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Check-In
Tenth Edition
Check-Out
Vallen
Vallen
Managing Hotel Operations
Check-In Check-Out
Gary K. Vallen
Jerome J. Vallen
The Folio: The Group Account Receivable 324 Debit Cards and Smart Cards 373
Master Accounts 324 Debit Cards 373
How Master Accounts are Structured 327 Smart Cards 375
Split Billing 327 Still Other Cards 376
Understanding Charges and Credits 328 Other City-Ledger Categories 377
Assets 329 Master Accounts 377
Sales or Incomes 331 Groups, Packages, and Company-
Posting to the Folio (The Account Sponsored Functions 378
Receivable) 332 Individual “Direct Bill” City-Ledger
Overview of the Billing Procedure 332 Receivables 379
Preparing the Folio 333 The Original City-Ledger Accounts 379
Presenting the Bill 333 Travel Agents (TAs) 379
Communicating the Charges 334 Banquet Charges 380
Recording Charges to Accounts Late Charges 381
Receivable 335 Delinquent Accounts 382
Understanding the Posting Line 335 Executive Accounts 382
Reference Numbers 337 Due Bills 382
Posting Room Charges 339 Frequent (Preferred) Guest Loyalty Programs 384
Recording Credits to Accounts Receivable 341 Managing Cash and Credit 385
Three Methods of Settling Accounts 341 Managing Cash 385
Settling with Allowances 341 Counterfeit Currency 385
Settling with Transfers 345 Managing Checks 387
Summary 352 Three Quickies 387
Resources and Challenges 352 Simple Deterrents 389
Traveler’s Checks 389
Interesting Tidbits 352
Managing Credit 390
Challenges 353
A Cost/Benefit Decision 390
Problems 353 Collecting, Billing, and Dunning 391
Answers to True/False Quiz 355 Minimizing Chargebacks 392
Summary 393
11 CASH OR CREDIT: THE CITY LEDGER 356 Resources and Challenges 394
Interesting Tidbits 394
Cash 356
Challenges 394
Cash Paid-Outs 356
Tips to Employees 356 Problems 394
Cash Loans 358 Answers to True/False Quiz 395
Refunds at Check-Out 360
House Expenses 360
PART 5 Technology 397
Cash Receipts 360
House Receipts
The Cashier’s Daily Report
361
361
12 THE NIGHT AUDIT 399
The Bank 362 The Auditor and The Audit 399
Net Receipts 363 Point-of-Sale System Interfaces 399
Over or Short 363 The Night Auditor 402
The Turn-In 364 Work Shift 402
Due Back 364 General Duties 402
Other Related Issues 366 Overview of the Audit 404
Tour Package Coupons 366 Reconciling Accounts Receivable 404
Foreign Currency 367 The Closeout Hour 404
Credit and the City Ledger 369 Posting Room Charges 405
Review of the City Ledger 369 Posting Room Charges Electronically 405
Credit Cards 369 Room Charges Not Posted During the
Kinds of Credit Cards 370 Night Audit 406
How the System Works 371 Revenue Verification 406
ix
Innkeeping (hotel management) has a long tradition. But, as we shall see throughout
the text, the “traditional” hotel industry is in flux. Today’s issues and challenges would
not be familiar to the operators of even a generation ago. The skill set of the modern
hotel manager blends art and science (see Exhibit 3-2), and that makes membership
both exciting and demanding.
No one really knows when innkeeping moved from a personal accommodation pro-
vided to traveling friends and acquaintances to a less restrictive, more egalitarian one.
It all started ages ago when wanderers and single travelers sought security and accom-
modations in trees and caves first, then in castles and churches, then in homes and
estates, then in inns and hotels. Greater political and economic freedoms eventually
swelled the numbers. “For my part, I travel not to go anywhere, but to go.”1 Soon, the
courtesy of friendly hosts had to give way to commercial enterprise. The hotel indus-
try was born carrying this culture of hospitality. So hospitality and hotels are related
concepts, deriving from the same Latin root. However, “hotel,” from the French “hôtel
garni,” meaning furnished house, didn’t appear until the 18th century.
