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IBANIBO, Sean B
900-06-1703
HMM 103, Spring 2010
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Kemmons Wilson was born in Osceola, Arkansas as the only child of Kemmons and
Ruby Wilson. After the death of his father, when he was only nine months old, his
mother moved to Memphis, Tennessee with him. During a trip to Washington DC
with his family, Kemmons came up with the idea for a better motel than the ones hehad encountered on the road. The lack of consistency and quality of the road side
motels of the era were disappointing to him and served as his driving force to
establish a new standard in the hospitality industry, thereby giving birth to the Holiday
Inn. The name came by as a joke given to the first hotel by his architect, Eddie
Bluestein, in reference to the Bing Crosby show.
Kemmons Wilson wanting to provide a less-costly accommodation for families andtravelers in America opened the first Holiday Inn motel to customers in the Berclair
district in Memphis, Tennessee on August 1st, 1952. In 1957, it became a franchise
and went international in 1960. In 1958, a year after becoming a franchise company,
the newly formed chain known as Holiday Inn of America saw a growth to 50
locations across the country and in 1968; the 1000th location was opened in San
Antonio, Texas. Its growth was in part due to Wilson¶s original idea to make the
motels accessible to travelers, keep it standardized and clean, predictable and very
family oriented. Not meeting any of these requirements may result in a lost of
franchise.
The growth of the company led to many changes in the hospitality industry and set the
standard for the competition like Days Inn and Best Western. Leading the charge and
putting a huge amount of pressure on other traditional hotels at the time. Indoor pools
added to most of its chains, brought more customers flocking through its doors till the
later 1980s, when it lost dominance in the hotel industry. Holiday Inn was sold to
Bass Brewers of the United Kingdom, which would later become InterContinental
Hotels Group, in 1986. In 1988, Kemmons Wilson retired and sold his remaining
interest in the company to InterContinental Hotels Group.
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Howard Deering Johnson, the founder of the Howard Johnson¶s chain of restaurants
and hotel, was born on February 2nd, 1897 in Boston, Massachusetts. Having
completed his elementary education, he went to work at his father¶s cigar shop and
later joined the American Expentionary Force in France during World War 1.
After his father¶s death, he inherited the cigar business his father ran with a debt of
about $10,000. Liquidating the business in 1924 to pay of his debt proved effortless.
Looking for a means to pay of his debt, he bought an ice cream recipe from a local
and a small soda shop in Quincy, Massachusetts. Using hand-crank ice makers in his
basement and doubling the butterfat in the original recipe, Howard Johnson was
grossing approximately $240,000 in sales revenue by 1928 by selling his ice creamsand soda pops along the beaches of Massachusetts and in-store.
Expansion for his business came quick. Opening more locations in the general
Massachusetts area and adding other food items such as hamburger and frankfurter to
his original menu of over twenty eight ice cream flavors. In 1935, he formed his first
franchise with a local businessman, Reginald Sprague. Though new at the time, it was
a success for the Howard Johnson¶s brand. The move saw the Howard Johnson¶s
restaurants expanding rapidly and would lay the ground work for his move into the
lounging industry.
In 1954, Howard Johnson opened his first motor lounge in Savannah, Georgia. And
1975, with over 1000 restaurants and some 500 motor lounges in forty two states and
Canada, Howard Johnson¶s reached its peak. Losing revenue following the oil
embargo of 1974; up till then, eighty five percent of the company¶s revenue was
provided by travelers. With more Americans opting not to travel and fast food
companies like McDonalds becoming more appealing to children and families, the era
of Howard Johnson¶s chain of high end restaurants and motor lounges came to an end.
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The company would accept a bid of takeover from Imperial Group PLC of England in
1979 and was sold for $630 million to G, Michael Hostage.
Compared to most hotel chains of today, both hotels were centered on been cost
efficient, familiar and accessible. They were built and designed with the average
lounger and traveler in mind, providing basic amenities at a cheaper rate. Franchising
the chains, meant recognition for regular and potential customers. And a standardized
appearance created a sense of familiarity also. But with a lack of hindsight, both
chains focus entirely on their locations as a means to create wealth. While it was a
good decision in their early days, that decision became their hanging noose. Slow to
adapt to a changing environment and the fast pace in technological change left a sweetspot for their competitions such as Best Western and the Marriott hotel chain.
