DAOHOG: HMPE4 (HM3-G1) MODULE 1 Page 1 of 4
INITAO COLLEGE Course Code: HMPE4
Jampason, Initao, Misamis Oriental Course Title: Front Office Operations
1st Semester, S.Y. 2021 - 2022 Unit: 3 (Lecture)
Instructor: Subject Schedule: MTH 2:30-4:00pm
JULIANNE MIDNIGHT C. DAOHOG
Mobile Number: Facebook Group Page: HMPE4 (HM3)
0935-824-1727/0912-732-2100
Messenger Group Chat: BSHM3 G1
e-mail address:
jmdaohog99@gmail.com
Contact Schedule:
MONDAY-FRIDAY: 8:00AM-5:00PM
MODULE 1
Topic: Introduction to Hospitality Management Desired Learning Outcomes:
• Obtain information on the history of the hotel industry.
Duration: 3 hrs • Acquire knowledge on the hotel classification system.
• Recognize trends that foster growth and employment in the
hotel industry.
SPECIFIC INSTRUCTION FOR SUBMISSIONS:
Keep this module clean, stain-free and, crumple-free. Answer your assessment found at the last page of this learning
module.
ANALYSIS
The mere mention of the word hotel conjures up exciting images: a busy lobby filled with international dignitaries, celebrities,
community leaders, attendees of conventions and large receptions, businesspeople, and family vacationers. The excitement
you feel in a hotel lobby is something you will have forever in your career. Savor it and enjoy it. It is the beginning of
understanding the concept of providing hospitality to guests.
The front office is the nerve center of a hotel property. Communications and accounting are two of the most important functions
of a front desk operation. Effective communications—with guests, employees, and other departments of the hotel—are
paramount in projecting a hospitable image.
FOUNDERS OF THE HOSPITALITY INDUSTRY
E.M. Statler
Ellsworth M. Statler (1863–1928) developed the chain of hotels that were known as Statlers, beginning with a hotel in
Buffalo, New York, built for the 1901 Pan-American Exposition. Eventually there were Statler hotels in Boston, Cleveland,
Detroit, New York City, St. Louis, and other locations. In 1954, Statler sold this chain to Conrad Hilton. Statler devised a
scheme to open an incredible two-story, rectangular wood structure that would contain 2084 rooms and accommodate
5000 guests. It was to be a temporary structure, covered with a thin layer of plaster to make it appear substantial, although
simple to tear down after the fair closed.
Conrad Hilton
Conrad Hilton (1887–1979) became a successful hotelier after World War I, when he purchased several properties in
Texas during its oil boom. In 1919, he bought the Mobley Hotel in Cisco, Texas. In 1925, he built the Hilton Hotel in Dallas,
Texas. In 1946, he formed the Hilton Hotels Corporation, and in 1948, he formed the Hilton International Company, which
came to number more than 125 hotels.5 With the purchase of the Statler chain in 1954, Hilton created the first major chain
of modern American hotels—that is, a group of hotels that follow standard operating procedures in marketing, reservations,
quality of service, food and beverage operations, housekeeping, and accounting. Hilton Hotels now includes Hilton Garden
Inns, Doubletree, Embassy Suites, Hampton Inns, Harrison Conference Centers, Homewood Suites by Hilton, Red Lion
Hotels, and Inns, and Conrad International.
Cesar Ritz
Cesar Ritz was a hotelier at the Grand National Hotel in Lucerne, Switzerland. Because of his management abilities, “the
hotel became one of the most popular in Europe and Cesar Ritz became one of the most respected hoteliers in Europe.”
William Waldorf Astor and John Jacob Astor IV
In 1893, William Waldorf Astor launched the 13-story Waldorf Hotel at Fifth Avenue near Thirty-fourth Street in New York
City. The Waldorf was the embodiment of Astor’s vision of a New York hostelry that would appeal to his wealthy friends by
combining the opulence of a European mansion with the warmth and homey qualities of a private residence. Four years
later, the Waldorf was joined by the 17-story Astoria Hotel, erected on an adjacent site by William Waldorf Astor’s cousin,
John Jacob Astor IV. The cousins built a corridor connecting the two hotels, which together became known by a single
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hyphenated name, the Waldorf=Astoria. In 1929, after decades of hosting distinguished visitors from around the world, the
Waldorf-Astoria closed its doors to make room for the Empire State Building.
