In the hospitality industry, hotels are often described as two distinct businesses. One is the operating business, which involves the renting of the guest rooms and the provision of food and beverage. The other is the real estate business, owning the land and building which house the hotel property and operations. Those two distinct attributes, the fact that hotels are both an operating business and a real estate business, have been the cause of many of the major changes in the hotel industry over the past 30 years.

Going back to the 1990s, Marriott split into two companies, an operating company and a real estate company. The reason it did so was because investors felt that those two businesses were distinct and that the skill sets necessary to maximize both were different. There was inefficiency from having both under the same ownership structure. Due to increased online hospitality education on what works best, the hotel industry has largely moved in that direction of separating asset ownership from day to day operations.

One of the key concerns of hospitality and hotel investors is making sure the relationship with the manager of the property is on an even keel. Hotels often have a tension in that managers are compensated primarily on the basis of top line revenues while owners are compensated on the basis of bottom line profitability. Those two different attributes, as to how they are compensated, can lead to challenging relationships, especially as the business gets weaker during a economic downturn.

There is a whole field, in fact, of advisors and counselors that provide hospitality education and help hotel owners and managers work through these relationship issues. This affects everything from approving annual budgets to capital renovation plans as well as the day to day attributes that go into the hotel business.

Hotels often expand into what is called neighboring businesses. This concept is in addition to their core business of operating rooms for overnight guests.

Many hotels in resort destinations may feature a timeshare component. Overnight guests can buy weekly intervals of units.

It’s not uncommon for hotels to be a part of apartment buildings in urban areas. Residents who own apartments above or below the hotel property feel a unique sense of pride or value. They are happy having their units affiliated with a luxury hotel brand. As a result, hotels have expanded into businesses that are complementary to the hotel industry.

In resort markets, hotels have evolved into timeshares, residential condominiums, lot sales, and even community care facilities for the elderly.

Hotels need a large quantity of support space to ensure operations run properly. You might have basement sales offices, accounting offices, paint shops, upholstery repair shops, and more to assist the process. Yet, revenue is in selling guest rooms and food and the provision of food and drinks.

There is a lot of pressure in the hospitality industry to maximize the space in the hotel that generates money. Hotels must optimize efficiency with “facility programming.” It’s also essential to minimize the areas that are simply required for the support of the operation.

Today’s hotel industry
Over the years, the hotel industry has evolved into two basic organizational types:
* Hotel operating companies who run hotels but rarely have significant real estate holdings
* Privately or publicly held hospitality enterprises owning real estate
Many well-known hospitality companies like Hilton Worldwide, Marriott International, Hyatt Hotels and others may own few (if any) properties in terms of controlling the involved real estate. Similarly, many hotel ownership groups don’t take part in the day-to-day of hotel operations.
Only a few organizations work both sides of hotel operations. Some examples of publicly traded hotel groups include LaSalle Hotel investors and Pebblebrook Hotel Trust. Meanwhile, privately held companies, like Lubert-Adler or Colony Capital own various real estate groups, including some hotels.
Hotel perks make guests happy
In the hospitality business, we have this saying, “you don’t replace the carpet in the lobby when it wears out, you replace it when fashions change or when customer expectations change.” This adage is the definition of functional obsolescence (when hotels or other businesses no longer meet their customers’ expectations.)
Hotel managers are familiar with the constant pressure to keep properties fresh, and for facilities, services and other features to always meet customer expectations. We know that though a hotel may have adequate TVs, if they have only 12-inch screens—or other flaws—guests aren’t going to be incredibly happy.
Keep investing in customer satisfaction
Expect to make large annual reinvestments for room upgrades and to refresh hotel lobbies and restaurants.
It requires significant effort to manage daily hotel operations, particularly any investments needed to ensure a hospitality property’s image for years to come.

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The hospitality industry offers a variety of rewarding roles. We encourage people to consider careers beyond servicing and managing rooms, food, and beverage. Completion of an appropriate hospitality education could lead to roles requiring managerial expertise to manage and control the operations in several departments.

There is a complexity of services and managerial effort that sits on top of the direct operating departments. We have an administrative and general department with a manager that oversees all the departments. These departments include marketing, maintenance, housekeeping, finance, human resources, and information and telecommunication services

The marketing department conducts sales and marketing activities to drive business for rooms, food, and beverage. Within this department are roles like marketing managers, marketing coordinators, sales managers, sales coordinators, and reservation agents.

