The recession has affected any and all businesses in all industries, but it seems to have affected certain aspects of the hotel industry less then normal. Though some may not have been hurt as bad, almost all businesses were hit negatively when it came to their balance sheets and how their profit margins were affected.
The two least hit areas of the hotel industry were the leisure and global wide companies. This is extremely interesting since it is usually those in leisure that are hurt the worst. So why would they do so well in such a bad economy? It is simple, businesses don't need to travel nearly as much to do business anymore. Because businesses can now host video conferences and basically have a virtual meeting anywhere in the world, they no longer need to travel to a country to do business. Though they will have to travel a bit, because they of the new technologies, they have been able to cut their travel budgets at extraordinary levels.
So why does the leisure aspects of hotels still attract such business? It is actually less complicated then you would think, to go on a vacation, you need to go TO the vacation. Although there isn't as much travel occurring, people still are which means they are forced to use the industry. However, it is important to note that it is the lower priced leisure divisions that are able to maximize on this so much.
http://ezinearticles.com/?How-the-Recession-Affected-the-Hotel-Industry&id=3452689
Wednesday, November 16, 2011
Monday, November 14, 2011
Leaders in the Hotel industry
Within the hospitality industry, we can see some of the biggest leaders pushing their companies to achieve more than thought possible. Within the past 20 years specifically though, we have seen certain individuals rise above the usual assessment of leadership to provide their respective companies with the guidance to take them to the next level.
One of the most important leaders to note is Mr. Wilburt Chang of Howard and Johnson International (China). Although you would not expect it, Howard and Johnson Int. opened its 55th hotel in China in 2008. This shows how a company went from only 13 in 2006 to 55 in only 2 years. This is especially important since they only started their operations in 1999.
Another large leader of the Hospitality industry includes Mr. Stephen Schwarzman of The Blackstone Group L.P. The reason Mr. Schwarzman is so important is due to the Hilton hotel chain is managed by The Blackstone Group L.P. This is especially important to note because they control a total asset assessment of $18.845 billion. This means that for each of the 1,440 employees they have, each is worth a little more than $13 million. This is an impressive number when you take into account they they were started only in 1985.
Sunday, November 13, 2011
Influential Leaders in the Industry
In recent years, competition has increased as a wider consumer choice became a trend. Along with this competition especially in the hospitality industry, came influential leaders who have marked the beginning of a new approach by their contributions and innovative ideas. These leaders were either founders of hotels, restaurants, casino and amusement parks or CEOs who have also contributed to flourish the firms in the industry.
One of the most well-known CEOs in the lodging industry is Van Paasschan of Starwood Hotels. Paasschan, who have been entitled as the CEO of Starwood chain from 2007, and have contributed greatly in the development and performance of the firm in recent years. Through his creative ideas and leadership style, he was able not only to succeed in the local market but also marked new strategies aiming for global expansion in the global market in emerging countries such as China, India and Qatar. Facing intense competition from Marriott, Hyatt and others, Paasschan saw success in global recognition, reaching 900 hotels in 100 countries and also setting strategies to build a new team of workers and further motivate workers and also sell some branches that are drain the resources. He was also able to develop his skills and shape his personality to fit his position; having no experience in the industry at all he formed an enthusiastic leader.
Another CEO in the same sub-industry, who has been an asset for the Taj Hotels and Resorts, is Raymond Bickson. He was named 2007 Corporate Hotelier of the World by Hotels magazine. Under his leadership, Taj Hotels witnessed tremendous growth in global market by partnerships with cruise companies as well as acquisitions with some luxury hotel chains. Taj Group has also been growing profits due to strategies set by Raymond since 2003.