As the industry progresses, changes is bound to happen. Changes in appearance and
services, changes in amenities offered as well as location. All these are important
aspects, needed, for the growth in the industry. Hotels are viewed as a home away
from home by their customers and when there is a glitch in that perception, the
customer will look for a different place where they feel welcomed. Business travelers
and families on vacation provide the necessary monies these hotels need to still
remain in business so by providing better services and amenities that will make their
stay more enjoyable, relaxed and comfortable; they will in turn promote these hotels
to their friends, families and coworkers.
No hotel company operating today is unaware of the swift pace of global change and
its impact on the hospitality industry. A disgruntle customer before, using word of
mouth, could only reach a hand full of people but with today¶s technology; blogs and
social networks such as MySpace and Facebook, that handful can be as much as a
thousand in an single minute. Change is everywhere and with these changes come
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new business practices, which are evolving as fast as our technologies. Resistance to
change has become one of the primary causes of business failure.
The stream of constant change raises fundamental questions as to the creation of
shareholder wealth in a capital-constrained, highly competitive environment. How
will hotel organizations build shareholder wealth and what key drivers will result in
success? What future products and services will be essential in a technology-driven,
global environment marked by rising customer expectations? Also, what alternative
approaches and skills must organizations develop to ensure market success?
The future success of hotel organizations will be driven in large part by the ability to
foresee and capitalize on change. Beyond this, there is an urgent need to identify what
will be required in the competitive environment of the future with its intense focus on
serving customer needs. The hospitality industry is subject to deep currents of change
set in motion as economic and social systems shaped in the industrial era evolve to a
knowledge-based era driven by technology advances with the strongest influence
coming from the customer¶s need and expectation.
In structuring organizations for the future, companies must build management
capabilities to deal with one of the most critical challenges, diversity in the
marketplace. Employing information technology to drive business success in this
information-driven era is not only the path of least resistance, but vital to virtually
every aspect of operations.
Hotels, before now, have always been centered on location. Adopting the ideology
that ³if we build it, they will come.´ This idea will not work in the future, if thesecompanies hope to grow and create wealth for their shareholders. The trend to have a
real estate and asset orientation, rather than been customer oriented will result in loss
of revenue for most chains as others move towards a more customer base form of
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business, relying on excellent customer service and word of mouth, from their
customers, to promote their entities.
The hotel organizations will be best served by focusing less on their hotel assets as
measures of success, and more on their customers. This will involve a shift in viewing
the real estate asset as the wealth creator, to the customer as the key to building
wealth. Therefore, leading hotels to create customer focused business decisions at all
levels of developing and operating a hotel organization.
Within this context, hotel developers, owners and management companies will all
need to develop new strategies, skills and processes that look forward to the
competitive demands of the future. These ultimately must address issues related to
vision and planning, as well as organizational skill sets and processes to attract and
retain customers. To stake a claim in the future, current business practices should be
examined in light of what can be expected to be the key success factors in the coming
years.
Embracing a global change orientation as the information age produces greater
worldwide integration of business practices. A global knowledge base will become
invaluable. Success in local and regional hotel markets will be shaped decisively by a
global business environment that defines capital movement, customer expectations
and applications of new technologies.
Also as the hotel chains continue to grow and expand, the need for visionary leaders
will increase. Visionary leaders with the ability to forecast the change in the future, to
anticipate change rather than react to it, will be one of the single greatest determinantsof market dominance in the years ahead. The old command and control model of
leadership will give way to a focus on leadership in ideas, information, vision and
teamwork. Setting the trend for the future hotel, as Kemmons Wilson and Howard
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Johnson did in their time, will prove profitable for these chains and today's hotel
organizations need to recognize the need for that.
A visionary leader that applies Phillips Crosby¶s ³Principle of Zero Defect´ will see
growth. Phillips Crosby¶s ³Zero Defects´ was the principle ³doing it right the first
time.´ Using the concept of "zero defects" in amenities and services provided by a
hotel change can yield tremendous benefits, when used as a standard for quality
control.
The quality of any chain is in its staffs and that quality should be set by the leader of
the chain. The tone for moral character, vision, corporate culture and fiber of the
institution must be an idea shared by staff throughout the organization, including
those who meet the customer thereby overcoming the original status quo of over-
managed and under-led and placing an emphasis on flexibility, learning and
cooperation. Management competencies will need to be aligned in order to achieve
the desired result. For many organizations, this may mean a shift from traditional
hierarchies typical of companies in an industrial era to a flatter organization with a
more transparent interface between leadership, organizational functions and
employees.
