Effects of physical environment/evidence in

the selection of a Hotel

University of Information Technology & Sciences

Topic: Effects of physical environment in the selection of an organization. (Hotel)

Course title: Research Methodology of Business

Course Code: MGT– 441
Department: Bachelor of Business Administration

Prepared for-
Mrs. Nazia Nabi
Lecturer of Marketing
School of Business

Prepared by-
Rawnak Razzak (ID: 08310026)
Sadi Mohammad Naved (ID: 08410056)
Israt Jahan (ID: 0841006)
Afsana Khanom (ID: 0841001)

Date of Submission: April 17, 2010

17th April, 2010

Mrs, Nazia Nobi

BBA, MBA (DU)
Lecturer
Faculty, School of Business
UNIVERSITY OF INFORMATION TECHONOLOGY & SCIENCES

Subject: Submission of the report on “The Hotel Analysis”

Dear Madam,

With humble submission we want to thank you for assigning us the pragmatic report on
“The Hotel Analysis”. We have really enjoyed the various stapes preparing the report.
We have made a strong group works and have also collected different data from
different Hotel. We think this report enriches our practical knowledge on finance.

There may be some mistakes. We think the mistakes in the report will be kindly
excused.

With thanks and best regards.

Sincerely yours,

Rawnak Razzak 08310026

Sadi Muhammed Naved 08410056

Israt Jahan 08410006

Afsana Khanom 08410001

BBA
Faculty, School of Business
University of Information Technology and Sciences.
 Table of Content:

Letter of transmittal 01
Acknowledgment 03
Executive summary 04
Introduction 05
Objective 05
Methodology 06
History of Hotel industry 06
Current Scenario of Hotel Industry 08
Classification 09
Market Segment 12
Property Type 12
Size 12
Level of Service 13
Ownership and Affiliation 13
Awarding of Class 13
SWOT analysis 14
Findings 16
Frequency Distribution 17
Conclusion 18
Acknowledgment-

Our project was to effects of physical environment/evidence in the selection of a

Hotel. We chose deferent type of hotels as our project.

It was really a nice experience to do the project. While we’re passing through all the
steps that is, collecting and analyzing the relevant information and trying to make valid
and reliable inferences about the different problems and opportunities in exporting and
their solutions, we found us to be grateful to them who helped us a lot to make it
happen.

So, first of all, our gratitude along with thanks goes to The Almighty Allah for keeping
everything on the right track. Then, we would like to thank our honorable faculty Mrs.
Nazia Nobi for her loyal support. We’d thank all of our fellow classmates and last of all,
we should appreciate our team dedication and the spirit for making us able to finish the
project just by the time. At last, special thanks, gratefully and lovingly offered to our
parents, for their overall steadfast and loyal support during the preparation of this
project.

Thank you…

________________________

________________________

________________________

________________________
Executive Summary-
Hotel operators and observers often employ industry-wide averages as key points of
comparison and analysis for room rates, occupancy, and revenues. The use of simple
averages, however, can be misleading if one does not take into account the possibility
that a mean will be pulled in one direction or another by extreme values. This analysis
of three industry averages shows that those averages are, indeed, subject to distortion,
or skew. The analysis, which examines figures for virtually all brand-name hotels in the
United States, determined that the means for average daily rate (ADR) and revenue per
available room (RevPAR) are skewed in a positive direction by hotels with extremely
high rates. On the other hand, occupancy is skewed in a negative direction by a group
of hotels with inordinately low occupancy levels.

Many of the extreme values are found in the top-25 markets, which have hotels with
inordinately high ADRs. Analysis of those markets shows that, once again, the overall
statistics are distorted by a relatively small set of hotels with exceptional ADRs and
occupancies. However, each of the top markets shows a distinctive rate and occupancy
pattern.

The pattern of skewed operating statistics carries over into individual lodging segments.
The greatest distortions arise in the luxury and upscale segments, while economy and
budget hotels record more consistent (normally distributed) statistics.

Finally, the analysis shows that although the events of created much turmoil for the
industry, the hotel business had already cooled substantially from its record pace of a
year earlier. In conclusion, managers must be careful in applying overall industry
statistics to their own situation and should take into account the factors that distort
operating statistics.