Maintenance departments keep things working and looking their best. Responsibilities include keeping the hotel looking fresh and keeping the landscaping looking attractive. The energy department keeps ensures the air conditioning and heat work well.

The information and telecommunication services department manages a fair amount of hardware and software systems. They make sure charges from guests in the gift shop get properly transferred to their ledger to be paid when the guest checks out.

We hire for a lot of positions in the hotel. The housekeeping department requires room attendants and housemen. We hire public space attendants to look after our lobby, bar, hallways, and other public gathering areas. We also hire front desk agents, bell door attendants, cafeteria attendants, PBX operators, also called guest experience agents. There are roles that support our back-of-house spaces. Managers in food and beverage, front office, and guest experience supervise all staff. All of the openings are within our operations. The restaurant is a separate entity from the hotel, so we do not hire for these positions.

Why do people travel? There are so many reasons for travel. It could be for special events, occasions, to see new sites, or just visit an interesting city. Let’s take New York City, for example. One of the greatest global cities in the world.

The idea for global tourism is that people leave their home country to experience something interesting that they can’t experience back home. And if you look at the list of the most popular international destinations — France is number one at 85 million international visitors, followed by Spain, and then the United States, at about 75 million. New York City itself gets about 13 million visitors a year.

So why then, do people come to New York City? It’s an amazing place, for one. Diversity. Different cultures. Chinatown. Little Italy. Koreatown. But, there are also very interesting sites too. Central Park is probably the most popular site because it’s open, free, and provides such a contrast in a park experience. Take for example, a traveler from Finland, who might view Central Park as akin to a Finnish forest in the middle of skyscrapers.

And there’s also the 9/11 memorial and museum. The One World Trade tower. And a lot of museums. The famous Metropolitan (Met). The Museum of Natural History. There are many sites here to choose from. A common travel custom now is for the tourist to act like a local and experience things that the locals do. Consumers find these experiences to be authentic. And that’s something that New York City can offer a lot of.
And now thanks to social media, you don’t even have to do a lot of advertising anymore.

In creating your destination marketing plans, look at various sources that rate and rank the most popular attractions and activities in New York City. You don’t have to choose the most popular ones, but use some criteria to choose the ones that you would actually have as part of your vacation plans. For instance, you’ll be traveling to New York City for one week. Find out what you would do during those six nights and seven days. Then describe this in a one-page memo in terms of the criteria you used.

NYC & Company is a destination management organization in New York City that puts together programs that attract tourists to the city.

New York City, industries like hotels, restaurants, retailing, and Broadway shows all come together and finance NYC & Company, which then creates programs for marketing the city abroad.

They have done very creative partnerships with London. They exchange some advertising space on buses in New York City. So New York City buses are promoting London, and the same thing happens in London.

Reasons to come to New York City are plenty: there are attractions such as Central Park, 9/11 memorial museums, and events like the New York City Marathon in the first weekend of November, Fashion Week, and many others.
During these times, it’s very hard to get a hotel room, and even if you do, they’re pretty expensive.

Industries have to come together to make it attractive for consumers to come to New York City, because we compete against the likes of Paris, London, and Tokyo.

Luxury Hotels in New York City
NYC has 14 historic landmark hotels. There are the big ones like the Marriott Marquis, Sheraton, and Hilton, all of which have about 2,000 rooms.

There are also very boutique hotels with up to 20 rooms like the Casablanca library hotel at Times Square.

So how do consumers choose? They usually look at TripAdvisor and see the ratings! Interestingly enough, the #1 rated hotel on Trip Advisor is a small 10 room hotel on 44th Street.

There is a group of small hotels which get very high ratings on TripAdvisor.
Restaurants in New York City
There are about 26,000 restaurants in New York City, many of them in Manhattan. Every year, about 26% of this inventory of 26,000 restaurants closes and something new comes.

It’s a very competitive and creative market! If you want to be an entrepreneur in restaurant business in New York City, you have to create and innovate.

Companies like STL Steakhouse and Jonathan Siegel are at the forefront of innovation. Jonathan Siegel has created an amazing new concept: a steakhouse for ladies, breaking away from the traditional Smith & Wollensky style of older gentleman serving in long white coats and people with huge steaks. Instead, steaks are smaller and there’s seafood.