Traditional organizations that follow well-documented rules must give way to leaders
who can balance a sense of discipline with that of flexibility. Talent and resources
must be marshaled and leveraged. In an industry with high fixed costs and labor
intensity, the concept of leverage in the hotel business is an all-important one.
Improving labor productivity through technology must be a goal for today's forward-
looking hotel organization. Management must also be able to narrow the gap between
the employer and the employee, forcing a flatter organization in the process. This will
put management closer to the customer and speed the two-way communication
process up and down the organization.
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It used to be that hotel chains used information technology (IT) for book keeping and
other accounting processes, today however; information technology might be the
saving grace for most hotel chains. Information technology today influences all
aspects of business from corporate strategies to organizational structure and from thevery business processes it is designed to support to performance measurement. In
today¶s world were the customer dictates the amount of service they require and
where they want their money spent, information technology becomes the backbone of
the hotel chain and must be delivered to two very critical areas in any chain; sales and
marketing and customer service.
Technology was once viewed as a way to reduce costs by replacing people. Thatattitude has been firmly supplanted by one that seeks IT support for the creative work
that all organizations must pursue. IT must allow organizations to react more speedily
to market needs and, of course, produce the fulfillment of customer demands both
quickly and accurately. To do this IT must operate on a decentralized basis. IT
delivers, but it has to be the right information to the right people, and it needs to be
done on a timely basis.
Globalization and creating a more diverse staff and hotel culture will be important for
the hotel of the future. As more and more businesses go global, the need for a global
standard in hotel accommodation will be required by company for their traveling
managers and clients coming from different nations. So the need for a diverse staff
will be required to make these globetrotters feel at home while on the road. A friendly
staff with knowledge in different culture and possible bi-lingual will be an added plus
for hotels hoping to create wealth for their stakeholders.
In many countries where tourism has become a major export industry, the hospitality
industry will become the focal point for concepts of globalization to take root. Indeed,
tourism has become the world¹s largest export industry, involving as it does enormous
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cross-border flows of people and capital. The hospitality industry is one of the world¹s
largest employers and arguably one of the largest traders of foreign currency. It is
often also a focal point for local society, and is clearly at the center of the transfer of
ideas and the cross fertilization of cultures. At its heart, the hospitality industry playsan important part physically in bringing people together in a global community.
Hospitality is thus not only an industry it is a concept and a major force in the rapidly
evolving global marketplace.
The hospitality industry is thus at the very core of the globalization of international
business. Hospitality companies therefore need to consider the implications of the
global context in which they operate and must be prepared to address the questionsthat arise from this changing environment. What tangible trends driven by an inter-
linked global marketplace will shape the hospitality industry of the future? What does
globalization mean for the internationally oriented hospitality company, as well as
hotel operations that compete locally and regionally with these organizations?
The globalization of business and lifestyles is characterized by communicating over
vast distances in foreign languages, frequent travel to overseas countries, dealing in
many currencies, and coping with a variety of political and social systems, regulatory
environments, cultures and customs.
For those companies pursuing a global strategy and accustomed to hotel management
contracts and franchising relationships, significant adjustments will need to be made
to the growth and development model. The process that promotes these concepts is a
slow one and global-minded companies will need to respond accordingly.
A number of international hotel companies have sought the economies of scale
attendant to developing single brands and products, and providing them in a uniform
fashion to as many markets around the globe as possible. A countervailing trend is
that many people, both tourists and business travelers, seek the unique qualities and
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customs of an individual locale. In response, some international hotel companies have
tried to reflect local culture in the way their hotels are designed and operated.
This is clearly an arena in which there is no one right answer, but rather a balance of
complex factors required. For example, there is a general consensus that "global
travelers," who travel frequently whether for business or recreation, usually prefer a
uniform product, because they want the convenience and comfort of predictability,
and they demand a high level of service. Those who travel less frequently, but have a
fairly high level of sophistication may avoid such dominant global brand and product
concepts. A third group is looking for what they are accustomed to, and are attracted
by brands they are familiar with; in essence, they prefer to stay in environments thatreflect their home-based experience.
Staffs for the future hotel will have to be diverse, possibly bilingual and quick to adapt
to changes in the world economy.
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Sources:
http://www.hotel-online.com/Trends/Andersen/global.html
http://en.wikipedia.org/wiki/Howard_Johnson's http://en.wikipedia.org/wiki/Howard_Deering_Johnson
http://en.wikipedia.org/wiki/Holiday_Inn
http://en.wikipedia.org/wiki/Kemmons_Wilson
Leadership: the inner side of greatness: a philosophy for leaders By Peter Koestenbaum