The Financial Planning and Strategies of Firms within the Hotel Industry in the U.S - Essay Example

Hotel Industry Report Table of Contents Table of Contents 1 Introduction 3 Industry Description 3 Industry Top Companies 5 Industry Associations 7 Industry Growth Rating 8 Industry Forecast and Business Trends 8 Industry Financials 9 Pricing Analysis 250 10 Conclusion and Recommendation 11 Works Cited 13 Executive Summary The study report explores facts and findings regarding the hotel industry in America. The students conducted the research across a number of firms within the industry after which they undertook to analyze the findings that they presented in chronological order with special focus on precision and accuracy. The general objective of the study was to ascertain the fiscal planning and strategies of firms within the hotel industry in the U.S. As opposed to the likely scenario, the research biasedly focused on the top firms within the hotel industry. Therefore, the report focuses on the description of top companies within the industry. However, the report focuses special attention on the growth rating of the industry as compared to other competing industries over the past decade. The report also focused on the forecasts that the industry makes as strategies of growth. This also touched on the business trends exhibited within the sector. The report merged the trends’ comparison with the other industries’ business trends over the past years. Analysis of industrial forecast and business trend has acted as a measure of market competition among the firms within the global economics. Other analysis within the report included industrial financial scenario. In this analysis, the report undertakes to shed light on the financial management state of the firms and or companies within the hotel industry. From the analysis, it would be possible to provide an overview of the likely context of the industry in the face of scorching global financial recession. Finally, the report gives a broad analysis of the pricing system of the industry’s products and services. Here the analysis included the pricing policies, considerations, and standards. Introduction Like any other research report, this report of the research conducted on the operational context of the hotel industry seeks to bring to the knowledge of the policy and decision makers in the hospitality sector, the operational reality on the grounds for allied companies and or firms within the industry. The insights from this report seek to provide a platform for informing decision and policy making within the hospitality industry with special focus on the hotel and hoteliers in the U.S. It shall also serve to assist as a point reference for planners in the hospitality sector who focus on the strategic planning for the hotels. Planners in the hotel industry, therefore, shall feel enlightened in their endeavors amid likelihood of stiff competition with other industries in the global market. It provides an important insight into technical comparison between various industries having access to the global market. The report is vital to assist government officials in designing national economic models and strategies for economic growth with a view to competing favorably within the global market sphere. Moreover, the ministry in charge of higher education may also adopt it as a learning module in institutions of higher learning for economics and planning students. Industry Description By definition, the hotel industry is described as all forms of business that relate to the provisioning of accommodation, foods, drinks, and other services provided to the public in connection with the lodging and or other hotel services. The industry is a business sector that revolves around the provision of accommodation for travelers, food and catering services for both travelers and local public, and other social amenities to the public as well as travelers. The industry has its successes relying distinctly on the provision and or catering for the needs of the targeted clients, creation of a desirable accommodation and working atmosphere, and provision of a wide range of products and services (Woods, King and Woods 59).With its origin in the 18th century, the hotel industry grew from being centres providing bare essentials of foods and lodging services to the present day large and multi-faceted diverse industry encompassing several other social services such conferencing facilities and physical activities sites. However, its foundation remains the provision of catering and accommodation facilities. For the hotels that offer accommodation services, the rooms are designed for short stays. The industry is a subset of the overall hospitality industry that encompass, among others, tourism, tours and travel, and excursions. The industry is all about customer service; therefore, the staffs therein must work hard to maintain the industry’s reputation in the face of both current and prospective customers. As such, it is always a policy within the industry that for hospitality business to thrive, warmth, courtesy, friendliness, and services must go handy with organization, efficiency and professionalism. There are several types of hotels in the U.S. always defined according to the services they offer, their location and operational levels. Commercial hotels are designed to cater mainly for business clients to various location of the country. Such hotels offer room services, dining rooms, cocktail lounges, valet and laundry services. They also offer information and communication services to the prospective clients. Airport hotels are usually, located next to or in proximity to the airport. They specialize in the provision of airport-related services. The design of conference centres is such that they provide spaces for group meetings. They also provide such services as conventions and corporate meetings by offering all necessary equipment and tools for the same (Woods, King and Woods 23). There are economy hotels, specifically designed to meet the needs of not-so-rich people. Usually, many people identify such hotels as having clean rooms that go at low prices meeting just the travelers’ basic needs. There are All-Suite Hotels that specialize in offering spacious designs and layout. It also provides room for entertainment, and work that are separate from the bedrooms. Therefore, it is one of those hotels preferred by business people. Furthermore, there are residential hotels that are popular for offering accommodation on long-term basis. Finally, there are casino hotels that are luxurious and used for gambling operations, and resort hotels used as planned guests’ destinations for vacationers. Location of resorts is usually along the beaches or nature places away