1.

The History of Accommodations or

Lodging Industry
The lodging industry developed because of the need to provide
accommodations for travelers. Early roadside inns were mentioned in several
instances in both the Old and New Testaments. The development of the inn
in the late medieval period was due to security improvements in many
European societies. The Industrial Revolution and the development of spas
helped the growth of the hotel industry. America’s first hotels were seaport
inns. Coach service was established by innkeepers to attract business. The
inn was used not only as a boarding house but also as a booking office, a
waiting place, an eating establishment, and as a center of the town’s social
activities. With the rapid development of the railways in the 1820s and
1830s, large hotels were built next to or across the downtown railroad
station.
After World War II, air transportation advances led to increased
travelers who demanded more and more hotel space. The widespread
use of the car led hoteliers to build more roadside motels. The
Ellsworth Statler is the first hotel chain pioneer in the US. On the other
hand, Conrad Hilton built the world’s most famous hotel, the Waldorf
Astoria in New York. The Conrad Hilton Hotel (CHI) is the largest in the
US, with 3,000 rooms. The change in the function of a hotel brought a
change in its architecture. Another recent development is the overseas
expansion of the American chains.
2. Types of Accommodation
a. Hotel. Hotels can be a 10-room boarding house or a building that has a
thousand or more rooms, convention and meeting facilities, and recreation
facilities. Hotels have a twenty-four room service, with several restaurants
and bars and various types of entertainment.
b. Motels or Motor Hotels. Normally, motels offer rooms only and free
parking for guests. They are often found along busy highways and cater
primarily to transient and cost-conscious travelers.
c. Resort Hotels. Resort hotels are intended for vacation travelers. These
hotels range from budget to luxury and can accommodate these travelers
and even convention delegates. These are usually located near beaches and
offer more amenities, shops, and recreation opportunities.
d. Pensions. Pensions are found principally in Europe. These are usually
family-owned accommodation facilities. In German-speaking parts of
Europe, a pension is also called Gasthaus. Pensions and Gasthaus usually
offer continental breakfast but do not have facilities for other meals.
Pensions are known for their informal family atmosphere.
e. Paradors. Paradors are unique to Spain. These are generally old castles,
convents, or monasteries that have been converted into hotels by the
government and operated by the government.
f. Condominium Hotels. Condominium Hotels are a recent innovation. These
are often hotels with apartments (condominiums) instead of basic
rooms. The hotel developers sell the condominium units to individuals given
a title to the physical real estate. The individual owners then contract the
space to visiting tourists. The individual owners have the right to stay in their
units during specific periods of the year with a reduced room rate.
The developers or management company receives a fee for managing and
receiving out the units. The resulting profit is shared among the individual
unit owners. Condominium hotels generally appeal to families because of
the apartments.
g. Campgrounds. Camping is a popular form of overnight accommodation in
both Europe and North America. In North America, there are more than
20,000 campgrounds at present, and hotels own some. Campgrounds usually
appeal to families who travel in recreational vehicles (RVs). Campgrounds
and RVs stopping spots are often found in government parks and forests.
h. Bed and Breakfast. Bed and breakfast is a form of lodging which
originated in Europe. This form of accommodation provides a bed for the
night and breakfast the next day. It was only in the 1970s that the idea was
brought to the United States. Retired and semi-retired people with large
houses have contributed much to the growth of these establishments.
i. Tourist Inns. Tourist inns are lodging establishments that cater to
transients. These do not normally meet the minimum requirements of an
economy hotel.
j. Apartment-Hotels (Apartels). Apartment-hotels are buildings that contain
several independent and furnished or semi-furnished apartments. These are
leased to tourists and travelers on a long-term basis and offer basic services
to their tenants, similar to hotels.
k. Health Spas. Health spas are hotels and resorts that cater to people who
go to spas or mineral springs for medical treatment or weight
reduction. Several health spas in Europe offer modern techniques –
medically supervised rejuvenation programs, including supervised diets and
rigorous exercises to shed fat and reduced weight.
l. Private Homes. The private home is the earliest form of overnight lodging
for travelers. It provides lodging to tourists who cannot be accommodated in
hotels and motels during peak vacation periods.
m. Time-sharing. Time-sharing is a more recent unique type of
accommodation. It started in Europe in the 1960s when people found it
difficult to make reservations every year in popular hotels during
summer. Time-sharing is selling vacation lodging, usually condominiums, for
a specific week or weeks over a given number of years. Originally
condominiums in resorts were bought and marketed as either a second
home or primary home, depending on the buyer's needs.
n. Hostels. Hostels provide basic amenities such as a bunk bed and a
commonly shared toilet and bathroom. The traveler provides his/her own
bedding. Hostels appealed primarily to young travelers.
3. Classification of Hotels
There are different ways of c. Price
classifying hotels: i. Economy
a. Location ii. Standard
i. Center-city iii. First Class
ii. Suburban iv. Deluxe
iii. Airport
iv. Highway
b. Guest Type
i. Commercial
ii. Conventions
iii. Resort
4. Rating Systems
The following are used to rate hotels, motels, inns, resorts, and guest
ranches.