Kemmons Wilson
Kemmons Wilson started the Holiday Inn chain in the early 1950s, opening the first in Memphis, Tennessee. He wanted
to build a chain of hotels for the traveling family and later expanded his marketing plan to include business travelers. His
accomplishments in real estate development coupled with his hotel management skills proved a highly successful
combination. Wilson died in February 2003 at the age of 90. His legacy to the lodging industry is serving the traveling
public with comfortable, safe accommodations while making a profit for investors.
J. W. Marriott and J. W. Marriott Jr.
J. W. Marriott (1900–1985) founded his hotel empire in 1957 with the Twin Bridges Marriott Motor Hotel in Virginia, near
Washington, DC. By the time he died in 1985, Marriott Hotels and Resorts had grown to include Courtyard by Marriott and
American Resorts Group. At this point, J. W. Marriott Jr. acquired the Howard Johnson Company; he sold the hotels to
Prime Motor Inns but retained 350 restaurants and 68 turnpike units. In 1987, the Marriott company completed expansion
of its Worldwide Reservation Center in Omaha, Nebraska, making it the largest single-site reservations operation in U.S.
hotel history.
Ernest Henderson and Robert Moore
Ernest Henderson and Robert Moore started the Sheraton chain in 1937, when they acquired their first hotel, the
Stonehaven, in Springfield, Massachusetts. Within two years, they purchased three hotels in Boston and soon expanded
their holdings to include properties from Maine to Florida. At the end of its first decade, Sheraton was the first hotel chain
listed on the New York Stock Exchange.
Ray Schultz
In the early 1980s, Ray Schultz founded the Hampton Inn hotels, a former company in the Holiday Inn Corporation. These
hotels were tagged as limited-service (now referred to as select-service), meeting the needs of cost-conscious business
travelers and pleasure travelers alike. Schultz’s pioneering efforts in developing a product and service for these market
segments have proved a substantial contribution to the history of the hotel industry.
HISTORICAL DEVELOPMENTS
The history of the hotel industry is filled with concepts that shaped the products and services offered. The atrium concept
design, limited-service hotels, and technology were notable innovations. Management concepts such as marketing and total
quality management (TQM) offered managers a new way to do business in hotels.
Atrium Concepts
The hotel industry has seen many notable developments over the past years. The atrium concept, an architectural design
in which guest rooms overlook the lobby from the first floor to the roof, was first used in the 1960s by Hyatt Hotels.
Select-Service Hotels
The select-service concept—hotels built with guest room accommodations and limited food service and meeting space—
became prominent in the early 1980s, when many of the major chains adopted this way to serve business travelers and
travelers on a limited budget. Hampton Inn revolutionized the hotel industry as the first national brand targeted to the new
select-service hotel segment. The hotels featured spacious, comfortable rooms but eliminated or reduced other elements
common to hotels at that time, such as restaurants, lounges, and meeting and lobby space, passing on the resulting cost
savings to guests in the form of lower rates.
Technological Advances
Technology has played a major role in developing the products and services offered to guests. Reservation systems,
property management systems, and in-room guest checkout are only the most obvious advances.
Marketing Emphasis
An emphasis on niche marketing to guests was the theme in the 1970s. This technique surveyed potential guest markets
and built systems around the needs of identified segments. The larger hotel-management and franchise companies also
were discovering the advantages of forging strong reservations and marketing systems. For a guest, this meant that by
calling a single phone number, he or she could be assured of a reservation and feel confident of the quality of
accommodations expected. The marketing emphasis continues in the 2000s through the routine use of the Internet to
place guest reservations.
Total Quality Management
Total quality management (TQM), a technique that helps managers critique processes used to create products and
services with an eye to improving those processes, is practiced in hotels today. This emphasis on analyzing the delivery
of services and products, with decision making at the front lines, began in the 1990s and continues today under terms
such as quality assurance and service quality.