from the town centres. In most cases, resorts offer entertainment services for the guests. Industry Top Companies The industry is composed of large multinational firms that operate nationally, regionally, or globally. Such companies have regional branches spread all over the country and in other parts of the world. They operate with headquarters based in America and are headed by presidents or Chief Executive Officers. Some of the top companies in the U.S. include The Marriott International Inc., The Wyndham Worldwide, The Hilton Worldwide, The Choice Hotels Int. Inc., The Starwood Hotels and Resorts Worldwide Inc., Best Western Int., The Carlson Hotels Worldwide, and The Hyatt Hotels Corp. These companies trace their origins to the age of industrial revolution when they started as single holdings. The Marriott International Inc. has more than 3545 hotels distributed across over 80 countries with headquarter in The U.S. This is the largest hotel company in The U.S. It has more than 18 brands that it offers in its worldwide branches. On its part, The Wyndham Worldwide, with over 15 brands, has 7207 hotel outlets distributes around the world. Its proponents argue that it is the world’s largest and most diverse hotel company. The company is also believed to be to be one of those multinational hotel companies that pursue sustainability practices. It works to explore and adopt environmental-friendly solutions and practices through its Wyndham Green program. The Hilton Worldwide is also a multinational hotel company with over 3671 hotel outlets operating all over the world. It boasts over 10 brands that it offers to the customers. The Blackstone Group, a private equity firm, owns the company. Forbes has ranked the company as the 38th largest privately owned company in America. The Choice Hotels Int. Inc. is also one of the multinational hotel companies headquartered in America. The company operates with at least 10 brands and over 6142 hotel outlets. It has a total capacity of over 495145 rooms distributed among its over 6142 outlets globally. The Starwood Hotels and Resorts Worldwide Inc. is also a multinational hotel company with its headquarters in America and operates in other countries as well. It has over 1041 hotel outlets operating and reaching out to customers with over 9 brands. It has a room capacity of over 308, 736 distributed among its outlets. Another company of significance in America’s hotel industry is Best Western Int. the company has more than 4000 hotels operating in more than 100 countries globally. Each of the hotels has independent ownership. The company operates three brands that it deems appropriate for its vast customer base. The Carlson Hotels Worldwide is a family-owned multinational hotel company. It specializes in hospitality and travelling and operates 4 brands in more than 1340 hotel outlets. It holds the world’s largest travel management company. As such, its proponents boastfully describes it as a global leader in hospitality and travel industries. Finally, there is The Hyatt Hotels Corp. closing the list of selected multinational hotel companies in the U.S. The company has over 1064 hotels distributed in over 47 countries. It also specializes in 4 main brands. The company strive to provide authentic hospitality to its customers through making differences in the lives of the people whom they touch on a daily basis. Industry Associations There are several hotel industry associations in America. The American Hotel and Lodgings Association is the only U.S. association focusing on the needs of every segment within the lodging industry. The American Resort Development Association (ARDA) is also another association based in the Washington, D.C. It is a trade association that represents the vacation and resort development industries. It came to being in 1969, formerly referred to as the American Land Development Association, ARDA. Another key association within the industry is Arizona Hotel & Motel Association (AzH &MA). It came to operation in 1938 with the goal of enhancing, uniting and protecting the interests of the lodging industry in Arizona. There is also the Asian American Hotel Owners Association (AAHOA). The association has a membership of more than 125500 members owning more than 20000 hotels in the U.S. The association represents more than 40% of the American hotels and employs a whopping 600,000 people. The Association of Bridal Consultants also adds onto the list of The Hotel Industry associations in the U.S. It is the professional organization concerned with the welfare of the wedding industry. Headquartered in the U.S., the association has been in existence for more than 30 decades with a membership of 2900 in 19 countries. Another association is the Association of Corporate Travel Executives (ACTE) that represents the global travel business industry. It makes this successful through its international advocacy efforts, independent industry research, and executive level educational programs. Another key association in American hotel industry is The Association of Hospitality Financial Management Educators (AHFME). It is an organization striving to promote coordination among individuals involved in hospitality-based financial management. On its part, Travel Marketing Executives (ATME) is an association made up of travel industry marketers representing all segments of the hospitality industry. Finally, the American Society of Travel Agents, the world's largest association of travel professionals also exist among the hotel industry associations in America. It boasts being an advocate for the travel industry, travel agents, and the traveling public (Turkel 166). Industry Growth Rating The hotel industry is one of the fastest growing industries in the world today. The growth trends have remained positive over long period. According to the U.S. statistics, approximately thirty percent of the hotels are found in suburban areas. There thirty percent such premises in towns with only nine percent in cities. Furthermore, only four percent of the hotels are found near airports with seven percent of them found at resorts. Various reports predict that travel expenditures by U.S. residents alone will register an increment of four to five percent each financial year in the next subsequent three to four years to an approximate record of $749.8 billion(O'Fallon and Rutherford 443) Furthermore, the international visitors are also projected to shall have remitted $129 billion in the United States by then. Such a growth in travel is expected to place a favorable atmosphere for a simultaneous growth for both the hotel and travel agency industries. Therefore, it is shall be the right time to invest in either sector. Industry Forecast and Business Trends There is