A Cyclical Industry
Hotelkeeping is a cyclical industry that closely follows economic phases. Wide swings carry
innkeeping between peaks of exceptional profits and troughs of outright distress. This roller
coaster has been most evident over the past half century. The whole travel industry was
brought to its knees by the oil embargo of 1973. Innkeeping then cycled from bankruptcy
to recovery. A decade later, the early 1980s brought a second cycle when the federal gov-
ernment changed the income tax laws on real estate. (Remember, hotels are pieces of real
estate above all else.) Dominant companies bought distressed properties, and hotel profits
reappeared by the close of the 1990s. Just as the recovery was consolidating came the trag-
edy of 9/11, the World Trade Center destruction (2001). Travel and tourism bottomed out
anew. That recovery cycle faltered in 2008 when a dramatic downturn in the U.S. economy
1
Robert Louis Stevenson, 1878.
halted travel once again. Business began an upward crawl anew from late 2010. Prosperity
returned by 2015; hotels—both profits and physical buildings—were going up once again.
It happened just as predicted in the 2012 edition of this text. Hotel properties rebound
quickly because income (room rates) can be easily adjusted to changing economics.
Hoteliers stop building during downturns. Three years is the typical span between
planning and opening a hotel. It’s longer if there are special financing, zoning, or envi-
ronmental issues. Over half of announced projects are never built. Trump International in
Chicago took four years to build. Just renovating the Pierre in New York took 18 months.
When occupancy and profits boom, the competition begins to rev up new properties. So
new rooms frequently open—three years later—just as the cycle peaks. That increased
supply exaggerates the next downward dip. Supply and demand play their traditional
roles in hotel economics as they do for general business. Overbuilding (excess supply)
exaggerates the downturns far more often than does the insufficient demand (fewer cus-
tomers) of cyclical dips. The trend is exacerbated when civic pride provides financial
incentives (tax breaks and low-cost loans) to subsidize small, local projects that would be
uneconomical otherwise.
Occupancy
Occupancy, a measure of supply and demand, gauges the industry’s economic health. Robust
demand encourages construction. Falling demand seals the fate of old hotels. Worn-out
rooms are kept during boom periods, when there’s a shortage. They fall to the wrecker’s ball
or are converted when they are competitive no longer. Many were renovated into dormitory
rooms when American universities were in their boom years. In the 1990s, condo conversion
was the hot move. Luxury residential units were more valuable than luxury hotel units. The
famed Plaza in New York City carried out one of the most publicized of these conversions.
Its final count from the original 800 rooms: residential condo units, 152; guest rooms, 282.
The downturn that began in 2008 put an end to condo conversions. The movement has not
regained traction because room occupancy improved and renovation costs rose.
Given
Number of rooms available for sale 640
Number of rooms in the hotel 643
Number of rooms sold last night 520
Income from room sales $149,920
Employees on staff 461
Number of guests last night 600
Computations
Percentage of occupancy:
Number of Rooms Sold Last Night 520
= 81.25%
Number of Rooms Available 640
ADR—Average daily rate (Sales per Occupied Room):
Room Sales (in Dollars or Other Currency) $149,920
= $288.31
Number of Rooms Sold 520
REVPAR—Sales per available room:
Room Sales (in Dollars or Other Currency) $149,920
= $234.25
Number of Rooms Available 640
Mathematical Check:
ADR * Occupancy = RevPar $288.31 * 0.8125 = $234.25
EXHIBIT 1-1
Except for the number of employees, these values originate in the night audit (Chapter 12). Standardization
enables hoteliers to compare individual properties to industry-wide statistics. Some locations outside
of the United States favor bed-occupancy percentages (Number of Beds Sold , Number of Beds
Available) over room occupancy values. Bed (or guest or sleeper) occupancy of 50% approximates room
occupancy of 70%.
Occupancy can be computed by one hotel for one night, one month, or one year.
Citywide, regional (the Northeast, for example), and national occupancies are tracked
by many agencies. Among them are hotel chains, convention bureaus and state tourism
offices.
Values become less accurate as the count moves from the individual property to a
worldwide number. Nevertheless, everyone is engrossed by occupancy figures. More so
when estimates suggest that a mere 1% rise in chain occupancy (i.e., “chain” occupancy:
thousands of rooms, see Exhibit 2-3) represents millions of dollars of improved profits.
