effectively consolidated all the decision-making in the corporate office. General managers and upper-level executives were tasked with the implementation of those decisions. As a consequence, their decision-making opportunities were limited, impairing their personal career development.
As a further consequence, when Hilton—which fostered a more decentralized management system—acquired the Statler Hotels, the Statler managers and executives were ill-suited to work for Hilton. Their inability to analyze issues and make decisions resulted in many Statler executives losing their employment.
The importance of developing your decision-making experience is a critical career development experience. Sadly, there still exists many hotel operations that merely look to managers to implement corporate decisions. Leading hotel corporations focus on career enhancement opportunities that enable their managers to make decisions.
This is a critical criterion for an individual’s success in the hotel industry. Working in an organization, whether it be a franchise, corporate-owned, or management company, that supports and requires its employees to make decisions is one of the keys to developing a successful career.
The development of the hotel industry was stopped during the Depression. Occupancy rates and average room rates took staggering declines and the hotel bankruptcy rate soared. The result of this calamitous event was that bank loans to develop hotel properties dried up. This unfortunate episode would impact the industry for almost twenty years and underscored that the key to the hotel industry was the desire of business people and tourists to travel.
After World War II, a convergence of the lack of hotels, a growing desire of people wishing to travel, the development of the interstate highway system, and the advent of jet travel with the introduction of the Boeing 707 would create an unprecedented business expansion of the lodging industry.
There were several initiators developing the hotel industry. Kemmons Wilson, a building contractor on a visit to Washington D.C. could not find a hotel for his family to stay in. After his return home in Memphis, Tennessee, he built four roadside Holiday Inns in 1959. He would then pioneer franchising of Holiday Inns to by-pass the banks, who remained reluctant to extend loans for the development of hotels.
It is important to note that the development of Holiday Inns was parented by individuals from the construction industry and investors who were seeking safe harbors for their investments. An understanding of the intricacies of how to successfully operate hotels was limited to a few established hotel companies.
Another initiator of the modern hotel industry was J. Willard Marriott. As a successful restaurant developer, he had the foresight to build the Twin Bridges Hotel in Arlington, Virginia in 1957. His experience in the restaurant business and his understanding of delivering customer service would serve him well as he carefully studied and learned the hotel business at the Twin Bridges.
Another initiator of the hotel industry and exception that preceded the 1950’s expansion was Conrad Hilton. The Hilton corporation was founded in 1919. Through the Depression and World War II, he was able to forge a successful hotel chain. His focus and sheer determination through the vagrancies of the American economy would lead to the creation of one of the foremost international hotel chains.
A review of these selected initiators provides valuable insights into present-day hotel operations. By franchising their name, operating systems, training, and construction resources, Holiday Inn would open a new franchise hotel in the early 1970s every three days.
This robust expansion did not address the finer points of hotel operations. Based more on the scientific or bottom-line focus of an operation, Holiday Inns was ill-prepared to effectively address many of the operational challenges of the modern hotel. Their initial success was due in large part to their locations, name recognition, and lack of competition.
Holiday Inns would pay a price for this rapid development with many Holiday Inns closing and being absorbed by other hotel chains towards the end of the 1970s. This rapid demise cannot simply be assigned to a lack of operational deficiencies but more to a failure to understand the traveling public.
As more and more Holiday Inns failed to update and refurbish their facilities and keep in compliance with the standards of their franchising agreements. Other hotel chains began to emerge buying Holiday Inns and reshaping them into lower-priced economy hotels. The lesson was simple. Holiday Inn’s level of service was based on the, “One size fits all,” theory.
The lessons were painful but Holiday began to break their hotels into different brands to better fit the wants of particular market segments. Today, Holiday Inn belongs to a hotel group with seventeen different brands, The Holiday Inn lessons were learned by other hotel chains. Today, we find all major hotel chains have broken their offerings into different brand names for targeted market segments.
Holiday Inns responded well to the changing dynamics of the hotel industry but the effects of their initial developments linger in some of their operations. Their initial management system focused on the bottom line, sometimes identified as the scientific approach, did not understand the fine art of hotel operations. Today, leading hotel chains artfully balance both the art and science to their operations.
