The Hotel Business

STP -TRISAKTI
Candra Hidayat, SST., M.Par., MM. in
ITM
PERATURAN MENTERI PARIWISATA
DAN EKONOMI KREATIF
REPUBLIK INDONESIA
NOMOR 6 TAHUN 2014

STANDAR USAHA HOTEL

 BAB I KETENTUAN UMUM Pasal 1
1. Usaha adalah setiap tindakan atau kegiatan dalam bidang
perekonomian yang dilakukan untuk tujuan memperoleh
keuntungan dan/atau laba.
2. Usaha Pariwisata adalah usaha yang menyediakan barang
dan/atau jasa bagi pemenuhan kebutuhan wisatawan dan
penyelenggaraan pariwisata.
3. Usaha Penyediaan Akomodasi adalah usaha yang
menyediakan pelayanan penginapan yang dapat dilengkapi
dengan pelayanan pariwisata lainnya.
4. Usaha Hotel adalah usaha penyediaan akomodasi berupa
kamar-kamar di dalam suatu bangunan, yang dapat
dilengkapi dengan jasa pelayanan makan dan minum,
kegiatan hiburan dan/atau fasilitas lainnya secara harian
dengan tujuan memperoleh keuntungan.
 BAB II USAHA HOTEL Pasal 4

Usaha Hotel dikelompokan:

a. Hotel Bintang; dan
b. Hotel Nonbintang

Hotel Bintang, memiliki penggolongan kelas hotel

terdiri atas:
a. hotel bintang satu;
b. hotel bintang dua;
c. hotel bintang tiga;
d. hotel bintang empat; dan
e. hotel bintang lima.
 Hotel Development and Ownership

The lodging industry is a more than $155 billion industry that

includes approximately 53,000 properties with almost five
million guestrooms. This is an industry that continues to
flourish predominantly by way of franchising and
management contracts, which are the two main driving forces
in the development and operation of the hotel business
 Franchising
Franchising in the hospitality industry is a concept that
allows a company to expand more rapidly by using other
people’s money rather than acquiring its own financing.
The company, or franchisor, grants certain rights to the
franchisee—for example, the rights to use its trademark,
signs, proven operating systems, operating procedures and,
possibly, its reservations system, marketing know-how,
purchasing discounts, and so on—for a fee. In return, the
franchisee agrees by signing the franchise contract to operate
the restaurant, hotel, or franchised outlet in accordance with
the guidelines set by the franchisor.
Franchising is a way of doing business that benefits both the
Franchisor— who wants to expand the business rapidly—
and the franchisee— who has financial backing but lacks
specific expertise and recognition.

Franchising hotels in the United States began in 1907, when

the Ritz Development Company franchised the Ritz-Carlton
name in New York City.
The world’s leading franchisors of hotels are Inter
Continental Hotels and Resorts with 688,517 rooms in
4,704 hotels; Wyndham Worldwide with 627,440 rooms in
7,340 hotels; and Choice Hotels International with 500,000
rooms in 6,300 hotels. Franchising provides both benefits and
drawbacks to the franchisee and franchisor.

The benefits to the franchisee are as follows:

 A set of plans and specifications from which to build
 National advertising
 A centralized reservation system (CRS)
 Participation in volume discounts for purchasing
furnishings, fixtures, and equipment
 Listing in the franchisor’s directory
 Low fee percentage charged by credit card companies
The drawbacks to the franchisee are as follows:
 Franchisees must pay high fees, both to join and ongoing.
 Central reservations generally produce between 17 and 26
percent of reservations.
 Franchisees must conform to the franchisor’s agreement.
 Franchisees must maintain all standard set by the
franchisor

The benefits to the franchise company are as follows:

 Increased market share and recognition
 Up-front fees

The drawbacks to the franchise company are as follows:

 The need to be very careful in the selection of franchisees
 Difficulty in maintaining control of standards
Franchising continues to be a popular form of expansion both
in North America and the rest of the world. However, there are
always a few properties that lose their right to franchise by not
maintaining standards.

