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Complete Exercise 3 on pp. 63-64.

BACKGROUND INFORMATION
For #1: Born in 1991

For #3: New York City

Part

PERSPECTIVES ON
CAREERS IN HOSPITALITY

1

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THE

HOSPITALITY
INDUSTRY AND YOU
Courtesy of Four Seasons Hotel, Mexico, D.F.

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Chapter

T H E P U R P O S E O F T H I S C H A P T E R

Y
our own career choice is probably the most important management decision that you will ever

make—at least from your point of view. This chapter has been designed, therefore, to help you

analyze a career in the hospitality industry and correlate that analysis with your personal, profes-

sional, and educational experiences. It will also help prepare you for the first career decision you make

just before or after you graduate. This chapter discusses the career decisions that are ahead of you

over the next three to five years.

T H I S C H A P T E R S H O U L D H E L P Y O U

1. List examples of the kinds of businesses that make up the hospitality industry.

2. Understand the various roles that a hospitality manager serves.

3. Identify the reasons people study hospitality management—and list the advantages these

academic programs offer.

4. Describe your career plan in terms of a life’s work and not just as an economic means of

survival.

5. Identify two key components of the job-benefit mix that allow one to profit from work

experience.

6. Appreciate the value of networking and the other strategies for landing a job.

7. Consider the steps necessary in launching your career after graduation.

8. Name three general career goals frequently cited by graduates seeking employment.

9. Identify key trends driving change in employment opportunities in the hospitality industry.

Chapter

1

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4 Chapter 1 The Hospitality Industry and You

W H AT I S H O S P I TA L I T Y M A N A G E M E N T ?

W hen most people think of the hospitality industry, they usually think of hotels and restaurants. However, the true meaning of hospitality is much broader in scope.
According to the Oxford English Dictionary, hospitality means “the reception and enter-

tainment of guests, visitors or strangers with liberality and good will.” The word hospitality

is derived from hospice, the term for a medieval house of rest for travelers and pilgrims.

Hospice—a word that is clearly related to hospital—also referred to an early form of

what we now call a nursing home.

Hospitality, then, not only includes hotels and restaurants but also refers to other kinds

of institutions that offer shelter, food, or both to people away from their homes. We can also

expand this definition, as many people have, to include those institutions that provide other

types of services to people away from home. This might include private clubs, casinos, re-

sorts, attractions, and so on. This wide variety of services will be discussed in later chapters.

These different kinds of operations also have more than a common historical heri-

tage. They share the management problems of providing food and shelter—problems

that include erecting a building; providing heat, light, and power; cleaning and maintain-

ing the premises; overseeing employees; and preparing and serving food in a way that

pleases the guests. We expect all of this to be done “with liberality and good will” when

we stay in a hotel or dine in a restaurant, but we can also rightfully expect the same

treatment from the food service department in a health care facility or while enjoying

ourselves at an amusement park.

Turning our attention now from the facilities and services associated with the

hospitality industry to the people who staff and manage them, let us consider the pro-

fession of the hospitality provider. The hospitality professions are among the oldest of

the human professions, and they involve making a guest, client, member, or resident

(whichever is the appropriate term) feel welcome and comfortable. There is a more

important reason, however, that people interested in a career in these fields should

think of hospitality as an industry. Today, managers and supervisors, as well as skilled

employees, find that opportunities for advancement often mean moving from one part

of the hospitality industry to another. For example, a hospitality graduate may begin as

a management trainee with a restaurant company, complete the necessary training, and

shortly thereafter take a job as an assistant manager in a hotel. The next job offer could

come from a hospitality conglomerate, such as ARAMARK. ARAMARK provides food

service operations not only to businesses but also in such varied areas as recreation

centers, sports stadiums, college and university campuses, health care facilities, conven-

tion centers, and gourmet restaurants. Similarly, Holiday Inns is in the hotel business, but

it is also one of the largest food service companies in the United States.

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5

C A S E H I S T O R Y 1 . 1

A Former Student’s Unexpected Change

When one of the authors was an undergraduate student studying hospitality management at a large state

university, he heard repeatedly from his professors how important it was that he become active with the

student organizations on campus. There were quite a few student chapters of professional hospitality

organizations to choose from, including the Hospitality Sales and Marketing Association International, the

Travel and Tourism Research Association, and various food service organizations, among others. Partially

to satisfy his professors, and partially out of curiosity, he joined the student chapter of the Club Manag-

ers Association of America (CMAA), which had a strong presence on campus. When he joined, he was

quite confident that he would never have occasion to work in a private club, but he had to admit that it

sounded like an interesting segment of the industry. He spent two years with the association and even

took an elective course on club management to learn a little bit more about the field. He then promptly

began his management career with a food service management company. Much to his surprise, he was

offered a job at a private club a few years after graduating. His membership in the student chapter, and

the connections that he made while a member, went a long way in helping him secure the club position.

He has since enjoyed a long association with the Club Managers Association of America as well as the

private club industry. In fact, he was also the faculty advisor to a student chapter of CMAA for ten years.

Our own students now share similar stories with us. This just goes to further illustrate how careers

can take strange twists and turns and how hospitality graduates can find themselves moving from one

sector to another in short order.

The point is that the hospitality industry is tied together as a clearly recognizable

unit by more than just a common heritage and a commitment to “liberality and good

will.” Careers in the industry are such that your big break may come in a part of the

industry that is very different from the one you expected. (See Case History 1.1 for a

personal example.) Hospitality management is one of the few remaining places in our

increasingly specialized world of work that calls for a broadly gauged generalist. The

student who understands this principle increases his or her opportunity for a rewarding

career in one or more segments that make up the hospitality industry.

T H E M A N A G E R ’ S R O L E I N T H E H O S P I TA L I T Y I N D U S T R Y

As a successful manager in the hospitality industry, you must exhibit many skills and command much specialized knowledge, all directed at achieving a vari-
ety of management objectives. The manager’s role is wide and varied. Let’s now

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6

discuss three general kinds of hospitality objectives with which management must

be concerned:

1. A manager wants to make the guest feel welcome. Doing this requires both a

friendly manner on your part toward the guest and an atmosphere of “liberality

and good will” among the people who work with you in serving the guest. That

almost always translates to an organization in which workers get along well with

one another.

2. A manager wants to make things work for the guest. Food has to be savory, hot or

cold according to design, and on time. Beds must be made and rooms cleaned.

Gaming facilities must be service oriented. A hospitality system requires a lot of

work, and the manager must see that it is done.

3. A manager wants to make sure that the operation will continue to provide service

while also making a profit. When we speak of “liberality and good will,” we don’t

mean giving the whole place away! In a restaurant or hotel operated for profit,

portion sizes are related to cost, and so menu and room prices must consider

building and operating costs. Managing these aspects enables the establishment to

recover the cost of its operation and to make enough additional income to pay back

any money borrowed as well as to provide a return to the owner (or investor), who

risked a good deal of money—and time—to make the establishment a reality. (The

unique challenges associated with the operation of subsidized or noncommercial

facilities will be discussed later.) The key lies in achieving a controlled profit, loss,

or break-even operation. A good term to describe this management concern is

“conformance to budget.”

Entertainment and
attractions, such as the
Freemont Street Experience
in Las Vegas, play an
important part in the
hospitality industry.
(Courtesy of Las Vegas
News Bureau.)

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Image Intentionally Removed

Why Study in a Hospitality Management Program? 7

Simply stated, these objectives suggest that managers must be able to relate

successfully to employees and guests, direct the work of their operation, and achieve

operating goals within a budget—that is, to run a productive operation within certain

constraints.

W H Y S T U D Y I N A H O S P I TA L I T Y M A N A G E M E N T P R O G R A M ?

One way to learn the hospitality business is to take the direct route: Go to work in it and acquire the necessary skills to operate the business (as has been the traditional
route). The trouble with this approach, however, is that the skills that accompany the

various line-level workstations (cook, server, etc.) are not the same as those needed

by hospitality managers. In earlier times of small operations in a slowly changing

society, hospitality education was basically skill-centered. Most hospitality managers

learned their work through apprenticeships. The old crafts built on apprenticeships

assumed that knowledge—and work—was unchanging. However, this assumption no

longer holds true. As Peter Drucker, a noted management consultant whose manage-

ment observations are virtually timeless, pointed out, “Today the center [of our society’s

productivity] is the knowledge worker, the man or woman who applies to productive

work ideas, concepts, and information.”1 In other words, knowledge is crucial to suc-

cess, and studying is a necessary part of your overall preparation for a career as a

supervisor or manager.

Many people argue that a liberal arts education provides an excellent preparation

not only for work but also for life. They’re quite right. What we’ve found, however, is that

many students just aren’t interested in the liberal arts subject matter. Because they are

not interested, they are not eager to learn. However, these same people become hard-

working students in an applied career-oriented program that interests them, whether

that is in the hospitality industry or some other profession. There is no real reason for

educational preparation for work to be separate from preparation for life. We spend at

least half our waking hours at work. As we will learn shortly, work lies at the heart of a

person’s life and can lead directly to self-discovery.

Business administration offers one logical route to management preparation. In-

deed, many hospitality managers have prepared for their careers in this field. Business

administration, however, is principally concerned with the manufacturing and marketing

of a physical product in national (and increasingly international) markets. By contrast,

the hospitality industry is a service industry, and the management of a service institution

is vastly different. Food may be the primary product of a restaurant, but most of the

“manufacturing” is done right in the same place that offers the service.

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8

The market is often local, and the emphasis is on face-to-face contact with the

guest. Hospitality operations also tend to be smaller (with some obvious exceptions),

so the problems of a large bureaucracy are not as significant as the problems of face-

to-face relationships with employees and guests. Moreover, the hospitality industry has

a number of unique characteristics. People work weekends and odd hours. We are

expected by both guests and fellow workers to be friendly and cheerful. Furthermore,

we are expected to care what happens to the guest. Our product, we will discuss in

a later chapter, is really the guest’s experience. Additionally, the industry has its own

unique culture. An important task of both schooling and work experience, then, is

that of acculturating people to the work and life of hospitality industry professionals.

Our point is not that there is something wrong with a liberal arts or business ad-

ministration education. Rather, the point is that programs that are specifically focused

on hospitality management are usually made up of students who are interested in the

industry that they are studying. There is a clear difference between the hospitality ser-

vice system and the typical manufacturing company—between the hospitality product

and the manufacturer’s product. For these reasons, hospitality management programs

provide a distinct advantage for such students.

Why do people want to study in a hospitality management program? Perhaps the

best answer can be found in the reasons why students before you have chosen this

particular course of study. Their reasons fall into three categories: their experience, their

interests, and their ambitions. Figure 1.1 lists the various reasons that students cite, in order

of frequency. Many students become interested in the industry because a job they once

had proved particularly captivating. Others learn of the industry through family or friends

working in the field. Others learn about it through their experiences as customers.

High-volume food service
depends on a highly
skilled team made up of
both front-of-the-house
and back-of-the-house
associates. (Courtesy of
Bon Appétit Management
Company.)

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Why Study in a Hospitality Management Program? 9

One final consideration for many students is that they like and are genuinely inter-

ested in people. Working well with people is a crucial part of a manager’s job in our

industry. Many students, too, have a natural interest in food, and some are attracted by

the glamour of the hospitality industry.

E M P L O Y M E N T O P P O R T U N I T I E S

Another important consideration when choosing a profession is what the future holds

for the industry. In the case of hospitality, the employment outlook is solid in most

segments, particularly for managers. For example, in the period 2010 to 2020, employ-

ment of lodging managers is expected to grow 9 to 17 percent. This should encourage

those students who are attracted to a field in which they can be reasonably sure they

will secure employment. Others feel that in a job market with more opportunities than

applicants, they will enjoy a good measure of independence, whether in their own busi-

nesses or as company employees. Many students are drawn to the hospitality industry

because they want to get into their own business. Others, with good reason, suspect that

there are opportunities for innovation off the beaten track of the traditional or franchise

organizations. There have been many successful examples of the latter throughout the

history of the hospitality industry.