Scope of the report

At the backdrop of such a conducive business atmosphere 'Pre-feasibility Report on

Five-star Hotel Industry' attempts to examine such critical factors which will provide vital
inputs in general to the potential investors and estimation of commercial viability of such
an investment.

- It presents the market analysis of Indian hotel industry in terms of structure&

segmentation, market size, major hotels etc.

- It analyses the steps involved in setting up a hotel describing the technical aspects in
terms of location details and land requirement.

- It assess the manpower planning and financial estimate involved in setting up a hotel.
- Brings an insight into the procedure for setting up a hotel, type of machinery & floors
space required, requirement of regulatory permissions & clearances.

-Analysis of porter’s five forces and SWOT of the industry.

Introduction-
A hotel is an establishment that provides paid lodging on a short-term basis. The
provision of basic accommodation, in times past, consisting only of a room with a bed, a
cupboard, a small table and a washstand has largely been replaced by rooms with
modern facilities, including en-suite bathrooms and air conditioning or climate control.
Additional common features found in hotel rooms are a telephone, an alarm clock, a
television, and Internet connectivity; snack foods and drinks may be supplied in a mini-
bar, and facilities for making hot drinks. Larger hotels may provide a number of
additional guest facilities such as a restaurant, a swimming pool or childcare, and have
conference and social function services. Hotel rooms are usually numbered (or named
in some smaller hotels and B&Bs) to allow guests to identify their room.

Some hotels offer meals as part of a room and board arrangement. In the United
Kingdom, a hotel is required by law to serve food and drinks to all guests within certain
stated hours; to avoid this requirement it is not uncommon to come across private
hotels which are not subject to this requirement. In Japan, capsule hotels provide a
minimized amount of room space and shared facilities.

In the United Kingdom, Australia, Canada and Ireland (and rarely in some parts of the
United States), the word may also refer to a pub or bar and might not offer
accommodation. In India and Bangladesh, the word may also refer to a restaurant.

Objective-

The main papas of this research are to find out which hotel is better than each other.
How they perform & their service is good or bad. Followings were the objectives of the
study:
Broad objective: To develop profile of Hotels in Bangladesh.
Specific objectives: To attain the broad objective following specific objectives were
pursued:
ο To know briefly about the Hotel industry.
ο To find out the group influence on Hotel industry.
ο To identify the motivational factors that influences the Hotels in Bangladesh.
ο To find the situational influences that affects the Hotels.
Methodology-

Data Collection
This work is based on both secondary and primary sources. The secondary sources of
data include internet articles, some foreign and local websites on beverages. Most of
the data required for the study were collected from primary source through structured
questionnaire. The data are in the questionnaire is based upon the hotels in
Bangladesh.

Area Surveyed
The study was confined to Dhaka. This area has been selected because many hotels
are in Dhaka city. Time and cost were other important considerations for such decision.

Selection of Sample
Because of the lack of sampling frame convenient method of sample were used.
Because our group members were only six and all of them are from different location.
So random sampling was not possible for us to use. We collect our data initially from 60
respondents. After that we find out the consumers of beverage product and continue our
research by focusing on their opinion.

Analyze of Data
The hotel info is collected on basis of the hotel in Bangladesh. All the data were edited,
coded and classified by our group members before making the final analysis. Average,
percentage and ranking were used for analyzing the data. Different graphs, charts and
table were used for presenting the data.

History of Hotel Industry-

The hotel industry is a mature industry marked by intense competition. Market share
increases typically comes at a competitor’s expense. Industry-wide, most growth occurs
in the international, rather than the domestic, arena. Common American hotel
classifications are as follows:

Commercial Hotels cater mainly to business clients and usually offer room service,
coffee-shop, dining room, cocktail lounge, laundry and valet service as well as access to
computers and fax services.
Airport Hotels are located near airports and are a conveniently located to provide any
level of service from just a clean room to room service and they may provide bus or
limousine service to the air lines.

Conference Centers are designed to specifically provide meeting space from groups;
they provide all services and equipment necessary to handle conventions.