Double Occupancy
Exhibit 1-1 continues with the occupancy calculations. Spoken simply as “double occu-
pancy,” this value is really a “percentage of double occupancy.”
Number of Guests - Number of Rooms Occupied
= Percentage of Double Occupancy
Number of Rooms Occupied
Multiple occupancy is a better term than double occupancy because more than two
guests may be housed in one room. If the number of guests is greater than two, the for-
mula falters. Assume, for example, two rooms occupied with three persons in one room
and one person in the other. The calculation would be 4 (guests) - 2 (rooms) , 2 (rooms)
= 1 or 100% double occupancy. In fact, it is only 50%, one room in two.
Double occupancy’s impact on room revenue is much clearer. Additional charges
(a double rate) is usually levied when families, skiers, and tour groups double-up.
Break-Even Point
To break even is to have neither profit nor loss. Inflows from revenues match exactly out-
flows from costs. Hotels have large fixed costs including interest on debt payments, licenses,
taxes, and fixed salaries and wages. Reducing fixed costs drops the level of occupancy
needed to break even. Similarly, increasing sales from food, beverage, spa, etc. reduces the
pressure on room sales. Increasing the RevPar also contributes provided the percentage of
occupancy is maintained despite the rate increase.
Break-even points are important, because there is no profit until that point is reached.
Once the point is reached, profits accumulate quickly. Each sales dollar before the break-
even point is used to pay off debt; pay utilities; pay the staff. Thereafter, each dollar con-
tributes to profits.
Break-even points are expressed in occupancy percentages. That value has been declining
over the past decades. Better hotel design and better financing have held down both variable
and fixed costs. Changes in market mix and higher room rates have sometimes improved
revenues, the other component of break even. Different times and different circumstances
(rising debt and shrinking revenues) will boost the occupancy needed to break even.
Perishability
Vacant rooms are perishable. The industry’s mantra is “an unsold room tonight can never
be sold again.” Unlike a can of fruit which inventories on the grocer’s shelf, hotel rooms are
time restricted. No way to take last night’s empty room to meet an overflow tonight. Like
empty airline, theater or arena seats, unsold hotel rooms cannot be stored, cannot be saved,
cannot be used anew.
Location
Ellsworth Statler, who sold his Statler chain to Hilton, has been credited with “Location,
location, location” as the three most important aspects of [hotel] real estate. Good loca-
tions are not easy to acquire. Changing neighborhoods and shifting demographics some-
times doom a hotel whose original location was good. Unlike an airline seat, there is no
way to move the hotel room. A fixed location in an uneven neighborhood requires astute
management and a heavy dependence on marketing and sales.
Fixed Supply
Just as the hotel’s location is fixed, so is its supply of rooms. Airlines adjust to demand by
adding or removing flights. Not so with hotels. What you see is what you must manage.
Seasonality
Throwing away the key is a traditional practice when a new hotel opens. Hotels never
close; that’s the significance. Yet hotelkeeping is a very seasonal business. Cyclical
Monday 78
Tuesday 89
Wednesday 87
Thursday 80
Friday 41
Saturday 47
Sunday 54
476,7 days per week
= 68% average weekly occupancy
EXHIBIT 1-2
The difficulty of achieving a national occupancy in the mid-70% range is highlighted by the typical
cycle of weekly occupancy for commercial hotels. The challenge is convincing guest groups, whose
members work all week, to hold conventions on the weekends. (Smith Travel Research, among
others, tracks and reports U.S. occupancy figures.)
dips hit commercial hotels every seven days as they struggle to offset poor weekend
occupancy. The federal holiday law that extended weekends into Mondays certainly
didn’t help.
Occupancy computations must account for the weekend phenomenon. Especially
since the business traveler—the very person not registered during the weekend—still
accounts for the bulk of the industry’s business. Given the usual profile of the commer-
cial, urban hotel (see Exhibit 1-2), national occupancy in the 70–80% range remains
an elusive goal. Annual cycles compound the problem. Commercial occupancy falls off
between Thanksgiving and New Years and from May Day to Labor Day.
