Select-service hotels : a guide to understanding the lodging industry and one of its most attractive segments

Abstract

This thesis serves as a pedagogical guide to the hospitality industry, and presents a broad overview of the unique issues that arise through the development, ownership and management of select-service franchised hotels. It attempts to answer the following four questions: * How is the lodging industry organized? * How has the industry changed over time, and where is the industry headed? * What hotel product type is particularly attractive from a development, investment and operational standpoint? * What are the issues to be aware of when developing this particular product? To answer the first two questions, Section One of this paper offers a full discussion of the industry evolution and focuses on three major innovations that have been gaining momentum in the lodging industry. These innovations are the trends toward franchising, market segmentation, and the "life-style" brand. The study will describe how franchise and management relationships have gained strength in the lodging industry since their introduction in the mid-twentieth century. The study will then explore the intricacies of the on-going process of market segmentation. Through market segmentation, hotel firms have been able to create and introduce greater operationally efficient hotel typologies, one of which is the select-service hotel. Finally, this section of the thesis will explain how the third innovation--that of the "life-style" brand hotel--combined with the ideas of franchising and of operationally efficient product types, has borne into the hotel market a new and exciting product, the select-service franchised life-style hotel called Aloft. Section Two of the study will address the third and fourth questions by presenting a broad overview of the development process for a hotel of this type, as well as highlight the most pertinent issues and requirements that are associated with such a development.

(cont.) Additionally, this section will explore the relationships associated with owning and operating a franchised hotel, and the advantages and pitfalls of owning and building an asset under such an arrangement.