Economy Hotels provide a limited service and are known for clean rooms at low prices
meeting just the basic needs of travelers.

Suite or All-Suite Hotels are hotels which

offer spacious layout and design. Business
people like the setting which provides space
to work and entertain separate from the
bedroom.

Residential Hotels used to be very popular.

The typical residential hotel offers long term
accommodations.

Casino Hotels are often quite luxurious.

Their main purpose is in support of the gambling operation. Casino hotels often offer
top name entertainment and excellent restaurants.

Resort Hotels are the planned destination of guests, usually vacationers. This is
because resorts are located at the ocean or in the mountains away from inner cities.
Resort hotels may offer any form of entertainment to keep their guests happy and busy.

A summary of key events in the history of the industry would include the following:

While the practice of renting space to travelers stretches back to antiquity, what could
be considered the modern concept of a hotel derives from 1794, when the City Hotel
opened in New York City? While the practice of renting space was not new, the City
Hotel was purported to be the first building devoted exclusively to hotel operations. For
its time, the building was quite large and possessed 73 rooms. Similar operations soon
appeared in such nearby cities as Baltimore, Boston and Philadelphia.

Interestingly, New York City’s first skyscraper was a hotel - the six stories Adelphi
Hotel.

Hotels took a distinct step up in style and class when the Tremont House opened in
Boston in 1829. This hotel was considered by many to be the beginning of what was
regarded as first class service. With 170 rooms, the Tremont House was a large
facility. In addition, the hotel offered features which, for the time, were amazing.
Private single and double rooms were available, which offered not only privacy, but also
security. In addition to water pitchers and a washing bowl, free soap was provided in
each room. The Tremont House offered French cuisine and, reportedly, was the first
hotel to have a Bellboy.

In 1908, the Buffalo Sattler opened, marking the beginning of the modern commercial
hotel era. Many services now considered standard were introduced by the Statler,
including such amenities as a light switch next to the door, private bathe, ice water and
a morning newspaper. The Sattler set the standard of the day by being clean,
comfortable and affordable. The Sattler served as the pattern for hotel design and
operation for many years.

In the 1920’s, hotel building entered a boom phase and many famous hotels were
opened, including the Waldorf Astoria, New York’s Hotel Pennsylvania, and the Chicago
Hilton and Towers, which was originally named the Stevens.

Motels began to replace roadside cabins as use of the automobile spread throughout
society. Offering clean rooms with adjacent parking, motels enjoyed great popularity
with the traveling public.

In the 1950’s and 1960’s, the practice of franchising appeared within the industry.
Franchising enabled entrepreneurs to expand their operations without the use of
substantial capital.

For much of their history, hotels were owned and operated by individuals. However, as
franchises and chains began to appear, individually owned hotels found themselves
increasingly at a competitive disadvantage. By the 1960’s, independent prospects
began to improve as the result referral organizations such as Quality Courts, Best
Western, Master Host and Best Eastern.

From the 1980’s forward, mergers and acquisitions became common within the
industry, and brands become hotly traded commodities.

Recently, use of management companies has entered the mainstream. As a result,

many chains are more involved in management than in ownership. These chains
realize a much more predictable and steady income stream than had normally been
yielded by ownership.

Current Scenario of Hotel industry-

Over the last decade and half the mad rush to India for business opportunities has
intensified and elevated room rates and occupancy levels in India. Even budget hotels
are charging USD 250 per day. The successful growth story of 'Hotel Industry in
Bangladesh' seconds only to China in Asia Pacific.

'Hotels in Bangladesh' have supply of 110,000 rooms. According to the tourism ministry,
4.4 million tourists visited India last year and at current trend, demand will soar to 10
million in 2015 – to accommodate 350 million domestic travelers. 'Hotels in Bangladesh'
has a shortage of 150,000 rooms fueling hotel room rates across India. With
tremendous pull of opportunity, Bangladesh is a destination for hotel chains looking for
growth.