E X P E R I E N C E

Personal work experience

Family background in the industry

Contact with other students and faculty in hospitality management programs

I N T E R E S T S

Enjoy working with people

Enjoy working with food

Enjoy dining out, travel, variety

A M B I T I O N

Opportunity for employment and advancement around the world

Desire to operate own business

Desire to travel

Desire to be independent

Figure 1.1

The reasons students select hospitality management programs.

C A R E E R S I N
H O S P I TA L I T Y

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10 Chapter 1 The Hospitality Industry and You

One segment in particular that seems to offer tremendous opportunities is the

catering industry. Many young entrepreneurs have chosen catering as a low-investment

field that offers opportunities to people with a flair for foods and the ability to provide

customized service. Catering is a fast-growing segment of food service and is also a busi-

ness that students sometimes try while in school, either through student organizations

or as a group of students setting up a small catering operation. A related career path is

event planning, with many students seeking careers with event planning firms or hotel

chains that coordinate large events.

There are ample opportunities in the lodging area as well. One of the areas that

provides opportunities for entrepreneurs is the bed-and-breakfast/inn segment. Opera-

tors are typically able to enter these segments with lower capital requirements than

would be necessary in other lodging segments.

Whichever the segment, the hospitality industry has always attracted its share of en-

trepreneurs for the simple reason that it offers everything that appeals to small-business

owners. One characteristic that very much appeals to independent-minded individuals

is being able to be your own boss.

There are many other opportunities as well. For instance, people with chef’s training

may open their own business, especially if they feel that they have a sufficient manage-

ment background. In the health care area, home care organizations are expanding in

response to the needs of our growing senior-citizen population and offer a wide range

of opportunities to entrepreneurs.

Whether you’re studying hospitality management because you want to start a business

of your own or because you found your past work experience in the business especially

interesting—or perhaps just because the need for managers in the area makes the job

prospects attractive—management studies are an important preparation for budding en-

trepreneurs. Hospitality management students tend to be highly motivated, lively people

who take pride in their future in a career of service. Starting positions that hospitality, tour-

ism, and culinary students typically accept upon graduation are presented in Figure 1.2.

P L A N N I N G A C A R E E R

T H E M E A N I N G O F W O R K

We all have several motives for going to work. We work to live—to provide food, clothing,

and shelter. Psychologists and sociologists tell us, however, that our work also provides

a sense of who we are and binds us to the community in which we live. The ancient

Greeks, who had slaves to perform menial tasks, saw work as a curse. Their Hebrew

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Planning a Career 11

contemporaries saw it as punishment. Early Christians, too, saw work for profit as of-

fensive. By the time of the Middle Ages, however, people began to accept work as a

vocation, that is, as a calling from God. Gradually, as working conditions improved

and work became something that all social classes did, it became a necessary part of

maturation and self-fulfillment in our society.

Today, workers at all levels demand more than just a job. Indeed, work has been

defined as “an activity that produces something of value for other people.”2 This defini-

tion puts work into a social context. That is, it implies that there is a social purpose to

work as well as the crude purpose of survival. It is an important achievement in human

history that the majority of North Americans can define their own approach to a life of

work as something more than mere survival.

Work contributes to our self-esteem in two ways. First, by doing our work well, we

prove our own competence to ourselves. Psychologists tell us that this is essential to a

healthy life, as this information gives us a sense of control over both our environment

and ourselves. Second, by working, we contribute to others—others come to depend on

us. Human beings, as social animals, need this sense of involvement. For these reasons,

what happens at work becomes a large part of our sense of self-worth.

Education, too, is clearly important. Indeed, education has become essential in most

walks of life. There is, moreover, a clear connection among education, work, and income.

Studies have shown that workers with a postsecondary education earn much more

annually than workers with just a high school education. This difference is expected to

grow as the demand for “knowledge workers” continues to increase. The evidence, then,

is that your commitment to education will pay off.

L O D G I N G

Sales Managers

Front Office Managers

Guest Services Managers

Revenue Managers

F O O D S E R V I C E

Restaurant Managers

Banquet Managers

Food Service Managers

Bar Managers

C U L I N A R Y

Chef Supervisor

Banquet Cook

Station Cook

T R A V E L A N D T O U R I S M

Meeting and Convention Planner

Festival Manager

Market Researcher

Figure 1.2

Potential starting positions for hospitality and tourism management graduates.

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12 Chapter 1 The Hospitality Industry and You

The next section explores career planning in regard to employment decisions that

you must make while you are still in school. We will also discuss selecting your first

employer when you leave school. If you’ve chosen the hospitality industry as your career,

this section will help you map out your job plans. If you are still undecided, the section

should help you think about this field in a more concrete way and give you some ideas

about exploring your career through part-time employment. A large number of those

reading this text already have significant work experience, many in hospitality fields.

Because not everyone has such experience in his or her background, however, this is

a subject that does need to be covered. Perhaps those with more experience will find

this a useful opportunity to review plans they’ve already made. Taking a fresh look at

your commitments is always worthwhile.

It’s hard to overstate the importance of career planning.

E M P L O Y M E N T A S A N I M P O R TA N T PA R T O F Y O U R E D U C AT I O N

Profit in a business is treated in two ways. Some is paid out to the owner or shareholders as dividends (return on their investment). Some of the profit, however, is retained by
the business to provide funds for future growth. This portion of profit that is not paid out

is called retained earnings. We can apply the concept of retained earnings to consider

the real place of work experience in career development.

P R O F I T I N G F R O M W O R K E X P E R I E N C E

The most obvious profit you earn from work is the income paid to you by an employer.

In the early years of your career, however, there are other kinds of benefits that are at

least as important as income. The key to understanding this statement is the idea of a

lifetime income. You’ll obviously need income over your entire life span, but giving up

some income now may gain you income (and, we ought to note, enjoyment, a sense of

satisfaction, and independence) just a few years later. There is, then, a job-benefit mix

made up of both money and knowledge to be gained from any job. Knowledge gained

today can be traded with an employer for income tomorrow: a better salary for a more

qualified person. The decision to take a job that will add to your knowledge and experi-

ence base is thus a decision for retained earnings and for acquiring knowledge that

you can use later. Many graduates choose their first job on the basis of salary without

concern for the potential long-term advantages that one job may offer over another.

Every job, therefore, has to be weighed according to its benefit mix, not just in terms

of the dollar income it provides. A part-time job at a retail store might seem attractive

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13

because it pays more than a job busing dishes does. However, if you think about the

learning portion of the benefit mix and your total income, including what you learn,

your decision may—and probably should—be for the job that will add to your profes-

sional education.

There is another important point to consider about retained earnings and the ben-

efit mix. Often the only part-time jobs in the industry available to students are unskilled

ones. Many people find these jobs dull, and they often pay poorly. If you think about

these jobs in terms of their total income, however, you may change your perspective.

Although the work of a busperson or a dishwasher may not be very challenging, you

can improve your total profits from such a job by resolving to learn all you can about

the operation. In this way, you can build your retained earnings—the bank of skills and

knowledge that nobody can ever take away from you.

L E A R N I N G S T R AT E G I E S F O R W O R K E X P E R I E N C E

When you go to work, regardless of the position you take, you can learn a good deal

through careful observation. Look first at how the operation is organized. More specifi-

cally, look at both its managerial organization and its physical organization.

M A N A G E R I A L O R G A N I Z AT I O N . Who is the boss? Who reports to (or works directly

with) him or her? Is the work divided into definite departments or sections? Is one

person responsible for each department? To whom do the department staff members

report? If you can answer these questions, you will have figured out the formal manage-

rial organization of the operation. Indeed, most large companies will have an organization

Hospitality takes many forms,
including fast-growing areas such
as takeout and delivery. (Courtesy
of Domino’s Pizza, Inc.)

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14 Chapter 1 The Hospitality Industry and You

chart. If your employer doesn’t have such a chart, ask him or her to explain the orga-

nization to you. You’ll be surprised at how helpful to hospitality management students

most employers and supervisors are.

While you’re thinking about organization, it is also important to notice the informal

organization, also known as the social organization, of the group with which you are

working. Which of the workers are influential? Who seem to be the informal leaders?

Why? Most work groups are made up of cliques with informal leaders. After you iden-

tify this informal structure, ask yourself how management deals with it. Remember that

someday the management of these informal organizations will be your challenge; in

time, you will be helping to manage the organization, and you will need their coopera-

tion. In the meantime, this firsthand experience will help you both in your studies and

in sizing up the real world of work.

T H E P H Y S I C A L P L A N T. You can learn a great deal about a physical plant by making a

simple drawing of your workplace, such as the one shown in Figure 1.3. On this drawing,

identify the main work areas and major pieces of equipment. Then begin to note on it

where you see problems resulting from cross traffic or bottlenecks. For example, if you’re

working in the back of the house, you can chart the flow of products from the back

door (receiver) to storage and from there to preparation. You should also trace the

flow of dishes. Dirty dishes come to the dish room window and go to the clean-supply

area after washing. How are they transported to the line or to the pantry people for use

in service? If you are working in the back of the house, you will be looking mostly at

the flow of kitchen workers and dishes from the viewpoint of the kitchen, dish room,

or pantry. A similar flow analysis of guests and servers (and plates) can also be made

from the front of the house (i.e., the dining room).

A study of guest flow in a hotel lobby can also be educational. Trace the flow

of room guests, restaurant guests, banquet department guests, and service employees

arriving through the lobby. Where do you observe congestion?

These simple charting activities will give you some practical experience that will be

useful for later courses in layout and design and in food service operations and analysis

and, more important, for decisions that you will make while on the job later in your

career. Sometimes simple observations can lead to improvements in workflow patterns.

L E A R N I N G F R O M T H E B A C K O F T H E H O U S E . Things to look for in the back of

the house include how quality is ensured in food preparation, menu planning, recipes,

cooking methods, supervision, and food holding. (How is lunch prepared in advance?

How is it kept hot or cold? How long can food be held?) How are food costs controlled?

(Are food portions standardized? Are they measured? How? How is access to storerooms

controlled?) These all are points you’ll consider a great deal in later courses. From the

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Employment as an Important Part of Your Education 15

very beginning, however, you can collect information that is invaluable to your studies

and your career.

L E A R N I N G F R O M T H E F R O N T O F T H E H O U S E . If you are busing dishes or working

as a waiter, a waitress, or a server on a cafeteria line, you can learn a great deal about

the operation from observing the guests or clients in the front of the house. Who are

the customers, and what do they value? Peter Drucker called these the two central ques-

tions in determining what a business is and what it should be doing.3 Are the guests or

clients satisfied? What, in particular, seems to please them?

Figure 1.3

A sample layout.

Bar
entrance

Lobby

Dining room

Cocktail lounge

Kitchen

Divider

Stacking area

Storage area

Folding

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16 Chapter 1 The Hospitality Industry and You

In any job you take, your future work lies in managing others and serving people.

Wherever you work and whatever you do, you can observe critically the management

and guest or client relations of others. Ask yourself, “How would I have handled that

problem? Is this an effective management style? In what other ways have I seen this

problem handled?” Your development as a manager also means the development of

a management style that suits you, and that is a job that will depend, in large part, on

your personal experience.

G E T T I N G A J O B

Hospitality jobs can be obtained from several sources. For example, your college may maintain a placement office. Many hospitality management programs receive di-
rect requests for part-time help. Some programs maintain a job bulletin board or file,

and some even work with industry to provide internships. There are numerous Web

sites devoted to matching employers and job seekers, such as www.hcareers.com and

www.monster.com. The help-wanted pages of your newspaper also may offer leads, as

may your local employment service office. Sometimes personal contacts established

through your fellow students, your instructor, or your family or neighborhood will pay

off. Networking is as effective as always, and some would suggest it is still the most

important tool.

The New York, New
York Casino in Las
Vegas captures the
feel of the original.
(Courtesy of Las
Vegas News Bureau.)

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Image Intentionally Removed

Getting a Job 17

Networking occurs both formally and informally—often at industry functions, chap-

ter meetings, and the like. Or you may find it necessary to “pound the pavement,” making

personal appearances in places where you would like to work.

Some employers may arrange for hospitality management students to rotate through

more than one position and even to assume some supervisory responsibility to help

them gain broader experience.

