Research Paper on "Comparison of Hospitality Lodging and Catering Services"

Research Paper 6 pages (1564 words) Sources: 4

[EXCERPT] . . . .

Hotel Rest

Hotel and Restaurant Management: Turning Low-Occupancy into Profitability through Branding and Management

The hospitality industry is far from the lucrative cash cow that many individuals not involved in the business assume it to be, and many businesses struggle to break even, let alone turn a profit. Diversifying revenue streams is one way that certain companies can become profitable, offering value-added products and services to the basic hospitality offerings that from the core of operations in order to make the venture as a whole more profitable (or simply profitable at all). In order for this to work, however, the right market must exist and it must usually be met in a fairly unique manner in order to differentiate from competition. The task for hospitality businesses, in other words, is neither simple nor secure.

This case deals with a hotel and restaurant establishment that is currently struggling with an unprofitable annualized occupancy rate of fifty-five percent, meaning that on an average night only eighty-three of the hotel's one-hundred and fifty rooms are occupied. The location of the hotel and restaurant right off an interstate highway with easy on and off access directly to the hotel, there is substantial competitive advantage and opportunity for both businesses to succeed, however this success has not been capitalized on. A brief analysis of the market segments that should be catered to and the best method for approaching the business is provided below. Branding and management strategies and options for both the hotel business and the restaurant are also discussed, and recommendations are made.

Environmental Analysis and General Recommendations

The biggest strength that the hotel and restaurant businesses can boast of is its location right off an interstate highway, and with easy on and off access that makes convenience a major factor. At the same time, the means the hotel will likely not be a draw for tourists or those on extended stays that are seeking more immediate sight-seeing and other activities; it is not even clear that the hotel is located in an urban or suburban area that would have any particular reason fro drawing visitors. The market segment that the hotel and the restaurant should focus on are travelers -- people who are on the Interstate either for business or vacation travel and need somewhere to stop over or to have a meal. This means providing quality services to maintain reputation is essential, but adding high-cost "destination"-type amenities and luxuries is unlikely to be cost-effective. Instead, emphasis on the convenience factor of core services and value-added services should be the overriding objective. Food service, both through the restaurant and through the provision of many (primarily non-perishable) snack items, along with other similar convenience amenities can help turn relatively low occupancy into something more profitable.

Separating the restaurant brand is essential. Travelers are much more likely to stop at a recognizable restaurant entity for a meal than they are to pull into a hotel simply to eat. Yhe restaurant should be perceived as a separate entity to travelers such that eating is not associated with staying, yet staying at the hotel will make eating at the restaurant very convenient.

Hotel Branding and Management

As the business as a whole and the hotel specifically will emphasize reliable quality and convenience in its offerings in order to most effectively capitalize on the available market segment, a well-known and trusted hotel brand with reliable and consistent management practices should be employed. There needs to be a level of budget-consciousness employed, but at the same time the ability to capitalize on the offering of certain specifically identified high-volume and low-cost amenities needs to be present. Two brands were selected for more specific examination as potential branding and management companies for the hotel at this property: Holiday Inn (one of the InterContinental Hotel Group brands) and Ramada (a part of the Wyndham family of hotel brands).

A review of the InterContinental Hotel Group's corporate website shows a strong commitment to described values of customer service and efficiency, and concrete plans and processes for achieving this at all levels of the organization (IHG, 2012). This emphasis on customer service would greatly assist the reputation of the property, and the consistency that the organization ahs been able to achieve across its brands is also indicative of strong control and managerial aptitude for its hotels (IHG, 2012). Both of these elements work strongly in Holiday Inn's favor as a considered branding and management partner for the hotel businesses at this location. The price of Holiday Inn compared to that of a typical Ramada franchise, however, is a matter of some concern (IHG, 2012; Wyndham, 2012).

Lower costs translate to cheaper consumer prices -- a key factor in customer acquisition for this location -- and potentially higher revenue, and Ramada definitely offers this when compared to Holiday Inn (IHG, 2012; Wyndham, 2012). At the same time, Ramada's reputation for quality is not necessarily as high as Holiday Inn's, and there is evidence that the management structure at Wyndham's is purposefully looser and less controlled than at InterContinental Hotel Group or Holiday Inn (IHG, 2012; Wyndham, 2012). This causes some concern, as one of the major owner needs is reliable branding and management that will not need continual oversight or adjustment. The slightly higher pricing of a Holiday Inn is not likely to cause a significant decrease in occupancy, and the increased revenue from the amenities and control Holiday Inn will be able to offer makes t the better choice.

Restaurant Branding and Management

As noted above, the separation of hotel and restaurant branding is key to the success of this venture. While separate branding will not decrease the likelihood of hotel guests patronizing the restaurant as well -- something that can be encouraged through a variety of incentives, though with the convenience factor still presenting the largest benefit to consumers -- it will greatly increase the likelihood of attracting restaurant-only traffic. Again, a brand that is recognizable to consumers for consistency and quality is important, while keeping consumer prices and revenue potentials high at the same time. The two brands considered for branding and management of the restaurant location are Applebee's and Chili's.

Applebee's is owned by DineEquity, Inc., which used to be known as IHOP Corp and which still operates the IHOP brand as its core business (DineEquity, 2012). This company's business model has been to increase the franchising of its restaurants and decrease the centralized control of individual store management, meaning there can be a large degree of variance in the quality of products and service at its restaurants (DineEquity, 2012). While the Applebee's brand has only been owned by DineEquity, Inc. For a little over four years, the company has already stated and demonstrated its desire to apply the same franchising strategy to this newer acquisition, and it is likely that quality concerns will enter into this brand, as well (DineEquity, 2012). Just as with the looser management of Wyndham over its Ramada operations, the looser control on Applebee's management is a serious concern that renders this brand and management company inappropriate.

Chili's is also owned by a large and publicly traded corporation, Brinker International, however this corporation has retained much more direct control over its expansion and operations (Brinker International, 2012). With comparable prices and offerings to Applebee's and an even more recognizable brand identity and name, the greater levels of quality and consistency that Chili's will be able to provide will be of great advantage to the business as a whole by providing a strong revenue stream without needing close attention or oversight on the part of the owners or their agents (Brinker International, 2012). Chili's is clearly the better choice for this business venture given its particular needs.

Summary and Conclusion

According to the examinations, considerations, and… READ MORE

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