Major Reorganization, 1987–1988
The economic period of 1987 to 1988 saw a major reorganization of the hotel industry. Hotels that were previously
DAOHOG: HMPE4 (HM3-G1) MODULE 1 Page 3 of 4
economically viable suddenly were not. At this time, there were plenty of Japanese investors who seemed intent on buying
up, at astronomical prices, any piece of U.S. property with a hotel or golf course on it. As a result, the value of American
hotel properties continued to increase. Between 1990 and 1995, the recession began and ended, and the full impact of
the 1986 law and overbuilding were experienced.
OVERVIEW OF THE HOSPITALITY INDUSTRY
A working knowledge of the classifications used in the hotel industry is important to understanding its organization. The types
of properties, their market orientation and location, sales indicators, occupancy, and revenues as they relate to levels of service
and types of business affiliation are all means of classifying hotel properties.
TYPES OF LODGING FACILITIES
Hotels
A hotel usually offers guests a full range of accommodations and services, which may include reservations, suites, public
dining and banquet facilities, lounge and entertainment areas, room service, cable television, personal computers,
business services, meeting rooms, specialty shops, personal services, valet, laundry, hair care, swimming pool and other
recreational activities, gaming/casino operations, ground transportation to and from an airport, and concierge services.
Hotels are found in center-city, suburban, and airport locations. Guest stays can be overnight or long term—if several
weeks.
Motels
Motels offer guests a limited range of services, which may include reservations, vending machines, swimming pools, and
cable television. The size of these properties averages from 10 to 50 units. Motels are usually in suburban highway and
airport locations. Guests typically stay overnight or for a few days. Motels may be located near a freestanding restaurant.
All-Suites
The all-suites concept was developed in the 1980s as a separate marketing concept. The size of the operation can range
from 50 to more than 100 units. This type of property is usually found in center-city, suburban, and airport locations. The
length of guest stay can be overnight, several days, or long term.
Select-Service Hotels
Select-service hotels appeared in the mid-1980s. Hampton Inn and Marriott were among the first organizations to offer
select service properties. The concept of select service was developed for a specific segment of the market: business and
cost-conscious travelers.
Extended-Stay Hotels
Extended-stay properties were designed to offer guests a home-away-from-home atmosphere over long stays precipitated
by business, leisure, or personal necessity. For example, a person may have to attend to a business project for several
days or weeks.
MARKET ORIENTATION
Market orientation in the hotel industry is categorized into two segments: (1) residential hotels, which provide guest
accommodations for the long term; and (2) commercial hotels, which provide short-term accommodations for traveling
guests. Residential properties include hotels, all-suites, select-service, and extended-stay properties. Commercial
properties service the short-term transient guest. It is essential to note that these two categories overlap. A commercial
lodging establishment may have a certain percentage of permanent residents. Likewise, a residential hotel may have
nightly rentals available. Owners and general managers must exhibit a great deal of flexibility in meeting the needs of the
available markets.
SALES INDICATORS
Sales indicators, including hotel occupancy and average daily rate, are another way of describing hotels. This information
is necessary for business investors to estimate the profitability of a hotel.
Six factors measure a hotel’s degree of financial success:
1. Occupancy percentage is the number of rooms sold divided by the number of rooms available.
2. Average daily rate (ADR) is the total room revenue divided by the number of rooms sold.
3. Yield percentage, the effectiveness of a hotel at selling its rooms at the highest rate available to the most profitable
guest, reveals a facility’s success in selling its room inventory on a daily basis.
4. Revenue per available room (RevPAR) is used to indicate the ability of each guest room to produce a profit. Once
the daily sales opportunity has presented itself, it cannot be repeated (excluding the opportunity to sell a room at
a half-day rate). (Note: See below for computation of RevPAR.)
5. Gross operating profit per available room (GOPPAR) is defined as total gross operating profit (GOP) per available
room per day, where GOP equals total revenue less the total departmental and operating expenses.
6. Revenue per available customer (RevPAC) reflects the customer as the fundamental driver of value in the
hospitality industry.
Occupancy
Occupancy percentages measure the effectiveness of the marketing and sales department as well as the external and
internal marketing efforts of the front office.