People come for food, but they also come to see other people. There are also very interesting restaurants that are vegetarian, and you have pockets of restaurants, like in Chinatown, which are very authentic, Little Italy and Koreatown.

While in New York City, you’ll never go hungry! You can get the total culinary experience for the six nights, seven days. This includes breakfast, lunch, and dinner. It’s your choice where you’re going to eat. Variety is key: you can’t be at McDonald’s every day for every meal, even if it’s a Happy Meal.

First, decide on the criteria, and it can differ. For breakfast, it could be maybe grab and go, fast. For lunch, it could be something healthy. For dinner, something where it’s more about the atmospherics, the feeling, the mood of the place, and the food.

In a one-page memo, you can give us the list and links to those restaurants. If you have a favorite dish or have some preferred aesthetics of a restaurant, illustrate that.

The hotel company Marriott is a global leader with 29 brands, 6,800 locations in 150 countries, and various lifestyle brands. They also have an element, which is an extended stay. They have Aloft, a sort of an innovator in this space for Gen X and millennials. Then they have Moxy, which is probably targeting Generation Z, which will be a customer group in the future. So those are the brands. And then they also have AC Hotel, which is a company they bought. It’s a European Spanish company. And that profile, sort of a Spanish lifestyle with tapas and other Spanish cuisines in New York City.
How Does the Consumer Differentiate These Brands?
And having 29 brands, it’s a challenge because of consumer demand- the same consumer might be a business traveler during the week and leave a traveler during the weekend. The brands need to position themselves very clearly in the marketplace. The challenge is that the same customer can use the brand for different purposes.
Luxury
Within Mariott’s luxury category, there are two subsets. St. Regis and Ritz Carlton fall in the classic luxury subset. They also have distinctive luxury, which is the joint venture between Bill Marriott and Ian Schrager.
Ian Schrager is an innovator in the 1980s after Bill Clinton. Bill Clinton created the first boutique hotel in San Francisco with the theme. And then Ian Schrager and his partner, Steve Rubell, who founded Studio 54, got stuck with the hotel. That’s how that segment started to evolve. Ian talks about host boutique hotels, which are also called lifestyle hotels. So what makes them different? The consumer who considers a lifestyle brand has a solid affinity for it because it is part of their lifestyle.
Lifestyle Brands
Lifestyle brands emulate the customer’s life versus traditional brands that offer a standard fare. A customer seeking a New York City experience may choose two hotels, where they’ll stay for, say, seven days. The hotels they pick will be ones that really cater to their needs and desires.

Dr. Jukka Laitamaki is a clinical professor at New York University SBS Jonathan M. Tisch Center for Hospitality. His background is management consulting and he holds a doctorate from Cornell Hotel School. His expertise is in strategy, branding, and business development.

With his background in management consulting, Dr. Laitamaki was with McKinsey and Company and Service Management Group, and worked in the hospitality industry in several sectors in Europe and the United States. As a professor, he has taught in all six continents in executive programs.

An avid world explorer, Dr. Laitamaki has traveled to a total of 63 countries. He has also spoken at the United Nations. His most recent research is on sustainable tourism and the United Nations Educational, Scientific and Cultural Organization (UNESCO) World Heritage sites. He has focused on Cuba which has 11 sites and four historic city centers.

Sustainable development, especially in tourism hospitality, is very important to Dr. Laitamaki. The principle that we should leave this planet in a better condition than we received it for the future generation is important. UNESCO does wonderful work in preserving many historic, cultural, and natural sites.

Sustainability in the hotel sector is also important because it saves energy. More consumers, especially millennials, are looking for environmentally conscious companies. Companies like Marriott, for instance, has a brand called Element, which is an extended stay brand. Element is very energy efficient and uses recycled materials for their buildings from floor to ceiling.

With this online hospitality education course you will learn about the tourism industry. You will learn about global destinations as well as a lot about New York City. Why do consumers come here? You will learn about hotels and how consumers choose hotels, cruises, and car rental services. You will learn about this growing industry and how it’s transforming.

