The Modern U.S. Hotel Industry Emerged Following World War II. the Booming Postwar Economy

美國旅館業發展沿革

The modern U.S. hotel industry emerged following World War II. The booming postwar economy enabled Americans to purchase automobiles and to travel for leisure purposes. Motor hotels and motels blossomed along the roadsides in order to attract this new type of traveler. Their operators were small business owners who offered the traveler a bedroom, limited services, and parking right in front of the bedroom door. The quality of accommodations varied so widely that it was not uncommon for the traveler to ask to inspect the room before agreeing to spend the night.

Kemmons Wilson reacted to what he described as the most miserable vacation trip of his life (presumably in some of the more substandard accommodations) by entering the lodging industry himself. Wilson opened his first Holiday Inn on August 1, 1952, in Memphis, Tennessee.

Holiday Inn was followed in the late 1950s and early 1960s by Ramada, Howard Johnson, Marriott, Hyatt, and Radisson. These chains and other brands that were established earlier, such as Hilton and Sheraton, aggressively franchised their brand of lodging, dramatically changing the accommodations of U.S. travelers.

Although it is best known for the birth of disco, the early 1970s was also a boom time for hotel expansion. The completion of the U.S. interstate highway system, along with aggressive sales activity by the major brands, opened new markets in many previously inaccessible cities and towns. In response to this surge in hotel development, companies developed multiple brands aimed at different segments of the traveling public. Segmentation was heaviest in the lower-priced portions of the industry, as budget and economy chains attempted to distinguish themselves from their competitors.

In the mid-1970s, the Arab oil embargo and the subsequent U.S. energy crisis, with is gas shortages, gas rationing, and higher oil and gas prices, crippled the travel industry. Inflation also had a dramatic impact on the lodging industry during this period. As the cost of borrowing funds for new hotel development soared, development all but ceased.

Because of this decline in development in the 1970s, in the early 1980s, demand for rooms exceeded supply. Then, in 1981, changes in the U.S. tax law created a positive climate for investment in hotel development. Accelerated depreciation schedules prompted hotel developers and operators to create paper losses, providing substantial tax shelters against other sources of income. Unfortunately, many hotels were built during this period to create paper losses rather than to attract guests and generate profit. Developers jumped in with great enthusiasm, giving rise to the construction boom of the “go-go eighties.”

Later in the decade, the role of the hotel industry as a tax shelter backfired. The Tax Teform Act of 1986 increased the depreciation schedule from 18 years to 31.5 years, the investment tax credit was repealed, and earned income could no longer be sheltered by investment loss. This resulted in serious economic problems for many of the hotel development and operating deals that had been created in the early 1980s. Although catastrophic, the resulting impact was not felt immediately. To add to the challenges faced by the industry, demand began to lag behind the large number of new projects being developed, and hoteliers began to lower rates in order to attract business.

The economic recession of the early 1990s and the limitations on travel caused by the Persian Gulf War in 1991 caused demand for hotel rooms to falter once again. The rate cuts of the 1980s were followed by additional cuts in the 1990s. By 1991, an increasing percentage of each dollar earned was going to pay hotel debt service, and the creative financing of the 1980s was coming due. Hotel owners and operators were left with few options to survive, resulting in massive loan defaults. Lenders virtually shut off funding to the entire industry.

In 1993, the hotel industry turned its first profit since 1985. As the economy recovered form recession, demand picked up again. With no new supply of hotel rooms, all demand in growth went straight to increased occupancy, improving the average daily rate (ADR). The increase in ADR did not surpass inflation until 1994. New room construction began in earnest in 1995 and continued into 1997. The recovery did not last long. In 1998, the lodging industry again began experiencing problems. The supply of new rooms showed no signs of slowing. The REVPAR, the multiplication of average daily rate times occupancy percentage (i.e., ratio of the proportion of rooms sold to rooms available during a designated period) also began to decrease. The combination of these two factors began to slow the availability of new capital. It has been suggested that the lodging industry will not rebound again until 2004, when supply and demand are expected to equalize.

One of the pioneers in hotel management, Ellsworth Statler, opened his Statler Hotels in the early 1900s. In these searly hotels, Statler made a number of important guest room innovations: (1) back-to-back rooms with common shafts for plumbing; (2) the first circulating ice water; (3) full closets with lights; (4) bedside reading lamps; (5) towel hooks in the bathrooms; (6) a modified door with enough room for newspapers to be passed underneath; (7) posted room rates; (8) radios; and (9) a generous supply of towels and stationery. Statler believed that, to be successful, a hotel company had to give its guests more and better service than they expected. Statler employees were required to learn and carry with them a set of rules called the Statler Service Code.

Unitil the 1950s, travelers called long distance to the hotel or motel of their choice to reserve a room. Once the telephone technology became available, leaders in the motor hotel business such as Kemmons Wilson automated the reservation system (he called his the Holidex) and made the telephone call available at no cost to the traveler. Other companies quickly followed suit.

Conrad Hilton, perhaps the best-known hotel owner in the world, also made many innovations, which made his Hilton hotels stand out methods that quickly became widely imitated. He used a forecasting committee to predict the number of rooms that would be sold a month in advance, a week in advance, and three days in advance, and scheduled employees to fit the anticipated volume of business.

Hilton also developed a concept called “digging for gold.’ “Gold” referred to unused space. Creating revenue centers out of space that was not otherwise being used became a Hilton signature.

In recent years, the automation and integration of all hotel services through a property management system that permits an instantaneous examination of financial data and daily status of all property operations, from the front desk to the engineering department, has revolutionized the way in which decisions are made in hotels. As hotel guests demand instant worldwide communication, the Internet presents the next innovation in the lodging industry. Internet connectivity is becoming a standard feature available in guest rooms.

From:Hotel and Lodging Management: An Introduction, 2nd Edition

Alan T. Stutts (President, Brown College ), James Wortman (University of Houston )