⭐ Good, better than average

⭐⭐ Very Good
⭐⭐⭐ Excellent
⭐⭐⭐⭐ Outstanding
⭐⭐⭐⭐⭐One of the best in the country
5. Organization of the Lodging Industry
A hotel organization can be large and complex. A typical hotel has seven major
divisions: personnel, engineering and maintenance, accounting, security, food and
beverage, marketing and sales, and room division. Its division head runs each
division.
a. The personnel division recruits new employees and administers policies and
employee benefits for the company.
b. The engineering and maintenance division makes the necessary repairs and
implements the hotel’s energy management programs.
c. The accounting division handles the operation's financial activities, which include
payment of bills, sending out statements, payroll, and compiling monthly income
statements.
d. The security division protects both employees and guests.
e. The food and beverage division is responsible for the food and
beverages that are served.
f. The marketing and sales division is responsible for selling the rooms
and hotel services.
g. The rooms division is responsible for the front desk, telephone
reservations, and housekeeping department. The organization of a
hotel varies on the type of its operation. Below is an example of a hotel
organization.
6. Management Methods
Traditionally, hotels are operated by the people who own the property. In
some cases, the operator may lease the hotel from the owner then manage
it. In other cases, special arrangements are made, such as franchising and
management contracts.
a. Franchising. Hotels that are franchised are usually owned and operated by
the same person or company. The hotel operator or franchisee signs a
contract with the franchisor to maintain a certain operating standard and
use the hotel's franchise name. The franchisee receives benefits such as
extra business due to the franchisor’s national or international
advertisements, the use of the franchisor’s operating and accounting system,
and a line into the franchise chain’s reservation system.
In return, the franchisee will pay a royalty and an advertising fee plus a
percentage of annual room sales or a specified number of dollars for the
room sold.
b. Management Contracts. Under a management contract, the hotel
management company does not have a financial interest in its land and
building. The landlord owns the property but does not have any interest in
managing it. In return, the management company receives a basic annual
management fee, plus an incentive-based on the hotel’s gross profit and/or
net profit but may also be based partly on total sales. Developers who do not
have hotel management experience usually build large hotels and then turn
them over to hotel management companies to run them.
c. Chain Accommodation Operations. Individual units in the chain may all be
owned by one large company, be partly owned and partly franchised, or may
all be franchised. The owning company or franchisor establishes the
standards and operating policies to which each unit must conform. Chain
operations often can implement employee selection and training programs,
buy major equipment and furniture in bulk, and conduct market research.
d. Referral Groups. Referral groups have become popular because the
individual owner or operator can remain independent while achieving many
of a chain group's benefits. This is through voluntary membership in the
referral organization.
7. Hotel Terminologies
Rooms rates in the hotel are quoted in terms of what meals are included
in the price.
a. European Plan (EP) does not include any meals. This is the most
commonly used room rate quoted by North American hotels.
b. American Plan (AP) includes breakfast, lunch, and dinner in the
quoted price. This is known as “full pension” in Europe. Meals are
usually a fixed menu with little or no choice.
c. Modified American Plan (MAP) includes breakfast and dinner but
not lunch, or a breakfast and lunch, but not dinner. This is known in
Europe as “demi-pension.”
d. Continental Breakfast is usually offered by most European
hotels. This is included in the room rate, which consists of rolls, coffee,
and sometimes juice. It is also known as “hotel garni” or “pension
garni.”
e. Bermuda Plan (BP) is offered by hotels in Bermuda. It includes a
room and a full English or American type of breakfast.
8. Room Rates
The maximum rates that hotels charge for a room normally depend on
the number of people occupying it. These rates are call rack rates. The
rack rate is not always the rate paid for a room. Like airlines, hotels
have discounted prices too. The revenue that is not obtained for a guest
room is gone and cannot be recovered. Profits on banquet meals and
sales of liquor make up for the discounted room rates.
9. Hotel Profitability
The following are simple measures of a hotel’s profitability:
a. Room Occupancy. It is obtained by dividing the number of rooms
occupied by guests on any night by the number of rooms in the hotel
and by multiplying the result by 100 to determine the occupancy on a
percentage basis. For instance, if a 125-room hotel has 75 rooms
occupied on a particular night, its occupancy will be:
During peak season, a hotel may have 100% occupancy or close to it.
However, occupancy can be very low at other times of the year. In general,
hotels are considered profitable if they can operate with an average annual
occupancy of 65% or higher.
b. Double Occupancy Rooms. The double occupancy rate is the number of
the room occupied by more than one person. It can be determined by
dividing the number of guests accommodated during a certain period by the
total number of guest rooms during that same period. For example, if 713
guests occupied 463 rooms during a week, double occupancy is:

The 1.54 double occupancy ratio means that 54% of the rooms were double
occupied.
c. Average Rate per Room Occupied. The average rate will increase if
more expensive rooms are sold if more rooms are double or triple
occupied. The average room rate is obtained by dividing the revenue
for a period by the number of rooms occupied during that period. For
example, if a hotel had 463 rooms occupied during the week and a
room revenue of 37,640 for that week, the average room rate is:

d. Average Daily Rate per Guest. This is obtained by dividing total room
revenue for a period by the total number of guests accommodated
during that period.
e. Average Length of Stay. To maximize revenue and increase room
occupancy, hotels try to increase customers' length of stay through
advertising and other marketing methods.
f. Break-Even Point. It is that point at which a business will make neither
a profit nor loss. The equation for determining this is:

Fixed costs are those that stay the same regardless of the volume of business.
The contribution margin is the average room less the variable costs of having
a room occupied. Variable costs are those that change according to the
number of guests in a hotel.
10. Accommodation Reservation
Large hotels have computerized reservation systems, but overbooking
still occurs. Overbooking is selling more rooms than the actual available
rooms. Though, hotels do it for a reason. Hotels use different methods
to avoid overbooking and reduce the no-show factor.
a. Registration Cards. A registration card provides information about
the guests, such as name, address, geographical origin, and other
facts. The list can also be expanded to include the names and addresses
of clients who have made reservations, canceled them, and even
customers who made reservations but never arrived. The guest
registration card information can also be used to produce a typical
customer profile.
b. Hotels and Airlines. According to Lane (1994), there are three major
reasons why airline companies link with hotels. These are:
i. Their desire to protect existing business and develop future business, thus
increasing their profits;
ii. The expectation that hotel ownership will boost tourism development in
their home countries; and
iii. The desire to expand national culture.
c. Frequent Flyer Links. Many of the frequent flyer programs of airlines
are linked to hotel usage. This means that airlines grant airline
passengers extra mileage points for staying in participating hotels.
11. Accommodation Promotion
Most accommodation properties promote their properties to members of
the travel trade and tour wholesalers and travel agencies. Travel trade
advertisements emphasize the benefits that will be derived by the tour
wholesaler or travel agency in recommending the hotel. Hotels use the
direct mail approach to groups who would like to hold meetings,
conventions, or conferences in the hotel. Corporate rates are also offered to
large companies. Travel journals, travel and recreation magazines, and airline
in-flight magazines are used for advertisements. Short video cassettes about
large resorts’ properties are given away or sold. Several chain organizations
emphasize their image and uniqueness in their advertising. Some
accommodation entities feature the hotel’s president or general manager, or
chef in their advertisements.