DAOHOG: HMPE4 (HM3-G1) MODULE 1 Page 4 of 4
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑅𝑜𝑜𝑚𝑠 𝑆𝑜𝑙𝑑 𝑥 100
= 𝑆𝑖𝑛𝑔𝑙𝑒 𝑂𝑐𝑐𝑢𝑝𝑎𝑛𝑐𝑦 %
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑅𝑜𝑜𝑚𝑠 𝐴𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒
Average Daily Rate (Average Room Rate)
The average daily rate (sometimes referred to as average room rate, or ADR), is also used in projecting room revenues—
the amount of room sales received—for a hotel. However, this figure also affects guests’ expectations of their hotel
experience.
𝑇𝑜𝑡𝑎𝑙 𝑅𝑜𝑜𝑚 𝑆𝑎𝑙𝑒𝑠
= 𝐴𝐷𝑅
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑅𝑜𝑜𝑚𝑠 𝑆𝑜𝑙𝑑
Yield Percentage
Yield percentage measures a hotel manager’s efforts to achieve maximum occupancy at the highest room rate possible.
𝑅𝑒𝑣𝑒𝑛𝑢𝑒 𝑅𝑒𝑎𝑙𝑖𝑧𝑒𝑑 (𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑟𝑜𝑜𝑚𝑠 𝑠𝑜𝑙𝑑 𝑥 𝑛𝑢𝑚𝑏𝑒𝑟 𝑎𝑐𝑡𝑢𝑎𝑙 𝑟𝑎𝑡𝑒)
𝑌𝑖𝑒𝑙𝑑 =
𝑅𝑒𝑣𝑒𝑛𝑢𝑒 𝑃𝑜𝑡𝑒𝑛𝑡𝑖𝑎𝑙 (𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑟𝑜𝑜𝑚𝑠 𝑎𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑓𝑜𝑟 𝑠𝑎𝑙𝑒 𝑥 𝑟𝑎𝑐𝑘 𝑟𝑎𝑡𝑒)
RevPAR (Revenue per Available Room)
RevPAR is determined by dividing room revenue received for a specific day by the number of rooms available in the
hotel for that day. The formulas for determining RevPAR are as follows:
𝑅𝑜𝑜𝑚 𝑅𝑒𝑣𝑒𝑛𝑢𝑒
or 𝐻𝑜𝑡𝑒𝑙 𝑂𝑐𝑐𝑢𝑝𝑎𝑛𝑐𝑦 𝑥 𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝐷𝑖𝑎𝑙𝑦 𝑅𝑎𝑡𝑒
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝐴𝑣𝑎𝑖𝑙𝑎𝑏𝑙𝑒 𝑅𝑜𝑜𝑚𝑠
TRENDS THAT FOSTER GROWTH
Leisure Time
The trend toward increased leisure time—in the form of three-day weekends, paid vacations and personal days, a
workweek of 40 hours or less, and early retirement—sets the stage for the growth of the lodging industry.
The Me/Pleasure Concept
The idea of deserving recreation away from the job to restore mental acuity and improve attitude has evolved over the
years.
Discretionary Income
Discretionary income, the money remaining from wages after paying for necessities such as food, clothing, and shelter, is
the most important of all the trends that support the growth of the hospitality industry. One of the main reasons for the
increase in discretionary income of American families is the emergence of the two-income family. An almost double-income
family unit has emerged over the years as more married women join or stay in the labor force.
Family Size/Household Size
The current trend toward smaller families also indicates growth for the hospitality industry. Household size—the number
of persons in a home—has decreased over the years. Like the trend toward smaller families, the increased number of
small households indicates that more discretionary income is available.
Business Travel
Business travel often represents the largest portion of the regular income of a hotel property. This prime market must be
constantly reviewed for economic details that affect its viability.
Female Business Travel
Female business travelers represent an increasing segment of the corporate travel market. As previously discussed, their
travel is affected by energy prices and speedy communication. This market segment requires close attention to fulfilling
special needs.
Travel as Experience
At one time, people traveled primarily out of necessity; business and family visits were the usual reasons for traveling.
Today, people travel for many reasons, including education, culture, and personal development. Many people want to
learn more about the society in which they live.
CAREER DEVELOPMENT
• Educational Preparation
• Work Experience
• Professional Membership
• Ports of Entry
• Researching Growth Areas in the Hospitality Industry
REFERENCES:
Hotel Front Office Management (James A. Bardi) - eBook