Resorts have an opposite pattern: Busy weekends, slower midweeks. The slack
months of the commercial hotel are the very season of the resort hotel. At one time,
resorts opened Memorial Day and closed Labor Day. Winter resorts (December
15–March 15) fared no better. Bad weather could devastate both 100-day seasons.
Both summer and winter resorts have extended seasons with groups, conferences,
and special events. Most remain open year-round. Commercial hotels that operate on the
four-day season may be worse off than the seasonal hotels. At least the latter have high
double occupancy.
Traditional Classifications
Lodging is an industry of rapid transformation. The inns of old evolved from private homes
located along the traveler’s route. Today’s hotel is often a point of destination even as it
serves its traditional role of accommodating those in transit. Yesterday’s tavern offered
meals with the family. Dining today is a created experience in design, décor, and menu.
Early inns were indistinguishable from their neighbor’s homes. Today’s edifice is a sharp
contrast in style and packaging (see Exhibit 1-3).
The industry still delivers the basic accommodations of shelter, food and hospitality.
It’s the means of delivery that has changed. These variations have been marked by shift-
ing terminology: hostel, tavern, public house, inn, guest house, hotel, resort, motel, motor
lodge, motor inn, bed and breakfast, timeshare, condominium. The industry’s trade asso-
ciation has undergone similar shifts in identity. The American Hotel Association became
the American Hotel & Motel Association; and then the American Hotel and Lodging
Association. “Motel” has been replaced in the professional vocabulary with new hotel
types—and there are many, as we shall see throughout the text.
Changes notwithstanding, several traditional classifications have withstood the test
of time. They are size, class, type, and plan. These are not definitive, objective measures.
EXHIBIT 1-3
In sharp contrast to early inns, which were the homes of the innkeeper and his family, the architecture
of modern hotels contributes to their éclat.
Joyt/Fotolia.
Nor are they self-exclusive. Hotels fall into all categories or into just some. Each category
impacts differently on how managers manage. Hence, comes the text’s subtitle, Managing
Hotel Operations.
Size
The number of rooms available for sale, the very same figure used in occupancy compu-
tations (see Exhibit 1-1), is the standard measure of size. Measures such as the number of
employees or gross dollar sales are used less frequently. Counting available rooms is not as
certain a gauge as one would first believe. More rooms may be advertised than are actually
available. Older hotels have rooms that are no longer saleable. Newer properties lose guest
rooms to unplanned offices and storage. As a rule, the older the hotel, the fewer rooms
available relative to the original room count.
Hotels are grouped by size for financial reporting, for the U.S. Census and for trade
association dues. Traditionally, large hotels are 300 rooms or more, medium hotels are
100–300 rooms, and small hotels are less than 100 rooms. Recognize that these desig-
nations are somewhat arbitrary. Yet, most of the AH&LA’s membership is less than 100
rooms. The USA’s Small Business Administration (SBA) offers these small hotel builders
“7(a) 504 loans.” Periodically, the SBA redefines small by setting new dollar values. The
current limit for a “small” hotel is revenue of no more than $30,000,000! An 80-room
hotel with 70% occupancy and an ADR of $100 would easily qualify for such a loan. It
would generate only $2,044,000 annually (80 rooms * 70% occupancy * $100 ADR *
365 days = $2,044,000); far below the SBA’s ceiling.
Visualizing small-and medium-sized hotels as the lodging industry is difficult when one
thinks of famous hotels such as the Waldorf Astoria in New York City with 1,413 rooms
or the New Otani in Tokyo, 1,479 rooms (see Exhibit 1-4). Small hotels are more common
in Europe where they have been traditionally family owned and operated. But the shift to
chains and franchised hotel names has accelerated in both Europe and Asia. There are well
over 100 brands worldwide and that is changing the international structure of the business.