a steady trend in the state of hotel industry and its associated business. Today, customers are looking for comfortable, high quality but simple experience in the industry. Therefore, the hoteliers are on the edge towards capitalizing on this emerging demand. In the contemporary America, competition in the hotel industry focuses on brand awareness and environmental dynamism thereby calling upon the industry to device strategic plans for marketing. Hotels have embarked on increasing direct bookings to avoid unnecessary expenditures on the OTA commissions. There is also emphasis on online marketing that focusses on content marketing. This has special emphasis on brand awareness in order to reach a wider audience. Today, quality is vital in products of the hotel industry. Most customers opt to have better experience other than just cos-effective experiences. There are more or less likely trends in the future that require planners’ attention in the hotel industry. The most notable trend in the year 2014 and beyond is the demand for international knowledge. Global travel to the U.S. is poised to continue to influx. The U.S. Department of Commerce projects an annual growth rate of 3.7-4.2% translating to approximately 84.6 million visitors. This calls upon hospitality providers to have specialty in international knowledge. There is a growing use of sustainability concerns as standard measure of hotel preference. Approximately 62% of travelers today expect hotels to have some eco-programs in place. The need for sustainability and green practices in this industry can have a major impact. Room service revenue has been drastically decreasing. Some hotels have started to forgo the service altogether. Therefore, hoteliers have become more creative in room and catering services. Moreover, there is an increasing demand in the hospitality jobs with more than 14.6 million people securing employment, as at 2012. Industry Financials As at the year 2010, the hotel industry was one of the largest in the U.S. Consumers had rented 4.7 million rooms in 50800 different hotels across the county rooms in 2010(O'Fallon and Rutherford 449). In 2009, the industry earned a total of $127 billion. The industry employed more than 1.7 million workers as at the year 2012. The wage payment totaled to about $186 billion. The industry employs a diverse group of employees who have both low and high skill and wage positions. Hotels and motels have tended to be a venture that is particularly capital intensive. However, it also has the potential to offer quite lucrative returns if successfully managed in the face of global competition. In 2008, the industry had a total of 101,100 travel agents working in the travelling agencies in the US in. They earned an accumulated average over $30,000 with the agencies serving both business clients and consumers (O'Fallon and Rutherford 452). Pricing Analysis 250 Pricing within the hotel industry is determined by various factors. It requires a holistic approach to determine the pricing system of products and services within the hotel industry. The industry associations play a major role in controlling the price tags accorded to products and services. However, it requires comprehensive consultation and information gathering from all the stakeholders involved in the hotel industry to determine the standard prices. Government policies may determine the pricing of items of the industry within stakeholder nations. For instance, there are policies that regulate business fairness between and among enterprises. Prices are also set according to the customers’ nationality, social status, the industry’s location and regional location. Conclusion and Recommendation Success of the hotel industry calls for holistic management of all the dimensions and aspects that relate to its daily operations. The industry is one that concerns with the comfort and emotional services of people that makes it one of the most critical industries of the globe. It has become part of the human operation and livelihood. Therefore, it determines the sustainability of human wellbeing, comfort and welfare pursuant to the daily livelihoods. Most of the multinational hotel companies that exist in America today began on a simple foundation. None of them began from their present stature of large franchises. Their management strategies have been outstandingly effectively over those long periods thereby rendering their continued existence, growth and prosperity despite the underlying challenges attributed to competition, global economic crises, recession and climate change. Economic growth and expansion within this industry is commendable. Many people continue seek hospitality services on an increasing streak that spirals from day to day. The rise and continued existence of the so-called high and middle class individuals in both developed and developing countries keeps the future of the industry at a successful side end of the quantum (Turkel 169) As such, there is high likelihood for a continued customer influx of people seeking hospitality services from the industry’s numerous global outlets. However, the question will arise of how the hotel companies could keep pace with one another in the industry amid high chances of stiff competition from one another as well as related industries such as processing and manufacturing industries. Services diversification is one strategy that such companies must employ in their services strategies. For instance, instead of focusing on a single line or a few lines of products and services, they should consider a wide range of product and services for the prospective customers to choose. Furthermore, they should consider a global advocacy for formulation and implementation of policies that could favor fair competition and govern sustainable growth and development within the industry. Moreover, the companies must enhance their approaches in stakeholder coordination and corporation. The companies, in this regard, should emphasize on the provision of services based on the stakeholders’ recommendation other than management’s plans and decision. There are both internal and external stakeholders to the hotel companies. External stakeholders include shareholders, suppliers and customers. The internal stakeholders include employees, board of directors and other. Works Cited O'Fallon, Michael J, and Denney G. Rutherford. Hotel Management and Operations. Hoboken, N.J: Wiley, 2011. Print. Turkel, Stanley. Great American Hoteliers: Pioneers of the Hotel Industry. Bloomington, IN: AuthorHouse, 2009. Print. Woods, Robert H, Judy Z. King, and Robert H. Woods. Leadership and Management in the Hospitality Industry. Lansing: Educational Institute, American Hotel & Lodging Association, 2010. Print. Read More