G E T T I N G I N T H E D O O R

It is not enough just to ask for a job. Careful attention to your appearance is important

too. For an interview, this probably means a coat and tie for men, a conservative dress

or suit for women. Neatness and cleanliness are the absolute minimum. (Neatness and

cleanliness are, after all, major aspects of the hospitality product.) When you apply for

or have an interview for a job, if you can, find out who the manager is; then, if the op-

eration is not a large one, ask for him or her by name. In a larger organization, however,

you’ll deal with a human resources manager. The same basic rules of appearance apply,

regardless of the organization’s size.

Don’t be afraid to check up on the status of your application. Here’s an old but

worthwhile adage from personal selling: It takes three calls to make a sale. The number

three isn’t magic, but a certain persistence—letting an employer know that you are

interested—often will land you a job. Be sure to identify yourself as a hospitality man-

agement student, because this tells an employer that you will be interested in your work.

Industry Practice Note 1.1 gives you a recruiter’s-eye view of the job placement process.

L E A R N I N G O N T H E J O B

Many hospitality managers report that they gained the most useful knowledge on the job,

earlier in their careers, on their own time. Let’s assume you’re working as a dishwasher in

the summer and your operation has a person assigned to prep work. You may be allowed

to observe and then perhaps help out—as long as you do it on your own time. Your

“profit” in such a situation is in the “retained earnings” of increased knowledge. Many job

skills can be learned through observation and some unpaid practice: bartending (by a

waitress or waiter), clerking on a front desk (by a bellperson), and even some cooking

(by a dishwasher or cook’s helper). With this kind of experience behind you, it may be

possible to win the skilled job part time during the year or for the following summer.

One of the best student jobs, from a learning standpoint, is a relief job. Relief jobs

are defined as those that require people to fill in on occasion (such as during a regular

employee’s day off, sickness, or vacation). The training for this fill-in work can teach you

a good deal about every skill in your operation. Although these skills differ from the

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18

I N D U S T R Y P R A C T I C E N O T E 1 . 1

An Employer’s View of Job Placement—Hyatt

What do you look for in a potential management recruit?

We look for someone who is really thinking about a “long-term” career versus getting a good offer. We

take pride in the number of managers who have been rewarded with career growth and opportunities.

Another characteristic we evaluate is one’s energy level and service skills. We look that they have the

desire and are able to align with the company service strategy.

What is your favorite question, the one you ask to get the best “read” on a person?

“Tell me what you have learned from past experiences and what you can offer Hyatt.” This is a very

open question that allows us to hear more about one’s experiences. They have to be able to give specific

points and apply them to a new career with Hyatt.

How much does Hyatt depend on formal testing and how much on personal

interviews?

The personal interview will always outweigh any testing. However, we are experimenting with pre-employ-

ment assessments to ensure certain service characteristics and management aptitude are visible. We feel

this is a great way to prescreen applicants and create a more focused interview.

What is the quickest way for an interviewee to take him- or herself out of the

running?

Indecisiveness. We really want someone to have thought about a future career and have a general direc-

tion or goal. In addition, they must be flexible with relocation. A good hotelier is backed by a variety

of experiences.

What skills do today’s recruits have that those ten years ago didn’t?

Hospitality today means much more than it did ten years ago. Today, recruits are introduced to other

avenues such as Revenue Management, Retirement Communities, Casino Operations, Recreation, and

Development. Due to technology, recruits know how to get information about companies and opportuni-

ties (blogs, message boards, etc.).

What are some of the current opportunities for graduates of hospitality

management programs in the lodging sector?

Lodging will always offer the traditional opportunities in Operations, Culinary, Facilities, Catering, Sales,

Accounting, and Human Resources. The lodging sector offers much more today including Revenue Man-

agement, Spa Operations, and Development.

To what extent does your company employ the Internet in recruiting?

There is no other way to apply for a Hyatt job other than online. We deploy our training program and all

career opportunities on the Hyatt career site explorehyatt.jobs. However, we do leverage job openings

on other Internet sites, but we are selective. We prefer to post on a few large and some niche sites rather

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19

than posting on as many as possible. Research and networking through social media is now mainstream.

Many have discovered that connecting early and beginning dialogue or relationships may connect them

to their future employer early on. Is there anything else that might be helpful for a hospitality manage-

ment graduate to know before applying for a job with Hyatt?

Before applying to Hyatt, we ask that a graduate be open to movement [relocation]. We are focused on

growth and differentiating our brands. Our current processes allow our associates movement among all

Hyatt entities, which proves beneficial to one’s experiences. There is opportunity for experience across

all sectors of the industry including:

Park Hyatt, which provides discerning, affluent individual business and leisure guests with elegant

and luxurious accommodations, highly attentive personal service in an intimate environment.

Andaz, a vibrant yet relaxed atmosphere geared toward today’s individual business and leisure

travelers, designed to reflect the unique cultural scene and spirit of the surrounding neigh-

borhood.

Grand Hyatt, which features large-scale, distinctive hotels in major gateway cities and resort destina-

tions providing sophisticated global business and leisure travelers with upscale accommodations.

Hyatt Regency, which offers a full range of services and facilities tailored to serve the needs of

conventions, business travelers, and resort vacationers conveniently located in urban, suburban,

airport, convention, and resort destinations around the world.

Hyatt hotels are smaller-size properties conveniently located in secondary markets in the United

States offering guests the opportunity to experience our signature service and hospitality even

when traveling outside of major gateway markets.

Hyatt Place is designed for the busy lifestyle of today’s multitasking business traveler and features a

selected range of services aimed at providing casual hospitality in a well-designed, high-tech, and

contemporary environment located in urban, airport, and suburban areas.

Hyatt Summerfield Suites is an extended-stay, residential-style hotel that aims to provide individual

travelers with the feel of a modern condominium located in urban, airport, and suburban locations.

Hyatt Vacation Club provides members with vacation ownership opportunities in regionally inspired

and designed residential-style properties with the quality of the Hyatt brand.

Hyatt Resorts is a collection of vacation properties across our Park Hyatt, Grand Hyatt, and Hyatt Regency

brands representing attributes of the individual brand in the more personal context of a vacation

environment and are characterized by relaxed, comfortable spaces reflective of the local culture.

Randy Goldberg, Vice President Recruiting

Hyatt Hotels Corporation, August 18, 2009

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20 Chapter 1 The Hospitality Industry and You

skills a manager uses, they are important for a manager to know, because the structure

of the hospitality industry keeps most managers close to the operating level. Knowledge

of necessary skills gives managers credibility among their employees, facilitates com-

munication, and equips them to deal confidently with skilled employees. In fact, a good

manager ought to be able to pitch in when employees get stuck.4 For these reasons,

one phrase that should never pass your lips is “That’s not my job.”

O T H E R W AY S O F P R O F I T I N G F R O M A J O B

In addition to income and knowledge, after-school part-time employment has other

advantages. For example, your employer might have a full-time job for you upon gradu-

ation. This is particularly likely if your employer happens to be a fairly large firm or if

you want to remain close to the area of your schooling.

You may choose to take a term or two off from school to pursue a particular interest or

just to clarify your longer-term job goals. This does have the advantage of giving you more

than “just a summer job” on your résumé—but be sure you don’t let the work experience get

in the way of acquiring the basic educational requirements for progress into management.

Wherever and for however long you work, remember that through your employment,

you may make contacts that will help you after graduation. People with whom you have

worked may be able to tell you of interesting opportunities or recommend you for a job.

Global Hospitality Note 1.1 offers some information you may find helpful if you

think you might like to work overseas.

E M P L O Y M E N T AT G R A D U AT I O N

Graduation probably seems a long way off right now, but you should already be con-sidering strategies for finding a job when you finish your formal education. Clear
goals formed now will direct your work experience plans and, to a lesser degree, the

courses you take and the topics you emphasize within those courses. If you have not yet

decided on a specific goal, this question deserves prompt but careful consideration as

you continue your education. You still have plenty of time. Furthermore, you will never

know when or where a job opportunity may arise. For this reason alone, you should

always keep your résumé up-to-date.

The rest of this section offers a kind of dry-run postgraduation placement proce-

dure. From this distance, you can view the process objectively. When you come closer

to graduation, you may find the subject a tense one: People worry about placement as

graduation nears, even if they’re quite sure of finding a job.

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21

G L O B A L H O S P I TA L I T Y N O T E 1 . 1

Career Opportunities Overseas

Companies hire North Americans to work in hospitality positions abroad for several reasons. Some coun-

tries do not have a large enough pool of trained managers. Moreover, particularly in responsible positions,

a good fit with the rest of the firm’s executive staff is important—and often easier for an American firm

to achieve with someone from North America. The relevant operating experience may not be available

to people living outside the United States and Canada. Many factors are considered, however, including

familiarity with other cultures and the ability to speak multiple languages.

North American employees, however, are more expensive to hire for most companies than are local

nationals because their salaries are usually supplemented by substantial expatriate benefits. But cost

is not the only reason for hiring people from the host country. Local people have an understanding of

the culture of the employees in a particular country, to say nothing of fluency in the language. Local

managers, moreover, do not arouse the resentment that is directed at a foreign manager. For many of

the same reasons, foreign-owned firms operating in the United States seek U.S. managers and supervi-

sors in their U.S. operations.

A final point to consider is that many North American firms are using franchising as the vehicle for

their overseas expansion. In this case, the franchisee is most often a local national whose local knowledge

and contacts are invaluable to the franchisor. Not surprisingly, however, the franchisee is likely to prefer

people from his or her own culture if that is possible.

Although most positions in operations outside the United States are filled with people from those coun-

tries, many American companies offer significant opportunities for overseas employment. One of the first

obstacles to immediate employment overseas is the immigration restrictions of other countries (similar to

the restrictions enforced in the United States). Employment of foreign nationals is usually permitted only if

the employer is able to show that the prospective employee has special skills that are not otherwise avail-

able in the country. It is not surprising, therefore, that many employees who do receive overseas assign-

ments have been employed by the company for a few years and, thus, have significant operating experience.

Another major problem facing Americans who want to work overseas is a lack of language skills. In

fact, many hospitality programs are now requiring students to study at least one foreign language as

part of their curriculum and require a global learning experience, preferably in a non–English-speaking

country. The ability to adapt to a different culture is critically important, and probably the only way to

get it is to have experience living abroad.

Summer or short-term work or study abroad not only gives students experience in living in another

culture but also may offer them the opportunity to build up contacts that will help them in securing

employment abroad upon graduation. Opportunities to study abroad are plentiful in summer programs

offered by many hospitality programs. Some institutions also maintain exchange programs with institu-

tions in foreign countries.

As a student seeking overseas work, you should begin with your own institution’s placement office

and international center. The consulate or embassy of the country you seek to work in may be aware of

Continues on next page

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22

exchange programs or other means to obtain a work permit. Probably the best source of information is

other students who have worked abroad. Talk with students at your own institution or those you meet

at regional or national restaurant or hotel shows. They know the ropes and can give practical advice on

getting jobs and what to expect in the way of pay and working conditions. Whether you are interested

in overseas work as a career or not, work, travel, and study abroad can all be unique educational expe-

riences that broaden your understanding of other cultures, increase your sophistication, and enhance

your résumé.

Don’t underestimate a recommendation. Even if your summer employer doesn’t have a career oppor-

tunity for you, a favorable recommendation can give your career a big boost when you graduate. In

addition, many employers may have contacts they will make available to you—perhaps friends of theirs

who can offer interesting opportunities. The lesson here is that the record you make on the job now

can help shape your career later.

G L O B A L H O S P I TA L I T Y N O T E 1 . 1

Career Opportunities Overseas

Continues from previous page

G O A L S A N D O B J E C T I V E S : T H E S T R AT E G Y O F J O B P L A C E M E N T

Most hospitality management students have three concerns. They all speak to the deci-sion that is known as the strategy of job placement. First, many students are inter-
ested in such income issues as starting salary and the possibility of raises and bonuses.