Venetian/ Palazzo b
7,100 Las Vegas
MGM Grand/Mansion/Signatureb 6,850 Las Vegas
First World Hotel 6,100 Genting Highlands, Malaysia
Disney All Star resort 5,500 Orlando
Izmailovo Gamma Delta 5,000 Moscow
Wynn/Encoreb 4,750 Las Vegas
Luxor 4,400 Las Vegas
Mandalay Bay/Delano Hotelb 4,350 Las Vegas
Ambassador City 4,200 Jomtien Beach, Thailand
Excalibur 4,050 Las Vegas
Aria 4,000 Las Vegas
Bellagio 4,000 Las Vegas
Caesars Palace 3,900 Las Vegas
Sheraton Macau 3,900 Macau
Circus Circus 3,700 Las Vegas
Planet Hollywood (nee: Aladdin) 3,700 Las Vegas
Shinagawa Prince 3,700 Tokyo
Flamingo 3,550 Las Vegas
Atlantis 3,400 Paradise Island
Hilton Hawaiian Village 3,400 Honolulu
Las Vegas Hilton 3,200 Las Vegas
Disney 3,050 Lake Buena Vista
Mirage 3,050 Las Vegas
Opryland Hotel 3,000 Nashville
Monte Carlo 3,000 Las Vegas
Venetian 3,000 Macau
Cosmopolitan 3,000 Las Vegas
aRoom numbers have been rounded to 50.
bBuilt and marketed as separate hotels.
EXHIBIT 1-4
Megahotels, once exclusive to Las Vegas, are now worldwide. Still, many of these behemoths rely on
gaming for their financial success.
Mom-and-Pop Motels
The term “motel” (motor + hotel) was coined after World War II when Americans took to the
highways and the new freeway system. The concept was refined by Kemmon’s Wilson who
created the Holiday Inn chain. Motels replaced the very limited facilities known as tourist
courts (see Exhibit 1-5). Many motels—the term has now fallen from favor—were family
owned and operated, hence the term “mom-and-pop.” There were some 60,000 mom-and-
pop motels along the highways after World War II (1950s). Rising construction costs and
difficult financing headed a list of hurdles that such small entrepreneurs could not overcome.
(Support from the SBA, mentioned earlier, didn’t appear until a decade later, 1953.) Mom-
and-pops did not purchase in quantity; they were unable to advertise widely; and they
competed against the better management talent that were employed by the (new) chain/
franchise competitors. Positively: They could be built on just two acres of land.
Class
The class of hotel is sensed as often as it is measured, but two yardsticks quantify the
appraisal. They are price (ADR) and rating systems.
EXHIBIT 1-5
Tourist courts (camps) morphed into the motor hotel made popular by Kemmons Wilson’s Holiday
Inns and made possible by the federal interstate road system backed by legislation under the Eisen-
hower administration (post World War II).
extras. All must be recovered by higher rates. It is more than just a generalization that: The
better the class of hotel the higher the rate.
Driven by inflation, ADR has been increasing industry-wide for decades. So a higher
room rate over time is not the measure. The critical value is a higher rate relative to compe-
tition. “Location, location, location,” a quote from the famed Ellsworth Statler, also plays a
role. Hotels in small towns are different than their big-city counterparts. A $75 rate in Los
Angeles conjures up a totally different class of lodging than does that same rate in a small
rural town. However, at a given time and with concern for size, type, and location, ADR is a
fair measure of class. So rates help further classify the nation’s hotels (see Exhibit 1-6).
EXHIBIT 1-6
Average daily rate (ADR) helps classify the wide range of hotel accommodations, which range from
bare-minimum budget facilities to full-service, deluxe properties.
Number of Employees
Class as measured by full-service or limited service refers as much to staff size as to phys-
ical amenities. Thus, the number of employees per guest room is another measure of class
(see Exhibit 1-1).
Number of Employees on Staff
= Number of Employees per Guest Room
Number of Rooms Available for Sale
Budget properties, those without amenities such as restaurants, bars or room service,
operate with as few as 0.25 (one-fourth) employee per guest room. An 80-room budget
might have as few as 20 staffers. There’s a limit to how small the staff can shrink. If the
property wants the legal benefits of being a hotel, common law requires it to be open 24
hours daily. Now add in staff days-off, plus a minimum housekeeping crew, night secu-
rity, someone for repairs and maintenance and the total staff grows.
