Text 14. Read and translate the text.

THE HOTEL TRADE IN THE WORLD

Part 1

The accommodation sector is central to international tourism. Tourism flows are directly influenced by the size of this sector, by the way it adapts to demand and by the quality of the accommodation on offer. Three characteristics are associated with accommodation:

Seasonality. Its economic activities are seasonal which implies a great flexibility in structures.

Manpower planning. The industry is labour-intensive, which further compounds the problems caused by seasonality. It requires accurate forward planning of temporary employment.

Perishability. Accommodation production cannot be stocked. As with transport, accommodation products that are not consumed cannot be stored for use at a future date. Non-utilization is expensive.

The quality of the accommodation, the hospitality and customer service provided by staff and the efficiency of the operation all contribute to the success of international tourism.

Since the advent of mass tourism, many forms of accommodation have been developed. These can be classified according to different criteria:

Built accommodation or alternative accommodation — hotels, second homes and holiday centres or campsites, caravans and cruise liners;

Individual or collective accommodation: second homes or holiday villages;

Profit-and non-profit-making accommodation: hotels or holiday camps for children and social tourism.

The hotel is the traditional form of tourist accommodation. As a major economic activity, it creates direct and indirect employment and provides an important source of foreign currency.

The growth of the hotel trade has come about as a result of the traditional industry adapting to current conditions and modernising.

Accommodation supply is determined by the specific nature of the tourism industry. The hotel trade displays features associated with both heavy and labour-intensive industries.

Investments in hotel construction tie up large amounts of capital for medium-to long-term periods, a typical feature of heavy industries;

The activities connected with running a hotel are those of a service industry which is labour-intensive.

Industrialised countries have a competitive advantage, since sources of finance for investments are generally more easily available to them. Although developing countries have plenty of manpower, they often lack the necessary resources to develop tourism adequately and to manage their services in competitive manner.

In the economic analysis of international tourism, a hotel must be differentiated from other forms of lodgings used by tourists. Thus, a hotel is a commercial establishment offering rooms or furnished apartments to a market which is either passing through the area or staying for several nights.

It may offer a catering service, bar and complementary services. It can operate all year round or seasonally.

The hotel trade constitutes the principal accommodation capacity in industrialised countries.

However, there is a relative decline in its importance with respect to other types of accommodation and the whole structure of the hotel trade is undergoing profound change. The number of small independent and family-run hotels is

falling, while the number of hotel chains is growing rapidly.

There are two main kinds of hotel chains: hotel consortia which group together independent hotels, and integrated chains, which are made up of homogenous units.

Part 2

Hotel Consortia

Independent hotels are grouped together by hotel consortia, in order to compete with integrated and franchised chains. They promote an image of quality and aim at providing comparable standards of service, buildings and furnishings in order to build up customer loyalty from a domestic and international clientele.

Hotel consortia benefit from economies of scale when it comes to purchasing and marketing. The main benefits of joining a consortium are:

- joint production of guides and brochures, which advertise all the hotels in the chain and are distributed at each hotel through tour operators and travel agencies;

- joint national and international publicity campaigns;

- links into computer reservation systems (CRS) which allow agents to book directly from a screen;

- centralised purchasing of hotel equipment to achieve economy of scale;

- technical assistance and management consultancy.

This enables the small hotel to be represented on the international market while still keeping its managerial independence.

The concept of the hotel consortium has become very popular and their numbers have expanded considerably.

Integrated hotel chains

Integrated chains develop and commercialise hotel products that are consistent and homogenous. They exert their control either directly, by complete ownership of the hotel, or indirectly, through a franchise system or a management contract. All hotels in the chain carry the name and insignia of the chain.

The main integrated hotels originate from the United States, although the French group Accor is ranked fifth in the world in terms of size.

Hotel franchising

Hotel franchising is largely responsible for the expansion of the integrated hotel chain sector. This system benefits both the franchiser and the franchisee.

The franchiser brings his standards, his brand name, his experience and his reputation. The franchise company is a commercial enterprise (generally a public limited company) and the hotelier is both a client and an associate. The company contributes its technical expertise and financial help to set up the investment and it assists the franchisee's management by putting the marketing service and computerised central reservation system at its disposal. The franchise company will give support in publicity campaigns and provide advice on management matters and equipment-purchasing.

The franchisee contributes personal funds normally amounting to around 30 per cent of the investment. He also undertakes the whole financial risk of the hotel investment. He benefits from the standardisation and the profitability of the group and from the commercial and promotional advantages brought by belonging to a group. Franchisees are charged 3- 4 per cent of turnover depending on the franchise company. Furthermore, a membership fee, amounting to approximately 10 per cent of the investment, is charged to cover feasibility studies and financial packages.