Factors propelling franchise growth include the following:

 Fresh looks (curb appeal)
 Location near highways, airports, and suburbs
 Expansion in smaller cities throughout the United States
 New markets located in proximity to golf courses and other
attractions
 Foreign expansion and a move to increase brand awareness
 Referral associations

Referral associations offer similar benefits to properties as

franchises, albeit at a lower cost. Hotels and motels with a
referral association share a CRS and a common image, logo,
or advertising slogan. In addition, referrals may offer group-
buying discounts to members, as well as management
training and continuing education programs. Each
independent hotel refers guests to each of the other member
hotels. Hotels and motels pay an initial fee to join a referral
association. Size and appearance standards are less
stringent than those in a franchise agreement; hence,
guests may find more variation between the facilities than
between franchise members.
 Management contracts

Management contracts have been responsible for the hotel

industry’s rapid boom since the 1970s. They became popular
among hotel corporations because little or no up-front
financing or equity is involved. Hotel management
companies often form a partnership of convenience with
developers and owners who generally do not have the
desire or ability to operate the hotel. The management
company provides operational expertise, marketing, and sales
clout, often in the form of a CRS
The management contract usually allows for the hotel
company to manage the property for a period of five, 10, or
20 years. For this, the company receives as a management
fee, often a percentage of gross and/or net operating profit,
usually about 2–4.5 percent of gross revenues. Lower fees in
the two percent
range are more prevalent today, with an increase in the
incentive fee based on profitability. Some contracts begin at
two percent for the first year, increase to 2.5 the second, and to
3.5 the third and for the remainder of the contract.
 Real estate investment trusts (REITs)

Real estate investment trusts (REITs) have existed since the

1960s. In those early days, they were mostly mortgage
holders. But in the 1980s, they began to own property outright,
often focusing on specific sectors such as hotels, office
buildings, apartments, malls, and nursing homes. An REIT
must have at least 75 percent of its assets in real estate.
 Hotel Development

Hotel ownership and development is very capital intensive.

It takes millions of dollars to develop a property. New hotels
are built as a business venture by a developer, and because the
developer expects to make a fair return on the (substantial)
investment, a feasibility study is done to assess the viability
of the project—this is generally required by lenders. The
feasibility study examines the market area’s demand and
supply, including any potential or real competition in the
pipeline.
The feasibility study determines the degree to which the
proposed hotel project would be financially successful.
Revenue projections based on anticipated occupancy,
average daily rate, and revenue per available room are
presented. The feasibility study also helps determine the
type of hotel that would best suit the market and is used by
the developer to obtain financing for the project. One of the
most important documents is a Summary Operating
Statement, which details revenues and expenses for a period
 Hotel Affiliations
A hotel may have multiple affiliations including being part of
a chain, parent company, operation (such as corporation,
franchise, or independent), management company, owner,
asset management company, and/or a member of a
membership or marketing group.

Hotels may also be classified as corporate, franchise, or

independent. A corporate hotel is a chain hotel owned or
managed by the chain or parent company. Parent hotel
companies such as Marriott International, Hilton Worldwide,
and Wyndham Worldwide.
A franchise hotel is a chain hotel run by a third party, where
the chain receives some sort of franchise fee. Some well-
known hotel owner companies include Host Hotels & Resorts,
Caesars Entertainment, Morgan Stanley Real Estate, Starwood
Hotels and Resorts, and Walt Disney World Resorts.