The Marina Bay Sands (Singapore) opened 2,500 rooms in 2010 with 20,000 employ-
ees; an unprecedented ratio of eight employees per guest room! The staff has been whit-
tled down since—and that is the usual arrangement with new hotel openings. Because a
basic staff is needed, a hotel of 60 rooms might have almost the same number of employ-
ees as one of, say, 100 rooms. Each property needs a minimum number at the desk, a
manager, a head housekeeper, an accountant, and someone in maintenance. Each must
provide for vacations and sickness. Housekeeping is staffed differently. If a housekeeper
cleans 15 occupied rooms per shift, every additional 15 rooms require an extra employee
and eventually a supervisor. Hotels minimize that number by only using and paying for
call-in housekeepers when volume dictates.
The in-between class of hotels uses an in-between number of employees. That ratio
runs from 0.5 (one-half) an employee per room to a ratio as high as 1:1. Depending on
the level of service offered, a 300-room hotel could have as few as 125 employees to as
many as 250. Some will be part-time.
Full-service hotels offer a variety of departments (bells, restaurants, turn-down ser-
vice, marketing, pools). Still more staff is needed for properties with theaters, acres of
grounds, casinos, and 24-hour room service. The employee–rooms ratio may jump to 1.5.
So a 1,000 hotel/casino in full operation 24 hours could have 1,250–1,500 staffers. No
wonder so many localities with low labor usage—think Detroit, for example—have voted
for local casinos.
Asian hotels have had the largest ratio because labor has been less costly. The Bangkok
Shangri-La, for example, has a ratio of about 1.5:1. Hong Kong’s Peninsula Hotel oper-
ates with 655 employees for its 300 rooms. That’s better than 2:1. The Singapore Sands
had a nearly 4:1 ratio: 10,000 on staff for 2,560 rooms when it first opened. (And no
wonder! Singapore’s few hotel/casinos have generated more earnings than all of Las Vegas’
hotel/casinos combined.)
Rating Systems
Room rates provide good guidance to the class of hotel even when formal rating systems
exist. Some rating systems have been publicized; some have not. Some are government-run;
some are not. Most are standardized within the single country, but not across borders.
Members of the World Tourism Organization have done much to standardize their systems
by adopting the WTO’s five recommended classes. Deluxe or luxury class is at the top.
First class, which is not top-of-the-line despite its name, comes next. Tourist class, some-
times called economy or second class, is actually third in line. Third and fourth classes
(really the fourth and fifth ranks) usually have no private baths, no centralized heat, not
even carpeting. International travelers avoid third- and fourth-class facilities. They also
know to discount the deluxe category of many Caribbean properties. Experienced travelers
limit stays in Africa and the Middle East to deluxe properties only.
Worldwide Worldwide there are some 100 rating systems. Almost all of them rank by
using stars, but coffee pots, alphabets, and even feathers have been used. Britain uses ticks
for its holiday parks (upscale RV [recreational vehicle] parks).
Europe’s system is the most developed. Its four- and five-star hotels have restaurants
and bars. Hotel garni means no restaurant but a continental breakfast is usually served.
That’s the usage in England as well as on the Continent and both correspond to the U.S.
phrase, “breakfast included.”
The Swiss and Mexican Hotel Associations are unique because they are self-rating
private organizations. The Swiss use the WTO’s five classifications plus a luxury class
termed Gran Tourism or Gran Especial. The Irish Tourist Board takes a different
approach, listing the facilities available (elevator, air conditioning, laundry) rather than
grading them. Directories of the European Community do the same and also classify by
location: seaside/countryside; small town/large city. European auto clubs go further by
distinguishing privately owned from government-run accommodations.
Spain has standardized the ratings on its paradors (stopping places) despite a wide
range of facilities and furnishings. About one-third of this government-operated chain is
at a four-star level.
In 2008, Italy adopted a one-to-five-star plan leaving enforcement to individual
regions. Room size is one criterion: A minimum 15 square meters (155 square feet) for
four- and five-star properties.2 A staff of foreign-language speakers is among the standards.
Japanese traditional inns, ryokans, are rated according to their rooms and baths
and—of all things to Western values—gardens. Two meals are offered and often taken
in the uncluttered guest room that opens onto these gardens. The Japanese Travel
Bureau lists about 1,000 ryokans for international guests. Ryokans, great for tour-
ists, are not favored by Japanese nationals who prefer shukubos—rooms in Buddhist
temples.
