Characterization of the U.S. Hotel Industry

ANSWER 1: Characterization of the U.S. Hotel Industry

It is stated that the hotel industry in the U.S. had a $113.7 billion revenue and $16.7 billion gross profit by the end of 2004. There are many hotels in the U.S. and 2/3 of them are franchised under a brand to be used to the guests in the hotel rooms while 1/3 of the hotels prefer to handle their own brand or non-branded product. Because of this, it cannot be pointed that there is only one supplier for the hotels.

If one needs to focus on the competition between the hotels, price, amenities and service are the main areas that are considered by the consumers. Usually, the high price brings the higher quality of services and amenities. It can be stated that full-service hotels which account for 1.6 billion hotel rooms by 2005, are the most expensive hotels because of the restaurants, meeting facilities, room service etc. in their properties. Hence, hotels in the U.S are segmented as below;

1. Luxury Hotels (Four Seasons etc.)

2. Upper Upscale Hotels (Hilton etc.)

3. Midscale Hotels (Radisson etc.)

4. Midscale Hotels with Limited Service (Hampton Inn etc.)

5. Economy Hotels (Motel 6 etc.)

The hotels in the first 3 segments are considered as “Food and Beverage Hotels” which are full-service hotels and have the facilities for food or drink supply. The hotels in the last 2 segments account for 1.4 billion hotel rooms in the U.S. and focus on renting the hotel rooms rather than quality of the service or amenities. These kind of hotels are “Limited Service Hotels” with no food or beverage facilities.

The hotel performance are usually tracked by analyzing the operational statistics which are “Occupancy”, “Average Daily Rate (ADR)” and “Revenue per Available Room (PAR)”. It is projected that, the average occupancy rate was 65%, the ADR was $114 and the PAR was $77 across all hotel segments in 2005. As mentioned above, these rates are the average rates and changed between the five hotel segments significantly.

The next point that is needed to be focus on while analyzing the U.S. hotel industry, is the hotel guest profile. As in the case study, 50% of the guests are noticed as business travelers while the rest of all guests can be separated as pleasure/vacation travelers. A typical business room is usually rented by business travelers who are described as 34-54 (52%) year old males (67%) who are in the managerial position (50%) with a yearly income of $81.000 averagely. Travelers on a business purposes prefer to stay 1-4 nights and the one night stay is the most common one with a percentage of 39%. On the other hand, leisure rooms are generally rented by 2 adults (51%) who are between 34 and 54 (45%), and have a $72.600 income annually. These