The World Travel and Tourism Council, Bangladesh, data says, India ranks 18th in
business travel and will be among the top 5 in this decade. Sources estimate, demand
is going to exceed supply by at least 100% over the next 2 years. Five-star hotels in
metro cities allot same room, more than once a day to different guests, receiving almost
24-hour rates from both guests against 6-8 hours usage. With demand-supply disparity,
'Hotel Bangladesh' room rates are most likely to rise 25% annually and occupancy to
rise by 80%, over the next two years.

'Hotel Industry in Bangladesh' is eroding its competitiveness as a cost effective

destination. However, the rating on the 'Indian Hotels' is bullish. 'India Hotel Industry' is
adding about 60,000 quality rooms, currently in different stages of planning and
development and should be ready by 2012.

MNC Hotel Industry giants are flocking India and forging Joint Ventures to earn their
share of pie in the race. Government has approved 300 hotel projects, nearly half of
which are in the luxury range. Sources said, the manpower requirements of the hotel
industry will increase from 7 million in 2002 to 15 million by 2010.

With the USD 23 billion software services sector pushing the Bangladeshi economy
skywards, more and more IT professionals are flocking to Bangladeshi metro cities.
'Hotel Industry in Bangladesh' is set to grow at 15% a year. This figure will skyrocket in
2010, when Dhaka hosts the Commonwealth Games. Already, more than 50
international budget hotel chains are moving into Bangladesh to stake their turf.
Therefore, with opportunities galore the future 'Scenario of Bangladeshi Hotel Industry'
looks rosy. It is expected that the budget and mid-market hotel segment will witness
huge growth and expansion while the luxury segment will continue to perform extremely
well over the next few years.

The roles of the multinational companies are significant with their increasing contribution
to the Economy. Basically Services are intangible deeds, processes and performances
that cannot be touched, seen or felt but can be experienced. The Service sector is
characterized by its diversity. Global opportunities are growing due to accelerated
growth of the service economy.
Classification-
The cost and quality of hotels are usually indicative of the range and type of services
available. Due to the enormous increase in tourism worldwide during the last decades of
the 20th century, standards, especially those of smaller establishments, have improved
considerably. For the sake of greater comparability, rating systems have been
introduced, with the one to five stars classification being most common and with higher
star ratings indicating more luxury. Hotels are independently assessed in traditional
systems and these rely heavily on the facilities provided. Some consider this
disadvantageous to smaller hotels whose quality of accommodation could fall into one
class but the lack of an item such as an elevator would prevent it from reaching a higher
categorization. In some countries, there is an official body with standard criteria for
classifying hotels, but in many others there is none. There have been attempts at
unifying the classification system so that it becomes an internationally recognized and
reliable standard but large differences exist in the quality of the accommodation and the
food within one category of hotel, sometimes even in the same country. The American
Automobile Association (AAA) and their affiliated bodies use diamonds instead of stars
to express hotel and restaurant ratings levels.

Hotels are also classified by service type ranging for all-inclusive full-service resorts that
cater to vacationers to small limited service hotels that cater to transient business
travelers. The main categories of hotels are as follows;

• Full Service Upscale

o Examples include Conrad Hotels, Ritz Carlton, Four Seasons Hotels, and
JW Marriott
• Full Service
o Examples include Hilton, Marriott, Doubletree, and Hyatt
• Select Service
o Examples include Courtyard by Marriott and Hilton Garden Inn
• Limited Service
o Examples include Hampton Inn, Fairfield Inn, Days Inn, and La Quinta Inn
• Extended Stay
o Examples include Homewood Suites by Hilton, Residence Inn by Marriott,
and Extended Stay Hotels
• Timeshare
o Examples include Marriott Vacation Club, Westgate Resorts, and Disney
Vacation Club
• Destination Club

Hotels today are basically classified into the following categories:

1 Market segment:

· Economy / limited services hotel

· Mid market hotel
· All suite hotels
· Time-share hotels
· Condotel / Condiminium
· Executive hotels
· Luxury / Deluxe hotels

2 Property type:
· Traditional hotel
· Motels
· Bread and break fast inns
· Commercial hotel
· Chain hotel
· Casino hotel
· Boutique hotels
· Resorts
o Spa’s
o Conference resorts

3 According to size:
· Small hotels [150 rooms]
· Medium hotels [up to 299rooms]
· Large hotels [up to 600rooms]

Other classification can be based on:

a) Market segment
b) Property type
c) Size
d) Level of services
e) Owner ship and application
f) Plans
g) Type of patronage
h) Length of guest stay
i) Location etc …

Market Segment-
Economy hotel:
It provides efficient sanity private rooms with bath. The furnishing and decor are
acceptable to majority of travelers. Food and beverage service may or may not be
available.
Mid market hotels:
They offer comfortable accommodation with private on premises bath. Food and
beverage services and uniformed bell staff. They offer above average luxury.

