The Structure of the Accomodation Market

The Structure of the Accomodation Market

(Taken from Oxford English for Careers, Tourism, Robin Walker and Keith Harding, volume 3 p. 28-29)

Accommodation is at the heart of tourism, and hotels are at the heart of accommodation. However, obviously not all hotels are the same, the most fundamental difference from a travel trade point of view lying in who owns the hotel. These, broadly speaking, can be part of a large group or can be independent.

Increasingly, hotels form part of large corporations. Room totals for giants like intercontinental, Hilton, and Accor run into the hundreds of thousands, and operations on this scale mean economic efficiency through shared costs, bulk purchasing, and the centralization of functions such a marketing and promotion.

The major corporations do not own all of the properties they put their name to. Instead, various formulas are used, including:

Acquisition

The company own and manages the property.

Management contracts

Investors such as insurance companies own properties and contract a hotel group to operate them.

Franchising

The hotel group (the franchisor) allows another company (the franchisee) to use its name in return for an agreed payment.

A closer look at the structure of the hospitality trade reveals that both luxury and budget hotels are often only different brands in the same corporation. This is the case with Accor, the owners of the budget hotel chains Formule 1 and Etap, of the mid- range Mercure chain, and of top-end Sofitel, among others.

The attractions of such brands to the consumer are various, but boil down to clients knowing exactly what they are buying into; hotels within a given brand cost more or less the same and look and feel very similar wherever they are.

For many travellers, be they hardened business executives or timorous first-timers, this is genuinely comforting.

Independent hotels are privately owned and are managed as a small / family business. This means that each hotel feels unique, in contrast to the sometimes 'identikit' air of chain hotels. Independents can also offer the client a more personal experience; staff turnover is generally lower than in chain hotels, and so repeat guests quickly become 'part of the family'. On the downside, the independent hotel cannot easily access the obvious benefits of bulk purchasing and often there is no one to share the burden of marketing costs, although an independent with a well-executed website could receive just as much ’air time' as a major chain.

In order to overcome the drawbacks of being independent, hotels can team up with each other, either on a small scale as a local initiative or through a consortium. Best Western, for example, works by charging individual hotels set fees plus a percentage of room sales profits. In return for this, member hotels gain the use of an internationally recognized name, together with powerful, worldwide promotion.