Current Events in the Industry - Sales are up and marketing is changing
Disney sales are up! Last Thursday the company reported a “robust” increase in fourth-quarter earnings. Theme park sales, operating income, Disney’s television business, and other sectors all saw minor to significant increases. It seems as though the company is starting to see sales from the discounts they introduced the recession. During the height of the recession the company cut prices to consumers to offered large discounts and entice families to come. I guess the cuts paid off. Do you think other companies are starting to see a return on sales from discounts they offered during the recession?
http://www.nytimes.com/2011/11/11/business/disney-earnings-gain-30-surpassing-estimates.html
Here’s one way to raise revenue, sale wedding cakes for receptions. David Collier, pastry chef, is linking up with the Ritz in Pentagon City, run by Marriott International in Bethesda, to make and sell wedding cakes. Collier will prepare customer wedding cakes for couples getting married at the hotel. What separates him from other bakers is the type of cakes he makes. He offers over 200 variations of chocolate cakes and says he is “working the groom side of the pastry business.” He creates cakes the represents the groom’s hobbies, i.e. sports, cars, etc. $80,000 in revenue have been raised. Shannon Hadley, the hotel’s director of sales and marketing told the Washington Post: “The hotel has been able to double its revenue from wedding cakes.” The typical wedding cake is $3,000. Are themed wedding cakes the new trend for weddings and how long will it last? Could this be a new trend in hotels and how is it affecting the industry?
~Nia McCarthy
Saturday, November 12, 2011
The Current Economic Environment's Affect On the Hospitality Industry
You cannot turn on a TV or flip through a newspaper today without hearing about the financial crisis in the European Union (EU), which might “lead to the very rapid global spread of recession.” This is especially concerning for U.S. consumers and companies considering, “The European Union and United States economies are the two biggest in the world and their financial institutions are deeply intertwined.” This dreadful news “could damage consumer and business confidence.” As a result, consumers will begin spending less. For hospitality companies this is extremely problematic. Eating out and traveling are leisure activities, and if consumers are cutting their spending, funding in this area is the first to be cut. Revenue at McDonalds and Marriot will decrease and consequently so will those company’s bottom lines. Similarly, if firms do not have confidence that revenue will rise they are not going to have an incentive to invest and expand their business.
In addition, equity financing (stocks) could become a problem for both consumers and companies. If stock prices begin to fall, which is very possible due to a lack of confidence, companies have less money to invest with and stockholders begin losing money- none of this is indicative of a recovery. As Ryan Sweet, a senior economist at Moody’s Analytics, puts it,” If stock prices start falling, consumers are likely to cut back on spending, which would be sufficient to grind the recovery to a halt.” Simply put, the peril of the financial crisis in the EU could greatly affect hospitality companies, who rely heavily on consumer leisure spending.
However, one major industry player is exemplifying how to increase profits even when the pressure of another recession looms in the near future. This company is Wendy’s Inc. Aside form concern over then financial stability of the EU, hospitality companies, especially restaurants, have to contend with an increase in commodity costs. Wendy’s has decided to solve this dilemma by keeping prices relatively low. Although in the short term this might hurt their bottom line, they are hoping to offset that by focusing on long-term growth. Wendy’s hopes to achieve this by “investing in breakfast and other new menu items, like its own Redhead Roasters coffee blend, and expanding internationally, such as opening its first of four planned Canadian concept shops last month.” Mr. Brolick, President and CEO of Wendy’s, said, “Wendy's also intends to focus more attention on the dining-room experience, saying there is growth opportunity in that space”, particularly with older customers who tend to eat on location more often. Wendy’s has decided to price low in an attempt to attract more customers and keep them coming. In addition, they believe investing in new menu items will also attract more customers and keep Wendy’s competitive. So far, this has proved to be successful, seeing as revenue rose 1.8% to $611.4 million even though Wendy’s operating margin widened to 5.3% from 3.4% (due mostly to a rise in commodity prices).
Wednesday, November 9, 2011
Influential Leaders in the Hospitality Industry
There are several owners, presidents, and CEOs in the hotel and restaurant industries that have either directly changed their respective industry, or implemented drastic and revolutionary change in their own company which has prompted others to follow suit. These leaders have made changes in the government to benefit the hotel industry, changed the way hotels handle financial transactions, started the now-common trend of no-smoking facilities, and even affected the way restaurant owners grow their own ingredients to serve to their customers. Although these leaders are relatively recent, they all had their own impact on the hospitality industry.