An independent hotel is not affiliated with a chain or parent

company

A management company that operates the hotel on behalf of

another party. The top global management companies in 2012
included MGM Resorts, Caesars Entertainment, Interstate
Hotels, Merrylin Holding Ltd., and Aimbridge Hospitality.
Quasi-chains have recently come into existence and are
basically a cross between a chain and a marketing group for
independent hotels. The majority of these new types of
chains have been created in order to bring independent
hotels under a parent company flag or brand. The
independent hotels can take advantage of the many benefits
that membership in a parent company can bring, including
purchasing, marketing, reservations, and so on. Some of
the newest quasi-chain hotel brands include Autograph
Collection by Marriott; Luxury Collection by Starwood;
Andaz, Zilara, and Ziva by Hyatt; and Ascend by Choice
Hotels.
Classification of Hotels and Lodging Properties

According to the AH&LA, as of year-end 2013, the U.S.

lodging industry consisted of 52,887 hotels and motels, with
a total of 4,926,543 guest rooms with $163 billion in sales.
The average revenue per available room was $68.64 and the
average occupancy was 62.2 percent

Hotels may be classified using the Smith Travel Research

(STR) hotel classification system, the Forbes Travel Guide
Five-Star rating process, and the American Automobile
Association (AAA ) Five-Diamond award system.
 Hotel Classification by Rating System: AAA
 One-diamond properties have simple roadside appeal and
the basic lodging needs.
 Two-diamond properties have average roadside appeal,
with some landscaping and a noticeable enhancement in
interior décor.
 Three diamonds carry a degree of sophistication through
higher service and comfort.
 Four diamonds have excellent roadside appeal and service
levels that give guests what they need before they even ask
for it.
 Five-diamond properties have the highest service levels,
sophistication, and offerings.
 Hotel Classification by Rating System: Forbes
 Five-star properties are exceptional hotels that provide a
memorable experience through virtually flawless service
and the finest of amenities. Staff are intuitive, engaging,
and passionate and eagerly deliver service above and
beyond the guests’ expectations. Hotels were designed with
the guest’s comfort in mind, with particular attention paid
to craftsmanship and quality of product.
 Four-star properties provide a distinctive setting with many
interesting and inviting elements to enjoy throughout the
property. Attention to detail is prominent from design
concept to quality of products provided. Staff are
accommodating and take pride in catering to the guest’s
specific needs.
 Recommended properties are well-appointed hotels with
enhanced amenities that provide travelers with a strong
sense of location, whether for style or function. They may
have a distinguishing style and ambience in both the public
spaces and guest rooms
Smith Travel uses a seven-scale categorization, with six
categories for chain hotels (e.g., economy, midscale, upper
midscale, upscale, upper upscale, and luxury) and one scale
category for independent hotels.

 City Center and Suburban: May include luxury, first-class,

full-service, convention, midscale, economy, boutique,
extended stay, corporate housing, and all-suite hotels.
 Resort: May include luxury, midscale, economy suites,
condominium, timeshare, convention, boutique, all-suite,
all-inclusive, or a mixed-use hotel (e.g., includes a full-
service hotel, condominiums, homes, and fractional
ownership/timeshare units on property).
 Airport: May include luxury, full-service, midscale,
economy, and all-suite hotels.
 Freeway: May include midscale, economy, and all-suite
hotels.
 Casino: May include luxury, upper upscale, and midscale
hotels with an attached casino operation.
 Rural and Small Town: May include a mix of midscale,
economy, and bed and breakfast hotels.
 Best, biggest and most unusual, hotels and
chains
The Ritz-Carlton and the Four Seasons are generally rated
the highest-quality large chain hotels.

The largest hotel in the world is the Izmailovo Hotel in

Moscow with 7,500 rooms, followed by the 7,372-room
MGM Grand in Las Vegas and the Venetian Hotel, also in
Las Vegas, which has 7,117 rooms.