The Marriott hotel chain took a slower development strategy. They focused on the critical aspects of developing service delivery systems with a focus on satisfying the wants of their guests. J. Willard Marriott learned his lessons from the restaurant business in that, “It was not what you want to sell, it is what people want to buy.”
His focus on the guest wants would drive the development of a comprehensive management system that included creating a corporate culture of service, promoting, employee stock options, extensive training, and management development.
Conrad Hilton was the only true hotel career professional to develop a hotel chain. He survived the Depression and with a focus on delivering excellent customer service created an expansive international chain. The Hilton expansion was based on a slower expansion into the franchising arena and the careful stewardship of their brand name. Additionally, they entered into the lucrative gaming industry before their contemporaries.
The Hyatt Hotel chain was developed by business entrepreneur Jay Pritzker. And the corporate culture he developed placed more decision-making responsibilities in the hands of each operation and characteristically is more entrepreneurial.
The pathways to leadership in the hotel industry differed for each of these chains. Other chains have more or less followed these major trends as well. The importance when entering this industry is to take the time and analyze the corporate structure of each hotel system before you decide where to develop your career.
Each hotel develops a culture or a set of beliefs, values, and attitudes of who they are and how they relate to their guests. This culture is initiated by the decisions and actions that come from the very top of the organization. A culture that focuses on delivering quality service to the guest by empowering and supporting employee development creates the most successful operations. Ideally, a new employee in a culture with these strengths has ample opportunity to grow their work experience into a career.
Lodging in the Modern Era
As hotels began to proliferate through the country and for that matter the world, the need for professional skilled management grew. Investors and even chains offering franchises began to search for management companies to take over their operations. This was not a new concept, Statler corporation took over the management of the Pennsylvania Hotel in New York City in 1919.
The advent of management companies has grown and will continue to grow as the competition of hotels accelerates.
For the purpose of this chapter, we focus on your career development by encouraging you to research prospective hotel corporations. The metrics that are most helpful would be evaluating the culture of the company, reviewing the comments in Tripadvisor and Yelp—including the replies by the hotel to negative submissions, reaching out to employees, visiting the hotel, and determining the corporate entities directing the management.
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Bed and Breakfast/ Small hotels
Small hotels of less than a hundred rooms make up a sizable portion of the lodging industry. These operations provide a more intimate connection between the line employees and guests. Additionally, their lean management system allows for faster operational changes that may be quickly implemented.
The unique character of these offerings has long been an attractive career path for many lodging professionals providing an opportunity to develop basic operational experience in the front office, marketing, housekeeping, and maintenance.
A special dimension of the lodging industry is hotels designated as resorts. These operations are generally located in areas that attract vacationers. The mountains, beaches, and pristine water locations that primarily draw vacationers seeking to relax are another robust growth segment of the industry.
Generally, the guests at resort hotels are more relaxed and not on the fast-paced schedule of their normal lives. The purpose of their visit creates a profile of a far different guest than visiting city hotels. Customer service is always a criterion for service industry success and takes on a different dynamic when the guest is looking to relax. Consequently, these venues offer a more comfortable guest interaction.
Seeking employment in a resort hotel with its beautiful locations can be a consideration in deciding on a career in the industry.
One of the most exciting expansions in the lodging industry has been the proliferation of mega destination hotels. Destination hotels are not a new addition to the industry; their lineage may be traced back a hundred years ago to resorts located near water or hot springs.
Historically, inns and later hotels relied on the traveling public to show them where to build their facilities. Destination hotels attract visitors to the hotel facility itself. With a wide range of activities for all age groups, these facilities are the product and reason for a guest to select that region to visit.
Generally, these hotels have gambling as the core attraction with shops, recreational activities, restaurants, and amusement rides that keep their visitors fully engaged with all their product offerings.
The financial stability of destination hotels provides career opportunities in many operational areas.
One of the areas of remarkable growth in the lodging industry is Vacation Ownership or Timeshare offerings. These facilities offer guests the opportunities to purchase the ownership of a lodging—generally a condominium with kitchen facilities—for a short term period of a week or two. Effectively, the guest is an owner during their stay.
