Hotels using high-road competition charge high room rates but provide top-class amenities, satisfying customer service and on-site attractions, such as restaurants, lounges, conference sites, gift shops and concierge service to attract customers and incline them to spend. Upper segments are likelier to engage in high-road competition and lower segments, in low-road competition. Hotels in the limited-service segments must differentiate themselves from low-cost providers by offering better service, while upper-upscale and upscale hotels must reduce costs to increase or maximize profit (Working for America Institute). The amount and quality of service in the upper segments allow them to charge higher prices and to directly reward investment.
The high-road strategy may, however, not be conducive to the level of productivity that owners and managers would want, which is revenue per available room or RevPAR (Working for America 2004). RevPAR is a measure of capital productivity of hotel services per unit of the physical plant. It does not directly measure labor productivity, but the amount of service per hour rendered by hotel employees. It measures the value of the investment in the hotel labor force. RevPAR is equivalent to the product of the average daily rate of the room and the hotel room occupancy rate, which leads owners and managers to equate high room prices and high occupancy rates with success. This standpoint may then distract them from perceiving and improving the effectiveness of their internal operations and workforce by a constant reference to pricing and marketing innovations (Working for America Institute).
RevPAR does not reveal or contain turnover costs, for example, and reflects only room availability, thus hiding the high cost of a transient workforce. Knowing these turnover costs would be beneficial, as reducing them would also reduce training, hiring and recruitment expenses. Owners and managers tended to favor RevPAR and a study conducted in the 90s on the structure of hotel revenues reinforced this position among these owners and managers (Working for America Institute 2004). Revenue from room rental increased from 59.3% in 1992 to 73% in 1997, along with reduced sales of meals and alcoholic beverages within hotel premises and a slight increase in the sales of packaged items. But critics believed that these were due to the growth of limited-service segments and the outsourcing or the closure of some hotel restaurants in the 90s. These segments did not offer food and beverages operations or supplementary revenue-generating services within the premises. The observed increase in revenue from room rentals could be attributed to the increase in size of these segments (Working for America Institute).
II. Hyatt Hotels
The Hyatt Corporation opened its first hotel property in Los Angeles International Airport on September 27, 1957. It was first called Hyatt House, owned by a local entrepreneur, Hyatt R. von Dehn (Hospitality Online 2004). Hyatt's hotels grew aggressively along the West Coast in the decade following, but became known with their brand name only after Hyatt opened the world's first atrium hotel in 1987. This 21-storey tower lobby and dramatic difference from the traditional hotel architecture altered the course of the lodging industry. Architects would veer from eliminating extra space to utilizing or creating wide and open public spaces (Hospitality Online).
There were 13 Hyatt hotels in the U.S. By 1969, the year the first international hotel was opened. This was Hyatt Regency Hong Kong, operated by the newly established company, Hyatt International (Hospitality Online 2004). Hyatt Regency hotels became Hyatt's core brand, which offered opportunities to broaden one's horizons and to rejuvenate. The hotels' lobbies and rooms reflected the best of the indigenous culture, with creative food and beverage outlets and sophisticated technology, meeting and sports and fitness facilities.
To deepen its identity and present the varied types of Hyatt properties worldwide, the Corporation introduced the Grand Hyatt and Park Hyatt brands in 1980 (Hospitality Online 2004). The Grand Hyatt series addresses culturally rich destinations that attracted leisure and business travelers in addition to large meetings and conventions. Hotels in this series have been known for their grand scale and refinement, as exuded by such features as state-of-the-art technology, business and leisure facilities, world-class banquet and conference facilities, and programs customized for discriminating business and vacation guests (Hospitality Online).
On the other hand, Park Hyatts were smaller, luxury hotels intended for discriminating travelers who wanted privacy, personalized service and elegance traditionally found in small European hotels (Hospitality Online 2004). They also offer state-of-the-art technology, excellent food and beverage, conducive surroundings and 24-hour personalized service.
Since the Corporation...
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