How do you know what makes a great hotel? Well, consumers can use TripAdvisor. They can look at consumer reports. And they can find out what the most preferred brands are. If you look at the JD Power list, you’ll see all the best hotel companies. These comparison companies use specific criteria to rank hotels. Often it is based on the service, location, loyalty program, and facilities provided. But there could also be other criteria considered.

Think about restaurant ranking lists. For instance, the Zagat survey is a respected publication that ranks and rates restaurants. They look at the food service and decor. And they use a zero-to-five-point scale. Bernardin and other New York restaurants usually top global restaurant rankings. So, these are just some of the ways to set a benchmark and make your restaurant or hotel successful. Similarly, you can use a list like the 6A to help make your destination successful globally.

To understand what makes a hotel successful, you need to follow and understand your customer’s journey. Firstly, they dream about staying in a destination and hotel. Then they do their research. Following this, they choose the hotel, make the reservation, travel to the hotel, check-in, stay and check out. Finally, the hotel keeps in touch with them by asking them to review their stay and persuade them to sign up for their loyalty program.

During their stay, the room experience is essential. Rooms don’t have to be big to be good. A small room can have efficient service. If you are in a luxury hotel, the room has more amenities. So, again, the room is important. As is the food and beverage service. What services does the hotel provide? Remember, overall service quality is also critical.

Administrative processes are also vital to making your hotel successful. The check-in process, the check-out process, and overall customer satisfaction. Not to mention the cost and the fees. How much do you pay for a hotel? Because above all else, it’s always about value for money.
Yes, people in New York City pay over $1,000 for a room at the Mandarin Oriental, Four Seasons, Ritz Carlton, St. Regis, or Peninsula. And that’s because they offer value for the price, and they feel it’s a reasonable, fair rate.

However, in comparison, at independent hotels like Moxy and Lifestyle hotels, people may pay $200-300 for a night’s stay. So you’re likely not expecting as much. However, it is still good value for money as although what you get in those hotels is less than the more expensive hotels above, it’s relatively competitive for the rate you pay.

When you consider all the criteria above, you will understand precisely what it takes to have a successful hotel that people want to stay at.

New York City competes against Paris and London. These are all known cities.
But if you want to start a tourism destination, there are six things that need to happen. I have developed this framework called the Six As.

The first is awareness. You need to build it. How do you do that? You may want to have some world-class events taking place in your destination. For instance, Finland organizes crazy competitions like marsh football. Teams play football in a marsh and then in a swamp. They also organize a wife-carrying competition. You carry your wife, and you have to be legally wedded.

In addition, they organize throwing cell phones and rubber boards, which gets the country publicity — global publicity. So, that would be one of many ways to create buzz and awareness.

Then, you need attractions. New York City has an amazing set of attractions, from Central Park to museums.

Then, you need activities. In New York, you have a fashion week, a lot of trade shows, and the New York City Marathon. So these are world-class activities, that also bring awareness to the destination. More often than not, they’re the reason to visit New York City.

Out of those attractions and activities, you can form associations or consumer forums associations, which is basically their perception of the destination. When you hear the word New York City, what comes to mind? It could be the New York City Marathon; it could be some of the movies (e.g., When Harry Met Sally).

So, New York City is a place for movie making, which helps put the destination on the map. And there are actual tours; people go around New York City to hunt down the places where the movies were made. That’s a great way to create associations.

Then, you need access. Access is, especially for international tourists, the flights. How many direct flights from your home country come to JFK or Newark? And then how do you get to the hotel? How is ground transportation organized? In this case, airports — like LaGuardia — are behind the many international airports. But they are investing in this. So, we need to have very good access from the airport to the city and back.

Finally, it’s affordability. That’s the A number six. How much does it cost?

I benchmarked places like Arctic destinations in Finland, Sweden, Norway, Iceland, Greenland, and Alaska. I measured all these items, including affordability. Of course, you take a perspective. In my case, I studied a tourist from New York City who wants to go on an arctic holiday.

The most competitive was Iceland. Alaska was the most known. But when it came to activities and attractions, Finland offered the best. So, this is the way to do it.
You can calculate the actual cost using search engines like Kayak, which gives you the airfares and four-star hotel rates.

I did one about jazz festivals around the world. You have to factor in how much it costs for five days to attend a jazz festival in Havana, Montreal.

These are the necessary things. In summary, the six A’s you need are awareness, attractions, activities, associations, access, and affordability.