Sue Brush
Sue Brush was the Senior Vice President of Westin Hotels & Resorts. It was Brush who pushed Westin to implement a drastic change of the policy of all its properties. Westin was the first major hotel company to go smoke-free in all of its locations nationwide. According to a Westin company statement, “the smoke-out is part of Westin’s ‘Personal Renewal’ promise, an effort to make guests feel relaxed and happy from arrival until checkout and even beyond. It’s another Brush-supervised effort to which travelers are breathing a big sigh of relief.” This was perceived as a risky initiative, but many major industry leaders have followed suit. Disney, Gaylord Hotels, and Marriott International (with over 2,500 properties) have taken Westin’s initiative and implemented the same policy in all of their properties.
Roger Dow
Roger Dow became the President and CEO of the Travel Industry Association in Washington, DC in January of 2006. With his new position, Dow made changes that would raise the voice of the tourism reach in Washington, which has benefited many companies and employees in the area. With the help of the Travel Business Roundtable, which is the main lobbying partner of the Travel Industry Association, they have lobbied the federal government successfully on several occasions to benefit the hotel and travel industry. One example would be a measure to “delay enacting certain new passport and visa requirements pending less-disruptive solutions,” making it easier for tourists to come to DC and see what the nation’s capital has to offer. The several successful attempts to get government involved in improving the industry has led the way for new legislation that proposes a “longtime industry dream”: creating a national government tourist office in Washington, DC.
Raymond Blanc
Although Raymond Blanc has been growing his own fruits and vegetables in his restaurant, Le Manoir aux Quat' Saisons for years, this practice has just become a current popular season trend in the restaurant industry. Granted, large chain restaurants such as McDonald's are not doing this, but smaller, independently owned restaurants with specific clientele are have only recently caught on to this trend. Blanc was able to make his idea work with the help of his "world's busiest two-Michelin-starred restaurant." He is not only credited with popularizing the trend of restaurants growing the majority of their ingredients; he is knows to have inspired several chefs that are instantly recognized in certain niche market of the restaurant industry, including Marco Pierre White and Heston Blumenthal.
http://www.successfulmeetings.com/Event-Planning/Business-Meetings/Articles/The-25-Most-Influential-People-in-the-Industry-2007/
http://www.bighospitality.co.uk/People/The-21-most-influential-people-in-the-restaurant-industry
Thursday, November 3, 2011
How has the competitive landscape changed as a result of leading entrepreneurs in the industry?
Recently, the lodging sector has witnessed incredible increases in demand due to improvement in the travel and leisure sector. Hotels engaging to travelers’ requirements and fulfilling their needs found their opportunities for further revenue increase through customer satisfaction and better service. Therefore, well known firms and leading entrepreneurs resulted in a change in the competitive landscape benefiting greatly.
The competitive landscape not only included domestic businesses but also expanded greatly to China which is a welcomed visitor nowadays in the American market. Hotels find it insufficient to be hospitable with these guests, but also decided to tailor most of the services offered according to their preferences and standards. Major hotel brands in the United States are even starting to compete with Chinese hotels. Chinese business affairs and well known entrepreneurs all find the United States as a destination for their work and comfort, as it makes them feel at home. Marriott, Hilton and Starwood Hotels are all interested in serving Chinese costumers amiably. Chinese breakfast is now being introduced to impress the visitors as well as tea, in addition to slippers and rice dishes. Therefore, the introduction of a new demand force in the market of leading lodging brands have led to better services and variety of convenient choice for these visitors, knowing that the request for American visas have doubled even with greater travel expenses and long process. This change due to the existence of multiple leading entrepreneurs offered more choice variety for Chinese people as well as higher service to ensure and maintain a ranking as a leading firm and also to be able to expand internationally easily to the Chinese market with an already existing brand loyalty.
Another way in which the competitive landscape have changed due to the emergence of successful firms, is the lower prices strategy which would attract consumers as it might be a way of distinction from other hotel brands offering similar experience to their guests.
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