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Hotel operations continue to transition to a more technology-based environment.
These changes are driven in part by the capabilities of computers and applications but primarily by the guests who have adopted technological changes in their daily lives and now expect these tools to by-pass the hotel’s traditional processes of registration, check-in, assignment to a room, and check-out.
Processes that once created service failures can be minimized through technology applications. Today, some lodging operations have streamlined the registration, room assignment, and check-out to an almost contact-less experience for the guest. Their check-in experience can be directed from their personal phone to the extent that the guest need only provide a credit card and signature at reservation. Their phone can also be used as a room key. Check-out procedures are equally simplified. The guest merely requests charges for review from their phone, accepts them, and directs the hotel to bill their credit card. Equally, impressive technology developments provide management with real-time operational status in housekeeping. The front office no longer has to wait for notification on room status. A clean room is reported as soon as it has been clean and inspected.
In tandem with these processes, management has access to a wide range of reports to evaluate all operational processes and their relative efficiencies.
With all the possible reports an operation could generate, the key operational reports are:
- The Occupancy Rate where the total occupied rooms are divided by the total available rooms. For example, 200 occupied rooms in a 250 room hotel will realize an occupancy rate of 80%.
- The Average Daily Rate (ADR) is determined by dividing the total room revenue by occupied rooms. For example, a hotel with a total room revenue of $21800 for 200 occupied rooms would realize an ADR of $21800 divided by 200 would equal $109.
- The REVPAR or the Revenue Per Available Room would divide the room revenue by the total room count of 250. The calculation would provide for $87.20.
These reports drive the Revenue or Yield Management programs. These programs seek to project future occupancy rates so that room rates may be raised in high demand periods and lowered in times of softer demand. Room rates in hotels are based not on what it costs to prepare a room and service during a guest stay but on the demand of the marketplace.
The original management functions in hotels at the beginning of the last century reflected the contemporary business theories at the time. Management’s focus was on efficient processes and control of the workers. With a compliant almost subservient workforce and the lack of serious competition from other hotels, these functions were all that were needed to direct hotel operations. Additionally, the profile of hotel guests was generally wealthy and matched well with the attitudes and deference provided by hotel staff.
With the confluence of the industry expansion and the desire of people to travel, the management duties began a rather slow evolution. The initial managers hired by Holiday Inn and the other expanding chains were steeped in the classical management processes of planning, staffing, control, organization.
For a time, these tools were all that was needed for the hotel to operate profitably. Unfortunately, these functions were adopted primarily from manufacturing systems with a focus on efficiency and process without understanding that the product offering in hotels required a robust element of the intangibility of service. Manufacturing of a tangible product was easy to evaluate, quantify, and sell.
As the competition between hotel chains grew, workers began to organize into unions and the traveling public became more diverse, the management systems in hotels began to evolve. No longer could management expect the classical management processes to direct their operations.
The driving force of change was the evolution of the hotel product—service. This product could not be delivered by relying on the classical processes—though it was tried and still is promoted in some organizations.
Hotels found that the tangible elements of their products—the rooms—looked all pretty much the same. The realization that to be successful and differentiate their product or make their guest experience different from their competitors, hotels would have to create a more expansive hotel product with a focus on better service. The industry began to realize that the intangible elements of service in the hotel product were the critical difference between success and failure.
Lodging professionals came to the understanding that any interaction the guest had with the hotel, whether it be a visual assessment of the facility, the taste of a meal or the interaction with an employee, had the potential of creating a memory. These memories became addressed as Moments of Truth.
The first step needed was an expanded understanding of the dimensions of the hotel product. The qualities of the intangibles of customer service were divided into four concepts: perishability, variability, inseparability, and intangibility.
From the earliest stages, the industry understood that the hotel product is perishable. It cannot be stored to be sold at a later date. Rooms not sold are lost forever. You do not have the luxury of storing unsold items in an inventory room.