Second, students are concerned with personal satisfaction. They wonder about

opportunities for self-expression, creativity, initiative, and independence. This applies

particularly to students coming from culinary schools who want to be able to im-

mediately apply what they have learned. Although few starting jobs offer a great deal

of independence, some types of work (e.g., employment with a franchising company)

can lead quite rapidly to independent ownership. Students also want to know about

the number of hours they’ll be investing in their work. Many companies expect long

hours, especially from junior management. Other sectors, especially on-site operations,

make more modest demands (but may offer more modest prospects for advancement).

Third, many students, particularly in health care food service, want to achieve such

professional goals as competence as a registered dietician or a dietetic technician.

Professional goals in the commercial sector are clearly associated with developing a

topflight reputation as an operator.

These three sets of interests are obviously related; for example, most personal goals

include the elements of income, satisfaction, high ethical standards, and professional

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Goals and Objectives: The Strategy of Job Placement 23

status. Although it may be too early to set definite goals, it is not too early to begin

evaluating these elements. From the concerns we’ve just discussed, the following are

five elements of the strategy of job placement for your consideration:

1. Income. The place to begin your analysis is with the issue of survival. How much

will you require to meet your financial needs? If your income needs are modest,

you may decide to forgo luxuries to take a lower-paying job that offers superior

training. Thus, you would make an investment in retained earnings—the knowledge

you hope someday to trade for more income, security, and job satisfaction.

2. Professional status. Whether your goal is professional certification (e.g., as a regis-

tered dietitian) or a reputation as a topflight hotelier or restaurateur, you should

consider the job-benefit mix. In this case, you may choose to accept a lower income

(but one on which you can live and in line with what such jobs pay in your region).

Although you shouldn’t be indifferent to income, you’ll want to focus principally

on what the job can teach you.

3. Evaluating an employer. Students who make snap judgments about a company and

act aggressively during an interview often offend potential employers, who, after

all, see the interview as an occasion to evaluate a graduating class. Nevertheless, in

a quiet way, you should learn about the company’s commitment to its employees,

often evident through its employee turnover rates and its focus on training. For

instance, you might want to explore whether it has a formal training program. If

not, how does it translate its entry-level jobs into learning experiences? (Inquiries

directed to your acquaintances and the younger management people can help

you determine how the company really scores in these areas. Recent graduates

from the same hospitality program as yours are good sources of information.) Be-

cause training beyond the entry-level basics requires responsibility and access to

promotion, you will want to know about the opportunities for advancement. Finally,

you need to evaluate the company’s operations. Are they quality operations? Can

you be proud to work there? If the quality of the facility, the food, or the service is

consistently poor, can you help improve things? Or will you be misled into learn-

ing the wrong way to do things? A final note with regard to evaluating employers

who may be independent operators: Sometimes it can be more difficult to research

a small business. In this case, it might be worth asking around the local business

community to find out what kind of reputation the prospective employer has.

4. Determining potential job satisfaction. Some students study hospitality management

only to discover that their real love is food preparation. Such students may decide,

late in their student careers, to seek a job that provides skill training in food prepa-

ration. Other students may decide they need a high income immediately (e.g., to

pay off debts or to do some traveling). These students may decide to trade the skills

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24 Chapter 1 The Hospitality Industry and You

they have acquired in their work experiences to gain a high income for a year or

two as a server in a topflight operation. Such a goal is highly personal but perfectly

reasonable. The key is to form a goal and keep moving toward it. The student who

wants eventually to own an operation probably will have to postpone his or her

goal while developing the management skills and reputation necessary to attract

the needed financial backing.

5. Accepting skilled jobs. Students sometimes accept skilled jobs rather than manage-

ment jobs because that is all they can find. This happens quite often, especially

during a period of recession. Younger students, too, are prone to suffer from this

problem for a year or two, as are students who choose to live and work in small

communities. The concept of retained earnings provides the key to riding out these

periods. Learn as much as you can and don’t abandon your goals.

A final word is in order on goals, priorities, and opportunities. Hospitality students’

top-ten preferences for work upon graduation are summarized in Table 1.1. Hotels have

traditionally been the favored sector of the hospitality industry, with luxury opera-

tions typically preferred over midmarket or midscale operations among this sample

of students. Interestingly, quick-service restaurants and on-site food service was not

as common but generally equal in terms of starting salaries. There is an old saying,

De gustibus non disputandem est (In tastes, there is no disputing), and that certainly

should apply to job preferences. Later in this text, we will point out that although work

in on-site management is not any easier, its hours are more regular and its pace more

predictable, often making for a better work-life balance. In short, there are many

excellent career opportunities in the food service industry in general, and it is even

better in some specific segments.

Luxury hotels, private clubs, and fine-dining restaurants are undoubtedly more

glamorous than many other operations—or at least seem so—and it does appear

that they are attracting the greatest interest from graduates as applicants. In the

supply-demand equation, they have a plentiful supply of applicants, and yet they

are relatively smaller sectors of hospitality employment. That is to say, they have less

demand for employees than many other sectors. In economics, you may recall, a

large supply met by a modest demand is generally expected to yield a lower price.

Of course, there are no dollar signs on job satisfaction, and these are highly personal

choices. Still, the truth is that no job offers everything. You have to decide what your

highest priorities are and then choose the opportunity that suits you best. If career

advancement, achieving a substantial income, and gaining responsibility—or perhaps

just having a manageable work life—are priorities for you, you may want to consider

at least interviewing with some of the companies that are on this list but that you

had not previously considered.

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The Outlook for Hospitality 25

T H E O U T L O O K F O R H O S P I TA L I T Y

Over the past two generations, the hospitality industry has evolved to accommodate explosive growth, radically changing consumer demand, and a substantially different
social and economic environment. We will examine some of the basic forces driving

these changes in Chapter 2. The following brief summary points will alert you to some

of the key trends discussed in the balance of this text. We can begin with trends closest

to the industry and move outward to broader societal developments. Also, no hospitality

text can ignore the short- and long-term effects of September 11, 2001.

T H E E F F E C T S O F S E P T E M B E R 11, 2 0 0 1

The effects of the terrorist attacks in the United States on September 11, 2001, on all as-

pects of life have been examined extensively. Some high-profile hospitality programs, in-

cluding those at Johnson and Wales University and Cornell University, have hosted panel

discussions and/or conducted studies on the impact that the day had on the industry.

Certainly, there have been significant effects, both short- and long-term, on the hospital-

ity and tourism industries. These effects have ranged from the initial reaction during

which many people in North America (and elsewhere) stopped traveling anywhere for

any reason, to traveling sporadically, and finally to travel patterns reaching some level of

normalcy. The airlines were perhaps the most affected industry of all. (This is discussed

much further in Chapter 13.) The effects are sure to be felt for a long time to come, but

travel, accommodation, and food service have all reached activity levels equal to those

prior to September 11. Discussions of the impact of that day will be found throughout

the chapters that follow. The text also discusses effects that other terrorist attacks have

had (such as in Madrid, London, and Bali) as well as recent natural disasters in Asia.

TABLE 1.1

Hospitality Graduates’ Career Top Ten Preferences
INDUSTRY SEGMENT

1 Luxury hotels 6 Midscale/family restaurants

2 Event Planning/Catering 7 Economy hotels

3 Fine dining/upscale restaurants 8 Quick-service restaurants

4 Midmarket hotels 9 Gaming/casinos

5 On-site food service 10 Sports and entertainment/recreation

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26

P O L A R I Z AT I O N I N H O S P I TA L I T Y S E R V I C E O R G A N I Z AT I O N S

Hospitality companies are grouping themselves, to a very large extent, either as limited-

service organizations or as service-intensive operations. In lodging, although there are

price point divisions—budget, economy, midscale, upscale, and upper upscale—the

most basic division is between limited-service and full-service properties. In later chap-

ters, we will discuss concerns associated with the possibility of overbuilding and future

excess capacity in all but the luxury and extended-stay segments of lodging.

In food service, simpler operations specializing in off-premise service to guests—

takeout, drive-through, and delivery—have contributed greatly to the growth in restau-

rant sales in recent years. Quick-service and—the latest new segment—fast casual, too,

continue a healthy growth trend. Table-service restaurant growth in the more economi-

cal family restaurant segment has flattened, but within the table-service group a more

service-intensive format—casual restaurants—has shown healthy growth.

Restaurants and hotels, then, are tailoring themselves to specialized markets, a prac-

tice often referred to as target marketing.

A C C E L E R AT I N G C O M P E T I T I O N

One of the major reasons that hotels, restaurants, and other hospitality organizations are

increasingly targeting specific market segments is that in most markets, there is more

than enough capacity to go around. Competition is likely to be even tougher in the

years ahead. In food service, operators are adapting their operations by opening new

restaurants and bringing them closer to the customer (i.e., making them more conve-

nient). They are also creating smaller prototypes. Lodging capacity, as we have already

noted, offers a highly competitive outlook for all but the luxury sector (and even this

is changing). The growth in competition makes tightly controlled operations especially

The outlook for the hospitality industry
includes the continued growth of the
casual dining segment. (Courtesy of
Mimi’s Café.)

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27

important to survival. Competition also exists in the battle for customers in the conven-

tion, resort, and tourist destinations. Competition is no longer just limited to domestic

competition either. International competition has become a concern in many markets.

We will consider those issues for restaurants in Chapter 6 and for hotels in Chapter 12.

S E R V I C E I S T H E D I F F E R E N C E

As competing firms expand their menus and amenities and dress up their opera-

tions, all operations at a given price level tend to become more like one another.

The crucial differentiation becomes service—usually in the form of personal service.

Understanding service and how to manage it is so vitally important that the last chapter

of this book is devoted to it. In the world of today and tomorrow, service will be the

difference between barely surviving (or worse) and achieving success. As Ellsworth

Statler, founder of the groundbreaking Statler Hotels, (1893–1928) noted long ago: Life

is service; the one who progresses is the one who gives his fellow men a little more—a

little better service.

Service is becoming the differentiating factor in all segments of hospitality and tourism. (Courtesy of Southwest Airlines.)

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28 Chapter 1 The Hospitality Industry and You

V A L U E C O N S C I O U S N E S S

An educated, sophisticated customer base is placing increasing emphasis on the value

of goods or services received in relation to the price paid in the marketplace. This

trend probably originated with the baby boom generation and has continued with

subsequent generations. The baby boomers, arguably the best-educated generation in

history, has become a generation of careful shoppers. With an intensely competitive

industry vying to serve them, consumers are in a position to demand good value for

their money. Any discussion of value should also include mention of time and how

personal time is valued (as it becomes more precious). For this reason, consumers

often strive to balance the price they are willing to pay with a trade-off such as time

saved. For example, this helps to partially explain the increasing popularity of the

fast-casual dining segment.

T E C H N O L O G Y

Another driving force the industry has wrestled with for some years is the explosion

of technology. Technology has already changed the way work is done in operations

through increased automation and computerization. Even more fundamental, how-

ever, are the changes in marketing and management made possible by technological

advances. Lodging marketing, already shaped by a global computerized reservation

network, has been reinvented, so to speak, as the Internet continues to expand the

communication capacity of operators, their competitors, and the guest. Restaurants,

too, are maintaining Web sites, many of which are interactive rather than simply

informational. Even third-party companies, such as OpenTable (www.opentable.com)

are changing how we make our restaurant reservations. With greatly improved com-

munication and computerized financial and operational reporting, the hierarchy of

organizations is collapsing, and a flatter, more integrated organizational structure

is emerging.

E M P O W E R M E N T

As a direct result of the reduced number of middle managers, employees and manag-

ers at all levels are being asked to assume more responsibility. For example, they are

being empowered to solve many of the guest’s service problems on the spot. This is an

outgrowth not only of improved communication but of a more educated generation of

employees. Bright, well-educated people want to do their own problem solving—and

generally are able to do so effectively.

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The Outlook for Hospitality 29

D I V E R S I T Y

The face of North America is changing. Whereas the white male has been the dominant

force in the labor market, the majority of people entering the workforce for the foresee-

able future will be women and minorities, such as African Americans, Hispanics, and

Asians. Managers will need a broad background and an openness to many kinds of

people and cultures to prosper in the time ahead.