All Suite hotels:

It offers separate sleeping and living areas along with a kitchenette and a stocked
bar, and offer class service.

First class hotels:

They are luxury hotels with exceptional decor better than average food and beverage
service, uniformed bell services. They often have 2 or 3 dining rooms, swimming pool,
spas etc.
Deluxe hotels:
They are better and offer more specialized services than first class hotels. They
also provide limousine services.

Property Type-
Traditional hotels:
They have the basic concept of rooms with breakfast, bell desk services and the other
usual services.

Motels:
They are located on highways. Guest is given parking right outside their rooms. The
usually have a gas station / workshop attached to them.

Resorts:
They are usually situated in tourist locations like on rivers, mountains, jungles, or the
sea. They give more privilege to sports activities leisure and re-creation activities like
manages, sightseeing, adventure sports, etc.

Resident hotels:
Where guest stay for longer duration, stay like weeks, months even years.

Casino hotels:
They are hotels usually in tourist spots and mainly cater to people who are on holidays.
Casino hotels like the name suggest offer gambling facilities along with
accommodations.

Size-
Small hotel – up to 150 rooms
Medium hotels –150 to 299 rooms
Large hotels – 299 to 600 rooms
Extra large hotels – above 600 rooms
Level of service-
World-class services:
They target top business executives and provide service s that cater to needs of such
people like lap tops in the rooms, business center, sectarian services.

Mid range services:

They appeal to the larger segment of traveling public [tourist]. The services provided by
the hotel are moderate and sufficient to budgeted travelers.

Economy / Limited services hotel:

They provide comfortable and inexpensive rooms and meet the basic requirement of the
guest. These hotels may be large of small in size depending on the kind of business
they get. The key factor behind the survival of these hotels is that they are priced very
low and are in the budget of most of the travelers.

Ownership and Affiliation-

Independent hotels:
They have no application with other properties. They have their own management and
are single properties with one owner.

Chain hotels:
They impose certain minimum standards, levels of service, policies and procedures to
be followed by their entire establishment. Chain hotels usually have corporate offices
that monitor all their properties and one management runs these properties. That is all
the hotels under the chain are completely owned and run by the chain itself.

Franchisee hotels:
The franchisee grants the entities, the right to conduct business provided they follow the
established pattern of the franchisee, maintains their standards, levels of service,
practice their policies and procedures.

Awarding of Class-
These are a few things listed down that are taken into consideration while awarding star
category to any hotels.

· Number and types of rooms the hotel has

· Elegant and comfortable surroundings
· Rooms efficiency
· Cleanness and sanitation
· Staff size and specialization
· Range and level of services
· Number of Restaurants
· Bars and Beverage services
· Concierge services
· Accessibility to entertainment
· Availability of transportation
· Spa and swimming pool facility
· Reservation and referral services.

Star category of hotels

One star [*]

Two star [**]
Three star [***]
Four star [****]
Five star [*****]
Five star deluxe [***** deluxe]

THREE STAR CATEGORIES:

For a hotel to be recognized as a three star property the architectural features and
general features of the building should be very good there should be adequate parking
facilities. At least 50% of the rooms must be air-conditioned. Also the ambience and
decor of the place must be ecstatic.

They should provide reservation and information facility apart from reception,
information, bell service at least two gourmet dining facility should be available. The
establishment may or may not have banqueting facility.

They should provide high levels of personalized services. The staff must be well trained
and proper standards for hygiene and sanitation must be followed. Also all properties
have to keep in mind that proper waste management is done.

FIVE STAR CATEGORIES:

Five star categories is only allotted to properties, which have all the qualities of a three
star property and a few additional. Like the entire property must be centrally air
conditioned.

