OPERATIONAL CHANGES

Operational Changes In Hotels Due To Financial Crisis- Case Study Of London Hotels



Hospitality Sector

The traditional value proposition for the hospitality sector is the provision of temporary lodging and prepared food away from home, but this has gradually expanded to include a variety of service and entertainment offerings. The term hospitality refers to the relationship between companies and consumers, which serves as a substitute for the rapport between hosts and guests in private homes.

The business of hospitality can be traced to early recorded history, for example, the tabernae (taverns or inns) of ancient Rome. Until recently, the hospitality sector was highly fragmented and lacked sophisti cated management systems. However, as the demand for hotel and restaurant services expanded during the 20th century, several hospitality companies developed significant scale and scope, and the principles of managerial capitalism were gradually institutionalized. The multi-unit “chain” concept became increasingly dominant, and franchising was widely adopted as an expansion and financing technique. The late 20th century was characterized by the increasing segmentation of the industry, by the entry of chain operators into upscale segments, and by significant acquisition and consolidation activity. Notable moments include the listing by Sheraton on the Stock Exchange in 1947, and the inclusion of McDonald's in the Dow Jones Industrial Average in 1985.

Worldwide, 75 million people work in hospitality, and there are over four million guest rooms in London alone.

The hotel (or lodging) industry provides accommodations for travelers and related services such as onsite restaurants and spas. In London, the hotel industry generates annual revenues of more than 125 billion and comprises more than 47,000 separate locations or “properties” with more than four million guest rooms. The industry is segmented vertically by price and amenity level (from “luxury” to “economy”) and horizontally by usage patterns (such as “transient” or “extended stay”).

The largest global hotel companies include Accor, Best Western, Carlson, Choice, Hilton, Hyatt, InterContinental, Marriott, Starwood, and Wyndham. With the exception of Best Western, each of these is a holding company with a portfolio of subsidiary brands. Examples include Marriott (which owns brands such as Ritz-Carlton and Courtyard) and Starwood (which owns brands such as Sheraton and Westin).

The restaurant (or foodservice) industry offers prepared food and beverage products away from home. In London, the restaurant industry generates annual revenues of more than 500 billion and comprises more than 945,000 separate locations or “units.” The industry is segmented vertically by price and amenity level (from “fine dining” to “quick service”) and horizontally by style of cuisine (such as “French” or “barbecue”).

The largest global restaurant companies include Brinker, Darden, McDonald's, OSI, Wendy's, and Yum. Several of these are holding companies with portfolios of subsidiary brands. Examples include Darden (which owns brands such as Olive Garden and Red Lobster) and Yum (which owns brands such as Kentucky Fried Chicken and Pizza Hut). The restaurant industry also includes specialty food retailers (such as Starbucks) and contract foodservice operators (such as Aramark, Compass, and Sodexho). Restaurants within hotels are considered part of both industries, and therefore ...