Among the world’s most unusual hotels are ones like the
Treetops Hotel in one of Kenya’s wild animal parks—
literally in the treetops. The uniqueness of the hotel is that it
is built on the tops of trees overlooking a wild animal
watering hole in the park.
Another magnificent spectacle is the ICEHOTEL, situated
on the shores of the Torne River in the old village of
Jukkasjärvi in Swedish Lapland. The ICEHOTEL is built
from scratch on an annual basis with a completely new design,
new suites, new departments, even the “Absolut Ice Bar,” a
bar carved in ice with ice glasses and ice plates. The
ICEHOTEL can accommodate more than 100 guests, with
each room having its own distinct style. The hotel also has an
ice chapel, an ice art exhibition hall, and, believe it or not, a
cinema.

Australia boasts an underwater hotel at the Great Barrier

Reef, where guests have wonderful underwater views from
their rooms.
Japan has several unusual hotels. One is a cocoon-like hotel,
called a capsule hotel, in which guests do not have a room as
such. Instead, they have a space of about 4 feet X 7 feet. In
this space is a bed and a television— which guests almost
have to operate with their toes! Such hotels are popular with
people who get caught up in the obligatory late-night drinking
with the boss and with visiting professors, and who find them
the only affordable place to stay in expensive Tokyo.
One of the highest hotels in the world, in terms of altitude,
is the Hotel Everest View. It is nestled in the Himalayan
mountain range at an altitude of 13,000 feet. Weather
permitting, there is a marvelous view of Mount Everest. As
many as 80 percent of the guests suffer from nausea,
headaches, or sleeplessness caused by the altitude. No wonder
the hottest-selling item on the room-service menu is oxygen
—at $1 a minute.
 International Perspective

We are all part of a huge global economy that is splintered

into massive trading blocks, such as the European Union (EU)
and the North American Free Trade Agreement (NAFTA )
among Canada, the United States, and Mexico, with a total
population of 444.1 million consumers.

The European Union (EU), with a population of more than

509 million people in 28 nations, is an economic union that
has removed national boundaries and restrictions not only on
trade but also on the movement of capital and labor.
The synergy developed between these 28 member nations is
beneficial to all and is a form of self-perpetuating
development. As travel, tourism, commerce, and industry
have increased within the European Economic Community
(EEC), which could soon expand by another five nations, and
more in the future, so has the need for hotel
accommodations.

In the Middle East, in countries like Dubai and Abu Dhabi,

United Arab Emirates, several very impressive hotels and
resorts have been added as part of a strategy to encourage
more tourism to and within the region and the world. Once
the airport is capable of handling several international flights
daily, then soon hotels are built to cater to the traveler’s needs.
Now, these cities are gateways to the region and host
international conferences.
The growth in tourism in Pacific Rim countries is expected
to continue at the same rate as in recent years. Several resorts
have been developed in Indonesia, Malaysia, Thailand, and
Vietnam, and China and India have both seen hotel
growth.

Further international hotel development opportunities exist in

Eastern Europe, Russia, and the other republics of the
former Soviet Union.

Hotel development in China has exploded with nearly all

the major companies rushing to establish themselves in this
important emerging market.
In Asia, Hong Kong’s growth has been encouraged by
booming economies throughout Southeast Asia and the kind
of tax system for which supply-siders hunger. The Hong
Kong government levies a flat 16.5 percent corporate tax, a
15 percent individual income tax, and no tax on capital
gains or dividends. Several hotel corporations have their
headquarters in Hong Kong.
They are based in Hong Kong because of low corporate
taxation and the ability to bring in senior expatriate
executives with minimal bureaucratic difficulty
 Sustainable or Green Lodging

There are eight steps you can take to start an effective,

sustainable lodging program including:
1. Organize a waste reduction team;
2. Conduct a waste assessment;
3. Establish waste reduction goals;
4. Secure recycling markets;
5. Set up a collection and storage system;
6. Buy recycled products.
Lighting can account for 30–40 percent of commercial
electricity consumption. This can be reduced by the following
strategies:
• Use lighting only when necessary—employ motion
detectors.
• Use energy-efficient fixtures and lamps.
• Use low-wattage lighting for signs and décor.
• Avoid over-lighting wherever possible.