The building of the property must be an attractive one. All the rooms must be spacious.
The property must have proper banqueting facility, business center. Proper and well-
maintained pool and health club a spa is optional.

The property must have 24 hour coffee shop, round the clock room service, a bar, and a
minimum of 1 gourmet restaurant. The staff must be highly trained and a degree of
specialization must be shown. State of art Equipments must be used and the facility
provided in the rooms must be sophisticated.
FIVE STAR DELUXE CATEGORIES:
They are more or less like five star properties with the only difference is that they are on
a larger scale. Five star deluxe properties maintain a very high staff to guest ratio and
very high levels of service is maintained. They in addition to five star properties have 5
to 7 dining rooms, a bar, 24-hour coffee shop, banqueting facility. Spas, fitness centers,
business centers etc.

SWOT Analysis-

STRENGTHS
• A very wide variety of hotels is present in the country.
• A manpower cost in the Bangladeshi hotel industry is one of the lowest in the
world.
• Bangladeshi offers a readymade tourist destination with the resources
• Natural and cultural diversity
• Demand-supply gap
• Government support
• Increase in the market share

WEAKNESSES
• The cost of land in Bangladesh is high at 50% of total project cost as against
15% abroad.
• The hotel industry in Hotel is heavily staffed.
• High tax structure in the industry makes the industry worse off than its
international..
• Only limited value added services
• Poor support infrastructure
• Slow implementation
• Susceptible to political events.

OPPORTUNITIES
• Demand between the national and the inbound tourists can be easily managed
due to
• Difference in the period of holidays.
• The long-term the hotel industry in India has latent potential for growth.
• Unique experience in heritage hotels.
• Rising income.
• Open sky benefits.
THREATS
• Guest houses replace the hotels.
• Political turbulence in the area reduces tourist traffic and thus the business of the
hotels
• Changing trends in the west demand similar changes in Bangladesh
• The economic conditions of a country have a direct impact on the earnings in
hotel industry.
• Lack of training man power in the hotel industry.
• Fluctuations in international tourist arrivals.
• Increasing competition

Findings-

Maximum respondent’s age group is between- 20 to 29.

There are 4 five star hotel in Bangladesh.

• Westin Hotel.
• Radisson Hotel.
• Pan Pacific Sonargaon Hotel.
• Sheraton Hotel.

Most of the respondents are go to the Hotel for party, vacation or other reason.

Maximum respondents stay in the hotels for 10-15 days.

Frequency distribution-

For selecting a Hotel:

Not Important Very Important

1 2 3 4 5
Location 1 2 3 4 17
Site 1 2 3 4 5
Hospitality 1 2 3 4 5
Maintenance 1 2 3 4 5
Service 1 2 3 4 5
Cost 1 2 3 4 5
Transportation facility 1 2 3 4 5
Guide 1 2 3 4 5
Security 1 2 3 4 5

After staying in a hotel:

Not Important Very Important

1 2 3 4 5
 Employee’s uniform 1 2 3 4 5
Swimming pool 1 2 3 4 5
Cash/Card process 1 2 3 4 5
Restaurant Signs 1 2 3 4 5
(Entrance, exit)
Waiting area 1 2 3 4 5
Bar/Casino 1 2 3 4 5
Waiter station 1 2 3 4 5
Decoration 1 2 3 4 5
Parking 1 2 3 4 5
Guest waiting room 1 2 3 4 5
Package- Pick/Off pick 1 2 3 4 5
Feedback 1 2 3 4 5

Conclusion:

This hotel industry analysis report helps to know the full information of hotel Industry.
The government support towards the hotel industry and its development is appreciable.
It creates interest of the competitors to grow drastically. The hotel industry comprises a
major part of the tourism industry. The hotel industry contributes employment and
economical growth of the country.

The report shows that the present and future skyrocket scenario of the industry. Various
Classes and categories of hotels and their services of the industry are very effective.
The market share and expansion of industry in Bangladeshi economy is rosy day by
day. At present the government is very liberal in regulating and licensing to the hotels
because to increase foreign tourist average daily rate.