Korea has its own version of traditional, budget-priced lodging, yogwans. Most have
standard hotel accommodations. Upscale yogwans have jang or chang tacked on at the
end of their names. Many hanoks (traditional Korean houses) have been converted into
boutique hotels.
The United Kingdom has the largest variety of rating systems. Among them are the
National Tourism Board (NTB), the Automobile Association (AA), the Royal Automobile
Club (RAC), and commercial enterprises including the well-known Michelin. Some rate
by stars, others use pavilions or crowns. Each classification is further divided by grades or
percentages. For example, the AA might grade a property as Four Star, 65%.
2
See Chapter 3 for square foot and square meter equivalencies.
The U.S. System Unlike the United Kingdom’s mix of private and governmental sys-
tems, the United States relies solely on private enterprise. The American Automobile As-
sociation (AAA) has been one of two major participants. Mobil (present day Forbes) was
started in the motor-lodge era of the late 1950s as a subsidiary of Mobil Oil. Now, both
face several competitors. Michelin, popular in Europe, now has U.S. guidebooks. Zagat
started with restaurant guides and then added hotels. J.D. Powers, the consumer goods
rating system, has also entered the market. Many websites (Expedia, for one) carry evalua-
tions as do a wide range of publications. Social networks probably do the best job because
previous guests “tell it like it is!” on websites for all to read.
There are bed-and-breakfast guides, magazine guides, regional guides, even one by
the National Association for the Advancement of Colored People (NAACP). None are
government affiliated. All are crowding the traditional star system of Forbes and the dia-
mond ratings of AAA (see Exhibit 1-7).
Historically, a good Forbes listing boosted occupancy by 20% or so. Similarly, as
much as 40% of room sales in small hotels has been attributed to an AAA listing. Both
★★★★★
Every rating has cleanliness, maintenance, service (staff), furnishings, and physical appointments as
its base. Ratings must also consider regional differences. A historic inn of New England cannot be
compared to a dude ranch in the Southwest or an urban-center highrise. Each star-level must incorpo-
rate the best standards of the previous level.
★
One-star establishments should be clean and comfortable offering minimal services at minimal price.
Rates should be comparable to local competitors with similar accommodations. Service must be cour-
teous but may not be available around the clock. There is no restaurant. Furniture and linens must be in
good condition, but will not be luxurious. Housekeeping and maintenance should set a good standard.
★★
Two-star accommodations must meet the standards of one-star facilities and include some, but not
necessarily all, of the following: Better-quality furniture, larger bedrooms, color TV in all rooms, direct-
dial phones, and, perhaps, a swimming pool. Luxury will usually be lacking, but cleanliness, mainte-
nance, and comfort remain essential. The desk is open around the clock.
★★★
Three-star properties include all of the facilities and services mentioned in the preceding paragraphs.
Additonal service personnel will be apparent. Food service, especially at breakfast, is required. So is a
swimming pool. Upgardes in the bath should be apparent. Internet access available. Electronic locking
and security systems are in place. Three-star establishment should offer a pleasant travel experience.
★★★★
Four-star and five-star properties make up less than 2% of the ratings! They must be outstanding in
every respect. Bedrooms should be extra large; furniture of high quality; all of the essential and extra
services (dining, lounges, spas, laundry) should be offered at a stepped-up level. Personnel must be
well trained, courteous, groomed, and anxious to please. Rates will reflect these superior standards. A
stay in a four-star property should be memorable. No place will be awarded four or five stars if there is
a pattern of complaints from customers, regardless of the luxury offered.
★★★★★
There are very few five-star-award facilities. Those that reach this pinnacle go beyond comfort and
service to deserve the description “one of the best in the country.” Superior restaurants are required,
although they may not be rated as highly as the accommodations. Twice-daily maid service is standard;
linens should be no less than 250 count. Rooms will be large and accommodations and toiletries in the bath
extra special. Lobbies will be places of beauty, often furnished in antiques. Grounds surrounding the building
will be meticulously groomed and landscaped. Guest will feel pampered.
EXHIBIT 1-7
There are no universal standards for rating hotels although stars and diamonds are traditional. Some
systems are established by governments or semi-public agencies and some are privately rated as
they are in the United States. The authors’ guidelines help define the ratings.
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