Also, the variability of the product became a consideration. Each guest interaction can be different. The guest engaged with the hotel employee may have an entirely different experience of the transaction than the next guest that interacts with the customer service professional. Each guest contact experience varies and cannot be standardized.
Add to variability, is the inseparability of the product. The work effort to produce customer service by the employee cannot be stored. It is consumed when it is produced.
These elements of intangibility, perishability, variability, and inseparability make the production of customer service experience beyond the classical tools of management to include management talents in motivating, communicating, and leadership.
Individuals who desire a career in lodging management must assess the work experience in their current operations, even as an employee. Are they self-motivated? Are they practicing their communication skills especially on their non-verbal messaging? Leadership is based on decision-making. Are they able to make quality decisions or see their superiors make decisions?
These talents do not miraculously appear upon promotion to management but through practice on a daily basis.
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The myriad organizational systems in the lodging industry make categorization difficult. Management companies continue to expand with over 157 registered companies.
Franchise operations, many under the direction of management companies, remain a fundamental tool of growth and development. Bank loans for developing hotels are often contingent on the franchiser and the management company that has signed on to the project. Corporate-owned properties must be included as well as the independent operations from the Mega-destination hotel to the roadside motel.
Many lodging chain operations are owned by a Real Estate Investment Trust (REIT). REITs provide the opportunity for individuals to purchase stock in a trust that owns real estate, rather than owning individual pieces of real estate themselves. An individual REIT may invest some or all of its holding in hotels. REITs generate income and provide dividends to owners from the profit generated by the properties it owns. The operation of the hotel on the property is left to the management company or the franchisor.
Critical Skills for Hotel Employment
The purpose of this chapter, for the student of the lodging industry, is to address the activities a motivated individual takes to prepare for a management position. There is no single, clear path individuals take to become excellent managers but there are preparatory actions one takes in their entry-level employment or as supervisors that will serve them well as managers.
Consistency: The multilayered responsibilities of lodging management require a consistent steady hand in operations. Lodging managers are required to be consistent players within the operation. An individual needs the same steadiness in the daily discourse of directing the lodging operation. This personality trait that walks out of the hotel at the end of the day needs to be the same personality trait that walks in on the following morning. Consistency is not a born talent but is a learned activity. The best place to develop this talent is through the work effort you put into your entry-level employment. Practice consistency providing the same excellent performance today as you did on all the days prior. This practice will become a habit.
Excellence is not a single point of achievement but a series of your best efforts in everything that you do. Setting the simple goal of “doing your best,” becomes a habit. Excellence is not about the results but the efforts to achieve results.
Attention to Detail is a critical skill that needs development. As do all these management attributes. Practice in your employment to focus on the smaller tasks in your daily work responsibilities, take the extra step in whatever you are doing to make sure the details have been addressed. Housekeepers, front office personnel, and all the customer service employees are given many opportunities to focus on the smallest items or activities in delivering service to the guest.
Organization is a desperately needed attribute of any lodging enterprise. So many service delivery systems become cluttered and chaotic. Focus on organizing your own work area on a daily basis. This self-organizing experience will help you to organize the system you manage and the employees that work in that system.
Communication is the cultivation of past experiences that need serious attention. Lodging employees learn to choose their words carefully. Their verbal talents will naturally improve through interactions with the guest. The verbal communication between guest and hotel professional is reported to be about 20% of the total interaction. The key for the aspiring manager is to focus on their non-verbal messaging—posture, eye contact, and dress. And the all-important talent of learning how to actively listen to another individual.
Students seeking to develop a career in the lodging industry need to evaluate the operating principles of their management team. Does the team empower their employees to grow and develop? Do they provide training opportunities and allow employees to cross-train in other departments. Is the working environment challenging but enjoyable?
If you have positive responses to these questions, your career is on the right track.
The lodging industry and the eateries from ancient times were the first segments of the hospitality industry. Both developed to satisfy the needs of people to have temporary lodging or a meal.
The lodging segment catered to travelers and provided little more than a roof over a bed and place to stable their horse. Eateries were primarily available to the local townspeople. The initiators of these two segments identified a need and filled it creating the core of the hospitality industry.