C O N C E R N W I T H S E C U R I T Y

The results of September 11 and other more recent terrorist attacks have only served

to underscore the value that travelers put on their personal safety and security. As the

perceived incidence of violence increases, people worry about their personal secu-

rity—and so we see a proliferation of private security forces in hotels and restaurants,

marshals on airplanes and other public places, as well as high-tech security measures,

such as keyless electronic locks in hotel rooms. Security has become a commodity that

some people are willing to pay for—and that hospitality establishments have a respon-

sibility to provide. In some places in the world (such as Israel), security is everywhere,

even in local supermarkets.

C O N C E R N W I T H F O O D S A F E T Y A N D S A N I TAT I O N

The incidence of food-borne illness has increased as the food service system has be-

come more complex and the number of operations has expanded. One case of food

poisoning can seriously injure a restaurant’s reputation. More than one can endanger

an operation’s survival. The level of food safety demanded by consumers and regulatory

agencies alike has escalated in light of recent cases of food poisoning. That escalation

will continue in the years ahead.

S U S TA I N A B I L I T Y

Another sweeping change affecting hospitality operations is a distinct focus on sustain-

ability. The notion of going “green” is not a new one, but it is one that reflects corporate

responsibility and smart business practices. Today, almost all hotels encourage guests to

reuse towels, and most have already embraced low-cost changes such as using energy

efficient lighting. Customers also like to know that they are supporting businesses that

are concerned about the environment. Industry Practice Note 1.2 illustrates how hotels

are changing in this respect.

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I N D U S T R Y P R A C T I C E N O T E 1 . 2

Leading the Charge in Going

Green—Orchard Hotels

Why are hotels going green?

It makes sense from both a business perspective and a human perspective. “Green” buildings perform

better, so they operate very efficiently and positively impact the triple bottom line—socially, environmen-

tally, and economically. “Green” buildings are healthier for employees and guests—making for happier

employees and guests. Finally, it’s part of our responsibility to the environment to make our footprint as

soft and small as possible—“green” buildings are a part of meeting that responsibility.

For the hotel industry, cost cutting can lead naturally to green solutions. Since it’s hard to raise room

rates in economically challenging times, the best way to increase profit is to cut costs, but it must be

done without harming the guest experience. Working with partners such as electric and water utilities

is very important for hotels.

What makes Orchard Hotels different in this respect?

Inspiration for meeting the LEED guidelines comes from our octogenarian owner, Mrs. S. C. Huang. She is

passionate about clean environments, after the untimely cancer-related deaths of three family members,

and has devoted herself to creating environmentally safe and sustainable hotels.

Mrs. S.C. Huang pursued a LEED certification for her hotels for several important reasons. Studies

prove that LEED-certified buildings have lower operating costs, higher employee productivity, and hap-

pier, healthier occupants. We’re extremely proud to lead the hospitality industry in our dedication to

our environment and our guests’ and employees’ quality of life.

The Orchard Garden Hotel debuted California’s first guestroom key card energy control system—after

opening the guestroom door with the key card, the guest places the card in a discreet box in order to

turn on the lights and other room systems. When exiting the room, the guest simply takes the key card,

automatically “turning off” the entire room, with the exception of an outlet that guests can use to charge

laptops, cell phones, and other battery-powered devices. This system saves nearly 25 percent in energy

consumption, having paid for itself in around two years.

The Orchard Garden Hotel was built “green”—eco-friendly construction materials included using con-

crete made from fly ash, a by-product of recycling coal, and wood certified by the Forest Stewardship

Council as harvested in a sustainable manner. One environmentally sustainable building practice used

during construction diverts debris from landfill disposal by redirecting recyclable material back to the

manufacturing process.

In 2002, as it became increasingly important to control expenses ever so tightly in the post-9/11 busi-

ness climate, we wanted to change our cleaning products in Housekeeping. We were taking the first

steps to go green. And—yes—these green cleaning products, if used properly, would actually save us

valuable dollars! So, we called a meeting with all housekeeping staff members and told them the “good

news.” To our surprise, the message was greeted with distrust as most of the crew did not believe that green

cleaning products would do the job. My argument for a “healthier work environment” was met with very

little enthusiasm as the predominantly Chinese housekeeping team was much more focused on getting

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Continues on next page

rooms cleaned quickly and efficiently—no matter the (environmental) price. Potential health benefits?

Not much interest either.

At that point, it would have been easy to simply issue a memo and force the team to comply. Realizing,

however, that employees look at senior management for inspiration (and not just direction), we decided

to ask everyone to participate in an experiment assigning room attendants into two groups—one outfitted

with traditional chemicals, and one equipped with green products—for one week initially. During that

first week, much training was given to the green team as employees learned how to properly dilute, mix

and match, and apply specific surface cleaners. Since the products were nontoxic, fear of mishandling

evaporated quickly, but product performance remained a hotly debated point of contention. After another

week, the green group slowly began to see the benefits of using the product properly. Two more weeks

went by (all the while asking for daily feedback), and then we rotated groups. Those employees having

used the new product now had to revert to using chemicals, and the other team now couldn’t wait to

experience the green items that, in the interim, had generated lots of buzz among those who had been

using them for the past month.

The results were astonishing. Not only did our employees overwhelming select the green cleaning

products, but the “experiment” created a tremendous boost of confidence among staff members in a very

challenging business environment. They had become part of the decision-making process!

Now, seven years later, this story still inspires.

Do customers make buying decisions based on a hotel’s decision to be

environmentally sensitive?

The typical factors still apply to buying decisions—price, location, service, amenities, and so forth. But

we find that our “greenness” makes more people pay attention to our small hotels and will tip them in

our favor. So travelers choose a hotel only because it’s green? Probably not. Will they choose a hotel also

because it’s green? Much more likely!

Example:

How many of you would prefer to stay in a green hotel over a convention property? Probably most

or all of you, I would guess. Now, how many of you would stay at that green property if it didn’t have

Internet connectivity? Not many, I reckon. Does this mean Internet access is more important to you than

the environment?

You mention “LEED certified”—what does that mean?

In 2007, the Orchard Garden Hotel was awarded LEED® (Leadership in Energy & Environmental Design)

certification by the U.S. Green Building Council (USGBC). San Francisco’s first hotel to earn this honor,

the Orchard Garden was only the third hotel in the United States and fourth hotel in the world with

this certification. LEED is the USGBC’s leading-edge system for designing and constructing the world’s

greenest, energy-efficient, high-performing buildings.

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32

I N D U S T R Y P R A C T I C E N O T E 1 . 2

Leading the Charge in Going

Green—Orchard Hotels

In 2009, San Francisco’s Orchard Hotel joined its sister property, the Orchard Garden Hotel, in “green”

certification, earning LEED-EB® (Leadership in Energy & Environmental Design—Existing Building) certifi-

cation for an existing building by the USGBC. San Francisco’s first hotel to earn this honor, the Orchard

Hotel is the second hotel in California. LEED-EB is the USGBC’s system for operating high-performance

buildings dedicated to whole-building cleaning and maintenance issues, recycling programs, exterior

maintenance programs, and systems upgrades.

Is this trend going to stay?

In the near future it will be not be a trend, but a part of how business is done. “Green” is here to stay.

What does this mean for future hotel managers?

Get on board now—don’t wait. Develop intimate understanding of “green” hospitality, and make it a part

of the hotel’s everyday life.

Stefan Mühle

Portfolio Hotels & Resorts

Regional Director and General Manager

The Orchard Hotels

August 26, 2009

Continues from previous page

G L O B A L I Z AT I O N

In a sense, globalization has already become old news. With the falling of trade barriers

such as that brought on by the North American Free Trade Agreement and the European

Community, borders have become less important. The ease of financial transactions and

information flow means that some of the largest “U.S. firms” are owned abroad—and that

U.S. firms are major players overseas as well. Holiday Inn, for example, is owned by a

British company, and Motel 6 by a French firm. McDonald’s is the largest restaurant chain

in Europe and has restaurants in more countries than any other food service company

in the world (currently at 119 and counting). Forecasters are expecting tremendous

growth opportunities in both China and India, which are positioned to greatly influence

global commerce in the coming years. With all of the dynamism that the hospitality

industry offers, an exciting future beckons as you begin this study of the industry and

what makes it tick.

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Summary 33

S U M M A R Y

A s we have seen, the hospitality industry includes hotels and restaurants as well as many other types of operations that offer shelter and/or food (and entertainment, etc.)
to people away from home. A manager in the hospitality industry, therefore, must

keep in mind these three objectives: (1) making the guest welcome personally,

(2) making things work for the guest, and (3) making sure that the operation will

continue to provide service and meet its budget.

We mentioned the many reasons for studying in a hospitality management or cu-

linary management program, including past experiences working in the field, interests

in the field, and ambitions in the field.

We also discussed the meaning of work and how to get the most from a job, includ-

ing weighing both retained earnings and the job-benefit mix. We pointed out that in the

hospitality industry, you can learn a lot from studying the physical plant and from how

the front and the back of the house are managed.

We then turned to ways to get a job—including always having a résumé ready and

preparing for an interview—and how to gain the most from whatever job you do find.

We also talked about what you should consider in regard to a more permanent job:

income, professional status, your employer, potential job satisfaction, and accepting an

interim less-skilled job. We noted as well that supply and demand work in the hospital-

ity job market as they do elsewhere, suggesting that what is most popular in terms of

employment may not necessarily translate into the best opportunity.

Finally, we began our continuing discussion of the outlook for the hospitality indus-

try, which we found to be bright but full of change and competition.

Hospitality

Manager’s role

Profit

Knowledge worker

Hospitality industry

Work as a vocation

Work experience

Job-benefit mix

Managerial organization

Informal organization

Physical plant

Back of the house

Front of the house

Strategy of job placement

Key Words and Concepts

Review Questions

1. What kinds of institutions or establishments does the hospitality industry include

besides hotels and restaurants?

2. What is the role of a manager in the hospitality industry?

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34 Chapter 1 The Hospitality Industry and You

3. Why did you choose to study in a hospitality management program? What alterna-

tives were available to you?

4. What are some of the reasons that people work?

5. What does the concept of retained earnings mean as it relates to a career?

6. Describe the concept of the job-benefit mix. Give examples from your experience

or from that of your classmates.

7. What are some things to observe in both the front of the house and the back of

the house in the early stages of your career?

8. What kinds of things can you learn from a part-time (or summer) job that are not

strictly part of the job?

9. What are three principal concerns in regard to a job after graduation?

10. What are the five elements of the strategy of job placement?

Internet Exercises

1. Site name: Résumés and Cover Letters

URL: www.wku.edu/~hrtm/resumes.htm

Background information: This site provides a listing of Internet resources for writing

résumés and cover letters.

Exercises:

a. Surf the résumé and cover letter Web sites for information on writing résumés

and cover letters. Write a simple résumé and cover letter for an entry-level hotel,

restaurant, or tourism position for which you are interested and qualified. Use

only experience that you have already acquired.

b. After writing the résumé and cover letter, describe the experiences you will need

to acquire in the future to obtain an entry-level management position in the

hospitality industry.

2. Site name: Hotel, Restaurant, and Tourism Management Career Opportunities

URL: www.wku.edu/~hrtm/hrtmjobs.htm

Background information: This site is a launch pad for hospitality management career

Web sites. The site provides links to generic hospitality Web sites such as Hcareers.

com, HospitalityLink.com, and HospitalityJobOnline.com as well as Web sites that

specialize in hotels, food service/restaurants, casinos, and travel.

Exercises:

a. Explore at least two of the Web sites listed. Look through the job opportunities

in your area of interest.

i. What job opportunities are available for entry-level management positions

(recent graduates of a hospitality management program)?

ii. Are there abundant job opportunities in a location where you would like

to be after graduation?

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Summary 35

b. Which support/career services does the Web site provide candidates to assist them

with their job search (for example: résumé, cover letter, electronic résumé help, etc.)?

c. Explore the “Career Services” Web site at the college or university you are cur-

rently attending.

i. What types of services does your career services office offer to students

(résumé and cover letters, job search assistance, etc.)?

ii. Is there a person in your career services office who has been specifically

designated to assist hospitality management students? If so, what is the

name of this person?

iii. Does the career services office hold job/career fairs for students on your

campus? If so, when are these job fairs typically held and do they include

potential hospitality employers as exhibitors?

iv. Does your career services office maintain a database of current job opportuni-

ties for students? If so, how do they make this information available to students?