Part 3

Tourism lodgings

These are second homes, rented furnished apartments, timeshares, campsites, holiday villages, holiday centres and holiday camps. Second homes include homes wholly owned by the tourist, apartments in co-owned block with shared collective services (condominiums) and timeshare properties.

Second homes wholly owned by tourists

These are lodgings in addition to their main residence which they use for tourism purpose. They help maintain and sometimes boost the economic activities of different industrial sectors such as the handicrafts trade, security services, the retail trade, and the construction industry in rural, mountain and seaside areas which previously had poorly developed manufacturing industries. Furthermore, the purchase of second homes by foreigners brings in currency, which affects the balance of payments. Finally, the growth in the second homes in an area increases accommodation capacity, particularly if these are rented to other tourists when the owners are not using them.

Second homes with shared collective services

They are usually apartments in blocks which are serviced by a management company. These services include: maintenance of the apartments, laundry and linen hire, management of common equipment such as swimming pool, tennis courts and sports complexes and sometimes entertainment. Owners usually use the apartment themselves or put them in the hands of the management company for rental.

Timeshare

Timeshare can be defined as the purchase of a holiday accommodation divided into one- or two-week periods. Each period is sold separately. This system is very cost-effective as the cost is shared between several proprietors (up to 52) although the purchase value of the apartment is higher in peak season. There are many economic benefits in the timeshare industry as the system increases the utilisation of a property considerably and the management of timeshare blocks creates many permanent jobs.

Furnished rented accommodation.

Furnished accommodation rented on a seasonal basis has become an important type of tourism lodging particularly in countries where " bed and breakfast" is common, like the UK. This sector brings the advantage of elasticity to the tourism supply. Indeed, furnished rented accommodation (furnished apartments, guest houses and rural cottages) do not bear the high fixed costs of the hotel trade. They constitute complementary lodging in the high season and, more importantly, generate supplementary income for the local population.

Seasonally rented furnished accommodation.

These are self-catering apartments, studios and villas rented to tourists for periods ranging from one week to three months. The rapid growth of this sector has persuaded tour operators to develop new tourism products (transport + accommodation) at a lower cost than those using hotels. These products are better adapted to mass tourism.

Cottages and farmhouse accommodation.

Rural cottages (or " gites") divert tourism flows toward rural areas by providing new and inexpensive accommodation. They provide additional income for the population of rural communities and help to maintain country buildings.

Rural cottages and guest houses have seen rapid growth recently, particularly in France. The official body, the Federation Nationale des Gites Ruraux de France, deals in promoting this kind of tourism. These are houses or rooms in guest houses for rent on a seasonal basis in a country setting.

Guest lodgings.

This form of lodging is particularly well-developed in Great Britain (bed and breakfast), Austria, Ireland, Portugal, Italy and Greece. Rooms are rented in private houses with breakfast provided. As with the rural cottages and farmhouses, the bed and breakfast sector does not benefit from incentive to encourage its development. Besides, quality is difficult to control in these types of lodgings. This is why quality charters have been established in many countries to guarantee the quality level of equipment, facilities and services in this sector.

Social accommodation.

Social accommodation includes holiday villages, holiday centres and family holiday camps, youth hostels and accommodation provided by associations and staff clubs in firms. The accommodation is provided on a non-profit basis. Camping can be either on designated sites or in the wilderness (with the permission of the landowner).

Restaurant chains.

There has been a remarkable increase in the number and size of restaurant chains. A modern variation on the lunch counter is the fast food operation. Fast foods are those which can be prepared, served, and eaten quickly; probably the most typical fast food is the hamburger and pizza. Burger and pizza chains have been the fastest growing type of restaurant chain, particularly in the United States.

Hamburger chains are the largest segment in the market, followed by pizza chains. Competition is particularly intense in the sandwich market which accounts for more than 40 per cent of sales by restaurant chains.

It appears that large restaurant chains are following two commercial strategies: on the one hand, the short-term strategy is to bring down prices by reducing margins in order to maintain and capture market share; on the other, the long-term strategy concentrates on offering services in the evening with a greater added value. Furthermore, restaurant chains are diversifying into the pizza sector which has grown considerably since 1990.

Large hotel chains not only possess the know-how, they have also established vast marketing networks throughout the world. By developing high-quality tourism in the area, the international tourism chains have created conditions for local chains to develop and also to become international.