Question

The Traditional Hotel Industry

thinking of any hotels and all of its functions use any scenario and calculation. { very small business plain type}

Analyze the classifications, types, and plans of hotels, and discuss which you would prefer to manage (or work at) and why.

Answer 1

Definition of a Hotel

A hotel is defined as a place, where a guest receives shelter and food, for a price.

Classification of Hotels

Hotels are generally classified on several basis. Some of the common type’s are-

• On the Basis of Location- City hotels, airport hotels, motels, resort, floating hotels & resorts.

• On the Basis of Size-Small hotels, medium hotels, large hotels & mega hotels.

• On the basis of level of service-Economy or Budget hotels, luxury hotels & mid-market hotels.

• On the Basis of length of stay-Transit & residential hotels

• On the basis of theme-Heritage hotels, boutique hotels.

• On the basis of target market- Commercial hotels, timeshare hotels, residential hotels & suites.

• On the basis of ownership and affiliations-Independent hotels, chain hotels, Management contracted hotels & franchised hotels.

Function of a hotel

Among the several functions, which a hotel is expected to perform, the primary is to provide lodging facilities to guest that require, against a price.

Among the various hotel types, the major classification is in terms of Chain hotels Vs Independent franchised hotels.

Some examples of Chain hotels are Belmond hotels (UK), Apex hotels (UK), Days Inn China (Chain), Avolo hotels (Chain), Taj Hotels (India), Oberon hotels (India) etc. On the other hand, Budget independent franchised hotels are a new trend around the world. Some of their examples are Air BnB and OYO rooms.

BUSINESS MODEL OF OYO ROOMS IN INDIA

OYO rooms co-brands hotels and work as an aggregator for the customers.

Mission Statement

OYO’s goal is to change the way people stay away from home

Revenue Model

OYO resells the hotel rooms booked by them in advance to the hotel owners..

Hotels tied up-6000

Number of rooms booked per hotel by Oyo (in advance)-5 (assumption)

Cost per room-2000

Monthly cost of inventory-2000*5*6000=600000000

No of Employess-1000 (assumption)

Salary of employees-30000/employee

Cost of managing resources-3000000

Marketing expenditure-100000000 (giving huge discounts)

TOTAL EXPENSES-60000000+30000000+100000000= 190000000

Number of room books done in 1 year-1200000

Average Bookings in 1 month-100000

Average room rent-1200

TOTAL REVENUES-1200*100000=120000000

NET PROFITS-Loss of 190000000-120000000= 70000000 per month

Scalability of the model

As the number of room nights increase, the loss will decrease with improved marketing and promotions. With expansion, the revenues will expand.

Analysis of the model

With the increase in per capita income and the spending capacity of travellers as well as the aspiration of travellers, these hype of hotels are becoming more relavant.

The decision of either managing or working could be based upon on the point of view from which one approaches.

Person	Analysis
Hotel Owner	Franchised independent hotels provide utilization of free inventory Provide assured income due to advanced bookings Worry free mindset
Hotel Managers	Less control on inventory leading to less decision making power Higher fulfilment levels