3. Site name: Council on International Educational Exchange

URL: www.ciee.org

Background information: Study abroad or work abroad opportunities—CIEE provides

quality programs and services.

Site name: Hospitality Internships Abroad

URL: www.internabroad.com/listings.cfm/interntypeID/1 10

Background information: GoAbroad.com was launched to fill an information void in the

area of international student travel. GoAbroad.com was conceptualized to provide a one-

stop information center for students wishing to travel internationally. The site was created

to link prospective travelers with organizations providing international opportunities.

Site name: Idealist.org

URL: www.idealist.org/

Background information: Search for worldwide internship opportunities by location,

dates, and required skills.

Exercises:

a. Browse through all three Web sites and describe the countries that are repre-

sented and the hospitality job opportunities available on each Web site.

b. Choose an international internship Web site and select an internship that you

might be interested in pursuing. Describe the benefits and drawbacks of pursu-

ing an international internship.

Notes

1. Peter F. Drucker, The Age of Discontinuity (New York: Harper & Row, 1968), p. 264.

2. Work in America (Cambridge, MA: MIT Press, 1973), p. 3.

3. Peter F. Drucker, Management: Tasks, Responsibilities, Practices (New York: Harper & Row,

1974), pp. 80–86.

4. If they get stuck too often, of course, management must find out why and correct the prob-

lem. If a manager has to pitch in frequently, it can be a sign of an inefficient organization.

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FORCES AFFECTING
GROWTH AND CHANGE IN
THE HOSPITALITY INDUSTRY
Courtesy of National Park Service.

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Chapter

2

T H E P U R P O S E O F T H I S C H A P T E R

The hospitality industry, as it is today and will be tomorrow, is the result of the interaction of basic market forces. In this chapter, we will look at two of the most basic of these forces. The first is the demand for hospitality services from consumers. The second is the supply of those things
required to provide service, such as land and its produce, food, and labor. We begin by considering

demand; it is the most fundamental factor that gives rise to business activity. We will then consider

the supply of the factors of production used by hospitality service companies.

TH IS CHAPTER SHOULD HE LP YOU

1. Explain how the changing demographics of the North American population impact the demand
for hospitality services, and give examples of demographics that affect both food service and

lodging operations.

2. Describe the current and expected future impact of baby boomers on the demand for hospitality
services.

3. Identify and describe the key supply factors that are important to hospitality organizations.

4. Give examples of the opportunities and challenges inherent in the North American population’s
increasing diversity.

5. Explain how changes in the female workforce and alterations in family structure affect consumer
behavior and the markets for hospitality services.

Chapter

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38 Chapter 2 Forces Affecting Growth and Change in the Hospitality Industry

MANAG ING CHANGE

A t the outset of this chapter, it is important to place the topic of forces (market, environ- mental, societal, etc.) into its proper context. Managers in any line of business must
understand the external forces that are at work if they are going to be effective manag-

ers. This is especially true of managers in the hospitality industry. There are forces that

impact hospitality businesses on a daily basis, or on some other cyclical basis, and there

are singular events that have an immediate and ongoing effect. Some forces may invoke

gradual changes; others may come suddenly. Such factors as demographic changes,

fluctuating food costs, resource scarcity, and workforce diversity are ever present and are

all important to understand as a manager. We have continued to discuss these topics in

this as well as in previous editions of this book, because of their ongoing importance.

And then there are “one-time” events, such as the September 11 attacks that occurred

in the United States. Following the attacks, it was often repeated that the industry most

affected was the hospitality and tourism industry. Since that time the industry has also

coped with recession, war, , terrorism attacks in Europe and Asia, natural disasters (such

as Hurricane Katrina and the Asian tsunami), and severe acute respiratory syndrome

(SARS). The H1N1 (swine flu) pandemic is yet another example; in Mexico, when

the disease began to spread, gathering places, including restaurants, were closed to

limit the disease’s reach. Thus, managers must now be more aware than ever—indeed, it

has been said that there may never be a return to “normalcy.” This chapter sheds light

on some of the changes that continue to shape the industry and the ways in which

managers behave and react to events. We will begin with the effects of demand.

DEMAND

Ultimately, demand translates into customers. We will look at customers from three different perspectives. First, we need to understand what the population’s changing
age patterns are; second, we will explore how they affect the demand for hospitality

products. Finally, we will look at other patterns of change, such as the continued

increase in the number of working women, the transformation of family structure, and

changes in income and spending patterns.

One way to better understand these changes is by looking at changes in demo-

graphics. Demographics is the study of objectively measurable characteristics of our
population, such as age and income. As we review demographic data, however, it is im-

portant to keep in mind the human face behind the numbers. To do that, we will want

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39

to consider what the facts mean in terms of our customer base. The material in this

section is vital to understanding the most basic force driving the hospitality industry’s

development, which is demand—that is, customers.

THE CHANG ING AGE COMPOS ITION OF OUR POPULATION

It should be clear to students of the industry that the population of North America is

changing in many ways. This, in turn, is setting off an entire chain reaction of events

and associated challenges. To understand the scope of the changing population, one

Life events such as marriage,
birth, and death affect
demographic changes. (Courtesy
of Purestock.)

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40 Chapter 2 Forces Affecting Growth and Change in the Hospitality Industry

must first understand one of the driving forces behind this change—the baby boom

generation. Baby boomer is the term applied to a person born between 1946 and 1964.

To properly understand the boomer phenomenon, a little history is in order.

Beginning with the Great Depression, the birthrate fell dramatically and remained

low throughout the 1930s (a “baby bust”) in the U.S. Then came World War II, which also

produced a low birthrate. After the war, however, servicemen came home and began to

get married in very large numbers. Not surprisingly, between 1946 and 1964, the number

of births rose as well. The boom in births was far out of proportion to anything North

America had experienced before. As one can imagine, the resulting baby boomers
have, as a generation, had an unprecedented impact on all facets of North American

life, ranging from economics to politics to social change.

As of 2010, there were just under 81 million baby boomers ranging in age from 46

to 64, constituting more than one-fourth of the U.S. population. Although the number

of native-born baby boomers was at its highest in 1964 at the end of the baby boom,

immigration has increased the size of the boomer cohort by significantly more than

deaths have decreased it since that time. The year 2011 is significant because it is when

the oldest of the baby boomers turn 65.

By the mid-1960s, most of the boomers’ parents had passed the age when people

have children. Furthermore, just at that point, the smaller generation born during the

Depression and war years reached the age of marrying—and childbearing. Because

there were fewer people in their childbearing years, fewer children were born. The result

was the “birth dearth” generation, those born between 1965 and 1975 (although some

demographers include additional years).

Labeled Generation X (or GenXers), this group ranged in age from 31 to 41 and
numbered about 42 million in 2006. (Note that despite all of the attention this group

gets in the press, they are still far outnumbered by the baby boomers.) This generation

was born into a difficult period in the 1970s and began to come of age as the growth

of the 1980s flattened into the recession of the early 1990s. The GenXers “reveal the

sensibilities of a generation shaped by economic uncertainty.”1 Not surprisingly, they

are quite different from their boomer counterparts in a variety of ways. Among other

things, they have a reputation for being worldly wise, independent, pragmatic, and intel-

ligent consumers. Furthermore, they tend to be technologically savvy, having grown up

during the computer age (which earlier generations, believe it or not, didn’t). Factors

with a direct bearing on the hospitality industry are that they spend a large proportion

of their income eating out, have a predisposition to the convenience of fast food, and

look for value in their purchases. Finally, they, too, are becoming parents and passing

along many of these same characteristics to their children.

As we saw in our brief view of GenXers, food service makes a perfect case

history for assessing the impact of generational change on the hospitality industry.

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41

Quick-service restaurants (QSRs) grew up along with the boomers when they were

children and when their parents, still young, had limited incomes and needed to

economize. Then, starting in the late 1950s, the boomers, as young people, began to have

money to spend of their own. McDonald’s, Burger King, and other quick-service operations

suited their tastes and their pocketbooks. In the late 1960s and early 1970s, however,

the boomers were becoming young adults—and Wendy’s, among others, developed

more upscale fast-food operations to meet their moderately higher incomes and more

sophisticated tastes. Similarly, in the early 1980s, as a significant number of boomers

passed the age of 30, the “gourmet hamburger” restaurant appeared (such as the Fuddruck-

ers and the Red Robin chains), which accommodated boomers’ increasing incomes

and aspirations. Industry Practice Note 2.1 gives another example of how changing

demographics are influencing operations and company marketing strategies.

The baby boomers have also had a significant impact on lodging. Kemmons Wilson’s

first Holiday Inn was built when the oldest boomers were six years old. Holiday Inns

I N D U S T R Y P R A C T I C E N O T E 2 . 1

Demographics in Practice

“Gourmet” hamburger companies such as Fuddruckers are aggressively targeting baby boomers and

their offspring. As part of the relatively new restaurant classification known as fast-casual, Fuddruckers,

and other companies within the segment, attempt to offer an alternative to quick service to the aging

baby boomers. Fuddruckers, which was started in 1980 in San Antonio and now has 200 stores across

the United States, seems to be in the right place at the right time. The company represents many of the

changes that are taking place in the restaurant industry and particularly in this growing segment. It offers

a product that has the feel of a cross between quick service and casual, thus the fast-casual moniker.

Fast-casual restaurants, as a group, are tending to put a lot of emphasis on food quality, in an effort to

attract baby boomers and the like. With an emphasis on food, there is also a spillover effect that helps

to bring in other demographic groups.

Fuddruckers prides itself on its food quality—the freshness of its product, the toppings bar, big servings,

and the ability to appeal to a variety of demographic groups in addition to baby boomers. It is able to

identify and target the different groups by a variety of methods. First, it has created three different types

of restaurant facilities (prototypes) for use in three different types of locations (freestanding, urban, and

mall). Second, it has a new building prototype and design package that reduces the investment required

to open a new Fuddruckers. Third, it offers a variety of foods and flavors for different palates—including

items such as ostrich burgers for the more adventurous. Finally, its hours and its average check (about

$8.00) make the restaurants very accessible. Fuddruckers feels that it has found the right mix in its

strategy to target a range of customers through different menu offerings and locations. The company

plans to continue to grow with the majority of its restaurants company owned and operated but also

with many new territories available for franchisees.

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42

began as a roadside chain serving business travelers, but the big profits came in the sum-

mer days of 100 percent occupancy, with the surge in family travel that accompanied the

growing up of the boomers. Later in the 1980s, about the time boomers began to move into

their middle years, all-suite properties began to multiply to meet a surging demand for

more spacious accommodations. Boomers on a short holiday make up a significant

portion of the all-suite weekend occupancy, and much of the all-suite weekday trade

is boomers on business. Moreover, it seems reasonable to assume that the growth of

midscale limited-service properties is related, at least to some degree, to the boomers’

taste for informality and their desire for value.

In the mid-1970s, we saw the boomers themselves come into the family forma-

tion age. The increase in the number of children born beginning in the late 1970s

has been referred to as the “echo” of the baby boom (resulting in the echo boomers
or Generation Y ). As the huge generation of boomers entered their childbearing

Teenagers and young adults tend to seek out inexpensive, no-frills food service. (Courtesy of Purestock.)

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Demand 43

years, births rose simply because there were more potential parents. The echo boom,

however, was somewhat smaller because the boomers chose to have smaller families

than their parents had had.

Getting back to the baby boomers, this group will continue to be important not

only because its members are numerous but because they are at a time in their lives

when disposable income is likely at its highest. Also, older boomers outspend other

demographic groups in several areas, including food away from home, transportation,

and entertainment.2 Over the next few years, much of their budgets are expected to be

diverted toward health and health care. This is underscored by the elderly’s dramatic

healthcare increase between 2000 and 2010, the time during which the population of

people 85 and older increased by more than 33 percent.

Significantly, the total amount of the food budget spent on food away from home

rises as household income rises, as does the propensity to travel. Households headed

by people age 45 to 54 spend more total dollars on dining out than younger patrons.3

Because of their higher average incomes, though, they spend a lower proportion of their

income on restaurant purchases.

Even while the boomers occupy center stage, we have noted that another generation

has begun to edge toward the limelight. Generation Y, born between 1976 and 1994, were

age 17 to 35 in 2011. As of 2010, this generation has overtaken the boomer generation

in size. Similar generational trends will continue, as seen in Table 2.1.

TABLE 2.1

U.S. Population 2010 to 2020a

2010 % OF POP.b 2020 % OF POP.b
CHANGE

2010–2020

All ages 310,233 341,387 10.04%

Under age 5 21,100 6.8% 22,846 6.7% 8.27%

5 to 13 37,123 12.0% 40,792 11.9% 9.88%

14 to 17 16,994 5.5% 18,048 5.3% 6.20%

18 to 24 30,713 9.9% 30,817 9.0% 0.34%

25 to 44 83,095 26.8% 89,724 26.3% 7.98%

45 to 64 80,980 26.1% 84,356 24.7% 4.17%

65 to 84 40,229 13.0% 54,804 16.1% 36.23%

85 and over 5,751 1.9% 6,597 1.9% 14.71%

aProjected U.S. population by age, 2010, 2020, and percentage change, 2010–2020, number in thousands.
bTotals do not add to 100 percent due to rounding.
Source: U.S. Census Bureau.

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44 Chapter 2 Forces Affecting Growth and Change in the Hospitality Industry

Table 2.1 highlights the relative change of each age group resulting from births,

deaths, and immigration for 2010 and 2020. There will be a modest growth in the num-

ber of children, supporting a continuing emphasis on services aimed at families with

young children, such as special rates, accommodations, and services for families in

lodging and child-friendly services such as playgrounds, games, and children’s menus

in restaurants. One food service chain that puts real emphasis on targeting children

is Denny’s. Its children’s menu won Restaurant Hospitality magazine’s 2005 award for

children’s menus in the Family Restaurant category. Other companies that have received

recognition for their children’s menus in recent years have been California Café, Skip-

jack’s, Which Wich?, and Taco Bell.

The number of young adults expanded in the period up to 2010, which is good

news for the purveyors of inexpensive, no-frills food service such as QSRs, fast casual,

and certain casual dining concepts. There is mixed news when it comes to the teenage

group—the number of those between 10 and 14 decreased, while there was a signifi-

cant increase in the 15-to-19 age group. As of 2011, teenagers spend upward of $91.1

billion as a group!4 The impact of this group—the first to have never known a world

without computers and the Internet—however, is even greater than this because of

the substantial influence they have over family buying decisions—including where to

dine, where to go on vacations, and what lodging to use on family trips.

The number of people age 30 to 49 in North America has declined in the last

decade. This has implications for labor supply, which are discussed in a later section.

The baby boomers’ move into their retirement years (the first boomers begin to turn

65 in 2011) will be a preview of the trend toward growing demand for services of all

kinds for retirees, which will explode in the current decade. To summarize, the age

composition of the U.S. population continues to shift, having significant implications for

the hospitality services. The changes that are taking place in North America, though, do

not accurately reflect the changes that are taking place elsewhere in the world. Global

Hospitality Note 2.1 discusses demographic changes in other areas of the world.

D IVERS ITY AND CULTURAL CHANGE

We need to consider four other basic structural changes that will shape the demand for

hospitality services in the twenty-first century: an increasingly diverse population, the

proportion of women working, changing family composition, and a changing income

distribution.

A moment’s reflection suggests what the relationship of these factors to the hospital-

ity industry might be. One of the factors accounting for the success of ethnic restaurants,

for instance, is America’s already great diversity. ( The number and scope of ethnic
dining options has increased dramatically in recent years, especially in smaller markets.)

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45

G LO BA L H O S P I TA L I T Y N OT E 2 . 1

As North America Ages, Some Parts
of the World Are Getting Younger

It should be clear from our discussion so far that the population of North America is rapidly aging. We

can take this one step further and say that, in general, the population worldwide is aging and, more

specifically, the population of the developed world is aging faster than the rest of the world. Europe, for

instance, is experiencing much the same effects as the United States—Germany perhaps to the greatest

extent. According to The Economist, by 2030, almost one-half of the population in Germany will be over

65.1 Other European countries, such as Italy and France, are experiencing similar shifts. In Asia, Japan is

also getting older. The aging of the Japanese population is exacerbated by the country’s strict immigration

policies. Japan has the oldest population in the world with a median age of just over 41. (Compare this to

the median age of the United States, which is just over 35, and to Iraq’s, which is 17.)2

Perhaps the greatest changes taking place in the world are in the Middle East. American Demographics

magazine reports that there are nearly 380 million residents living in 20 Middle Eastern countries and

that the demographic makeup of the region is changing drastically. A number of factors, including lower

infant mortality rates, immigration, and an increase in the size of families, have all contributed to the

region’s population growth rate being the highest anywhere. The region is experiencing a baby boom

similar to what occurred in the United States in the 1960s. The total population in the 20 Middle Eastern

countries has almost quadrupled since 1950. The median ages in many of the countries, including Iraq,

are much lower than most of the world’s. These trends are expected to increase throughout the next

two decades. In Saudi Arabia, the number of persons under 25 is expected to double between 2000 and

2025.3 Such changes in the average age will result in shifting demand for jobs, consumer goods, educa-

tion, and hospitality services, just as it has in the United States. Together, it is important to understand

that demographic changes affect different parts of the world in different ways and at different rates.

1. “A Tale of Two Bellies,” The Economist, August 24, 2002.
2. United Nations Department of Economic and Social Affairs (unstats.un.org/unsd/).
3. “The Middle East Baby Boom” American Demographics (September 2002).

In addition to ethnic diversity, the composition of the workforce is also changing.

For instance, during the recent past, women have moved from being competitors of

the restaurant business to being its customers. A family with two working partners

simply approaches life differently. For instance, such families usually find it easier

to schedule shorter, more frequent vacations. Further, more children (or fewer, for

that matter) means a difference in the kind of hospitality service concepts that will

succeed—and much the same can be said for more (or less) income. These issues

are discussed further in the following sections.

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46 Chapter 2 Forces Affecting Growth and Change in the Hospitality Industry

D IVERS ITY OF THE U.S. POPULATION. According to U.S. Census Bureau projections,
African Americans, Asians, Native Americans, and Hispanics together will constitute a

majority of the U.S. population shortly after 2050. In less than one life span, non-Hispanic

whites will go from being the dominant majority to a minority. This shift in the balance

of North America’s ethnic makeup has already taken place in entire states, such as

New Mexico and Hawaii, and in many large cities across the United States. Major states,

such as California, where over 200 languages are known to be spoken and read, will

see ethnic majorities by 2020.

The U.S. population of Hispanics and African Americans continues to grow with

percentages as a total of the population of 13 and 16 percent, respectively. The His-

panic population is expected to triple in size between the years 2000 and 2050.5

The Hispanic population is increasing rapidly because of a higher birthrate and also

because of immigration, both legal and illegal.

The term Hispanics, we should note, is convenient, but it masks substantial differ-

ences that exist among subgroups. Most U.S. Hispanics are of Mexican origin (almost

60 percent), but two-thirds of these were born in the United States. The Census Bureau

says that approximately 10 percent of Hispanics are of Puerto Rican origin. Most Puerto

Ricans on the U.S. mainland were born in the United States. All Puerto Ricans are U.S.

citizens. Fewer than 5 percent of Hispanics are of Cuban origin. Hispanic Americans

also include a significant number of people from other Latin American countries.6

During the years from 2010 to 2020, the U.S. population of African American extraction

is projected to increase from 40 million to 45 million. African Americans continue to

represent the second largest minority group in the United States, but just barely. As a

group, they have experienced increases in education and income. Today, the majority

of African Americans live in the South.7

Asian Americans number over 14.4 million as of 2010, up almost 100 percent from

the 1990 level of 7.3 million. Their median household income, at $66,103 in 2008, was

substantially higher than the non-Hispanic white household average of $48,201 for the

overall population.8

We will be discussing the topic of diversity again in a later section on the hospitality

workforce. At this point, we can note that the shift toward the popularity of ethnic foods

almost certainly reflects a change in demand resulting from the increase in America’s

present diversity. (Most polls reflect that Americans’ favorite cuisines are Chinese, Italian,

and Mexican, in no particular order.) Another example of diversity’s present impact is

the number of convention and visitor bureaus all over North America that are targeting

African-American groups. Note the increase in African American–sponsored events. (The

music festival in New Orleans sponsored by Essence magazine is one such example.) This

trend is likely to continue as our population continues to diversify, and firms will have a

heightened need to adapt their products and services to the tastes of different groups.

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47

Women are playing an
increasingly prominent
role in the hospitality
industry. (Courtesy of
Las Vegas News Bureau.)

We have been discussing ethnic diversity, but this is by no means the only way in

which the population mix is changing or diversity is expressed in the general popula-

tion. The gradual aging of the boomers means that our population will soon have a

much larger senior population. Students of demographics speak of a “dependency

ratio” to express the relationship between people in certain age groups who are, for

the most part, working and people in other age groups who have not yet begun to

work or have retired. In short, it is expected that as the age of the general population

increases, so, too, will the age of the workforce.

Another form of diversity has developed in the last two generations as women’s

presence and roles in the workforce have changed, a topic to which we now turn.

WORKING WOMEN. The changes in our views of women and the family have had an
enormous impact on the hospitality industry over the last 100 years. Figure 2.1 shows

the change in women’s employment over the past 50 years (along with projections

for the next 50). In the early part of this century, women working outside the home

were the exception. Until the start of World War II, fewer than a quarter of women were

in the workforce—that is, they either had a job or were looking for one. World War II saw

that rate increase to nearly one-third of women. Over the next five years, the rate rose

until, in 1980, over 50 percent of women were at work away from home, resulting in

a large percentage of two-income families. The participation rate of women in the
workforce is expected to continue to increase in the short term and long term. Moreover,

the share of women in the workforce continues to increase.

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Image Intentionally Removed

48 Chapter 2 Forces Affecting Growth and Change in the Hospitality Industry

This is a change of major proportions in a relatively short period of time. It has

resulted in significant changes in many aspects of our society—including, of course,

the hospitality industry. Moreover, we have moved from a time when it was unusual for

mothers to work outside the home to a world in which the unusual mother is the one

who is not also a wage earner. More women are moving into the managerial ranks as

well. Women represent 51 percent of management and professional workers in the work-

force. Women represented 47.8 percent of all managers in food service and 44.1 percent

of managers in the lodging segment in 2008.9 Estimates indicate that the percentage of

women in management roles will also continue to increase.

It seems likely that the statistics we have cited actually understate women’s work

roles. Women enter and exit the workforce more frequently than men to accommodate

life changes, such as marriage and childbirth. Counted as nonparticipants are many

women who are not working at the moment but who expect to return to work shortly.

The seemingly underreported number of women is underscored by the fact that more

women than men are hospitality majors.

While the roles of women are changing and improving, they continue to expe-

rience challenges in some areas of the hospitality industry, as illustrated in Industry

Practice Note 2.2.

FAMILY COMPOSITION. Family composition is also rapidly changing. Just a few short
years ago, the largest segment of households in the United States were those with children

under age 18. Now, however, out of nearly 117,000 million households in the United States,

there are over 35 million households with just two people (the largest category) followed

by 26 million households with just one person. The U.S. Census Bureau indicates that

Figure 2.1
Female workforce participation, 1950–2030. (Source: Bureau of Labor Statistics, Workforce
Participation, 2006.)

0

10

20

30

40

50

60

70

1950 1960 1970 1980 1990 2000 2010 2020 2030

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49

I N D U S T R Y P R A C T I C E N O T E 2 . 2

Advocacy for the Advancement
of Women in Food Service1

The advancement and empowerment of women in the corporate world is still a major concern today. Work-

ing women face a variety of labor market challenges and opportunities. One of the signs that things are

changing is the formation of many support groups and research/educational centers. The Institute for

Women and Work (IWW) at Cornell University, for example, is “an applied research and educational resource

center, which provides a forum for examining and evaluating the forces that affect women and work.”1

It offers “expert training, hosts seminars, and creates connections among workers, advocates, employers,

students, academics, and others who share a concern about women’s role in the workplace.”2 With offices

in New York City, Ithaca, and Washington, D.C. and through its roundtable sessions and research conferences,

IWW has the opportunity to influence public policy.

In the hospitality industry, similar groups have been formed to support the well-being and advancement

of women in industry. One such group, the Women’s Foodservice Forum (WFF), was created in 1989 to

“promote leadership development and career advancement of executive women for the benefit of the

food service industry.”3 Since its inception, WFF’s membership has grown to more than 2,200 members.

This membership reflects all segments of the industry: restaurant operations, manufacturing, distribution,

publishing, and consulting. Such highly visible companies as Darden, Luby’s, McDonald’s, and Pizza Hut

are represented on the WFF board of directors. The group helps to build leadership abilities in women

through a variety of activities. Among other things, the WFF sponsors a mentor program, hosts an annual

leadership conference, hosts keynote speakers and regional networking events, publishes a newsletter,

provides scholarships, and commissions research studies on issues affecting women.

WFF has also conducted longitudinal research since late 2001 with the Top 100 Foodservice Operators,

the Top 100 Foodservice Manufacturers, and the Top 50 Distributors in the U.S. Foodservice Market.

These studies have been conducted to record the progress of female executives in the food service

industry. Among the key findings are that women occupy only 10 percent of board of director positions

and 12 percent of C-level positions (e.g., chief executive officer [CEO]) in the companies surveyed. The

research also suggests that it is two to three times more likely for a woman to hold an executive staff

position such as Marketing, Finance, or Human Resources than it is for a woman to hold an executive-

line position in operations.

Based on the results of this research, as well as other anecdotal evidence, the hospitality industry

can be a challenging environment for women intending to move up the career ladder. Nevertheless,

the findings also proposed what may seem to be an opportunity for best practice in the industry: The

companies with better-than-average profiles of gender equity have two commonalities in their best

practices: (1) their CEO is on public record in support of gender equity and the development of women

in the executive career path and (2) the company integrates support of gender diversity into other

training. Accordingly, encouraging these practices in the industry is likely to assist the empowerment

and advancement of women.

Continues on next page

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50

I N D U S T R Y P R A C T I C E N O T E 2 . 2

Advocacy for the Advancement
of Women in Food Service1

The research has indicated that there is much room for improvement in order for women to advance

to the highest job titles in the hospitality industry as well as in many other industries. The continuous

role of these advocacy groups is to persevere toward eliminating the barriers to women’s advancement.

Information for this Industry Practice Note was gathered from the Web sites of: The Institute for Women and Work, Cornell University,
and the Women’s Foodservice Forum.

1. The Institute for Women and Work, Cornell University, www.ilr.cornell.edu/extension/iww/default.html.
2. Ibid.
3. The Women’s Foodservice Forum, www.womensfoodserviceforum.com.

Continues from previous page

the number of family households, as a percentage of total households, has decreased

dramatically since 1970. Also, family households are simply getting smaller. Married cou-

ples with children under 18 are expected to continue to decrease as the baby boomers’

children grow up and leave home.10 One significant aspect of these population changes

is that couples without children to support—empty nesters and those who chose not
to have children—spend more than any other household. They spend more on take-out

food, for instance, than they do on groceries. They are also avid travelers.

Another change in family structure is illustrated by the growth in single-person (or non-

family) households. People are putting off marriage until much later in life—single-family

households have increased as a percentage of total households from 17.1 percent in

1970 to over 22 percent in 2008. This group of households is expected to continue

growing through this decade.11

Such changes are affecting major life decisions as well as spending habits. Male singles

are younger, whereas women living alone tend to be older widows, reflecting the tendency

for wives to outlive their husbands. Males have higher incomes, and their per capita spend-

ing is larger than women’s. Men spend twice as much of their annual food budgets on

food away from home, as do women. Although they exhibit different trends, both types of

single-person household are good potential customers, and as women’s incomes continue

to rise, the two types of household are likely to resemble one another more.

Single parents, however, are a group who have relatively lower incomes. They eat out

less often than the average North American, for instance. They are less likely to be hotel

customers because their budgets do not permit them to travel as freely as other groups.

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Demand 51

CHANGING INCOME DISTRIBUTION. In the 1980s,
the middle class decreased in size, with more
people leaving it than entering it. In general, the

“winners” were university-educated people, retir-

ees with investment income, and women with

full-time jobs. Women’s average income, adjusted

for inflation, has increased (but is still just 77

percent of that of men’s, and some estimates

indicate that it is even lower than this). This has

resulted in a changing income distribution.
In the 1990s, the middle class took a further

jolt from restructuring. White-collar workers and

middle managers were hardest hit by the efforts

to increase efficiency in many large firms. Most

reports indicate that there is a widening gap

between the rich and the poor, with the rich

getting richer, although this has been tempered

somewhat in recent years. Industry Practice Note

2.3 discusses the issue of the size of the middle

class further.

The greater the amount of a household’s

disposable income, the more frequently its mem-

bers dine out. But because a significant proportion of guests who eat out do so out of

necessity owing to hectic schedules, many who have moved down the economic ladder

have not been lost entirely to food service. In lodging and travel, however, this finding is

much less true, because these are almost entirely discretionary expenditures. Although

the large numerical growth in lower-income families discussed in Industry Practice

Note 2.3 probably indicates a growing number of customers for lower-check-average

restaurants, it almost certainly denotes a group that is effectively less able to participate

in the high-end travel market. It is important to recognize that not all factors affecting

demand can be as numerically specific as the demographic data that we have been

reviewing. People’s different patterns of activities, interests, and opinions, sometimes

called psychographics, also affect the demand for food service.

Also remember that households in the upper-income groups frequently represent

dual-income families where both spouses are working. These families experience

great time pressure, which undoubtedly explains the rapid growth in sales in both

take-out and the upscale casual category, a haven offering a quick moment of fun and

relaxation to these busy people.

Couples without children are a growing
segment of the population. (Courtesy of
Las Vegas News Bureau.)

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52

I N D U S T R Y P R A C T I C E N O T E 2 . 3

Is the Middle Class Shrinking?

Most North Americans think of themselves as middle class, whatever their actual income is. In the short

term, people’s incomes are growing and will continue to grow. In 2007, the median household income in

the United States was $50,233, according to the Census Bureau, a rise of only 1.3 percent over the previous

year. Earlier in the decade, however, the average annual increase was around 3 percent. These averages,

however, conceal certain trends. In 2006, the greatest household incomes were highly concentrated at the

top, where the top 6 percent earned roughly one-third of all income while 12.3 percent of all households

fell below the federal poverty threshold. The inequality is similar today to that seen before World War II.

Defining Middle Class
American Demographics (www.demographics.com/Publications/AD) proposes three definitions of middle

class: (1) those with incomes ranging around the national average ($25,000 to $50,000), (2) a broader

group with incomes of $15,000 to $75,000, and (3) households with incomes between 75 percent and 125

percent of the median. Although the numbers that emerge from these three categories differ, they all

point to a similar conclusion: The proportion of the population that is middle class is decreasing, but

with a growing total population, the absolute number of middle-class households is increasing.

Figure 2.2 shows how the median income has changed and the effects of recessionary conditions.

This increase in household income might suggest that we as a nation are slowly increasing our financial

Figure 2.2
Higher income equals more dining-out occasions, 2000. (Source: Meal Consumption Behavior, National
Restaurant Association.)

$15,000 $24,999

$15,000
to to to to to

$25,000 $35,000 $45,000 $60,000 $75,000

$34,999 $44,999 $59,999 $70,000
or more

0.0
less
than

1.0

2.0

3.0

4.0

5.0

Annual Household Income

C
o

m
m

er
ci

al
ly

P
re

p
ar

ed
M

ea
ls

p
er

W
ee

k

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53

positions. However, the following table shows changes in the number of U.S. households with incomes

in the middle range of $25,000 to $75,000 throughout the last four decades. The size of the middle class, in

relative terms, has gradually increased. The real dynamics seem to be the two far right-hand columns.

Here, we see the number of households increasing significantly during the same period and the propor-

tion tripling. This suggests a growing number of people are stretching the definition of “middle class”

by becoming wealthier. To balance that view, however, it is worth remembering that the number in the

lower-income category (far left-hand column) is increasing while at the same time the proportion is

generally growing smaller.

The Middle Class Is Changing1

LESS THAN $25,000 $25,000 TO $74,999 $75,000 OR GREATER

NO. (000,000) % NO. (000,000) % NO. (000,000) %

1967 19.7 32.4% 29.7 48.9% 13.2 21.7%

1970 20.0 30.8% 35.4 54.6% 9.5 14.6%

1973 20.8 29.8% 36.7 52.5% 12.4 17.8%

1976 22.8 30.8% 39.1 52.7% 12.2 16.5%

1979 23.3 28.8% 41.3 51.1% 16.2 20.1%

1982 26.1 31.1% 42.0 50.1% 15.8 18.8%

1985 25.9 29.3% 43.3 48.9% 19.2 21.7%

1988 26.0 28.0% 44.0 47.4% 22.7 24.5%

1991 27.4 28.6% 45.4 47.5% 22.9 23.9%

1994 28.7 29.0% 45.5 46.0% 24.8 25.1%

1997 27.4 26.7% 46.3 45.2% 28.7 28.0%

2000 26.8 24.8% 48.3 44.6% 33.1 30.6%

2003 29.6 26.4% 49.1 43.8% 33.5 29.9%

2006 29.2 25.2% 51.4 44.3% 35.3 30.4%

1Household income in constant 2006 dollars.
Source: U.S. Census Bureau, “Income, Poverty, and Health Insurance Coverage in the United States: 2006” (issued August 2007).

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54 Chapter 2 Forces Affecting Growth and Change in the Hospitality Industry

SUPPLY

The key factors of supply that concern us are land and its produce, food, and labor. Capital is a third factor of production, but we will reserve discussion of it until the
lodging chapters. The patterns of access to public markets discussed there can, however,

be applied to the hospitality industry in general.

LAND AND ITS PRODUCE

Land and the things that come from the land are classically one of the major factors

of production in economics. In hospitality, we are concerned with land itself as well

as with a major product of the land, food.

LAND. Because hospitality firms need land for their locations, certain kinds of land
are critical to the industry. Good locations, such as high-traffic areas, locations near

major destinations, or locations associated with scenic beauty fall into this category.12

Such areas are becoming scarcer with every passing day for at least two reasons: the

existence of established operations and environmental pressures.

To deal with the first of these reasons, the simple fact is that most of the best high-

traffic locations are already occupied. What creates good locations are changes in the

transportation system and changes in population concentrations. The building of new

highways has slowed greatly compared to the time when the interstate highway system

was under construction. As a result, fewer new locations are being created in this way.

In recent years, we have seen restaurant chains acquired by other restaurant chains

principally in order to obtain their locations for expansion. One of the factors that

led QSR chains to seek locations in malls some years ago was the shortage of freestanding

locations we are discussing.

A second reason for the growing scarcity of locations is environmental pressure.

Location scarcity is especially severe in locations such as seashores or wetlands, which

are often zoned to prevent building—especially commercial building—in scenic or

environmentally sensitive locations. Environmental pressures do, however, go beyond

scenic locations. Restaurants, particularly QSRs, are meeting more resistance because

of the noise, traffic, odor, roadside litter, and crowding that can accompany such opera-

tions and the renewed concern over environmental preservation. Restaurants have been

“zoned out” of many communities or parts of communities.

On balance, the greater pressure comes from the impact of present locations being

occupied, but, for both reasons discussed previously, land in the form of good locations

is a scarce commodity.

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55

As land and resources
become scarcer, companies
such as Checkers are
making greater use of the
space available. (Courtesy
of Checkers Drive-In
Restaurants, Inc.)

FOOD. Although the cost of food may vary from season to season, for the most part,
these variations affect all food service competitors in roughly the same way. Food

service menu price changes would have to reflect any change in raw food cost.

Food supply conditions do not suggest any major price changes in North America in
the foreseeable future, although weather conditions or temporary shortages of certain

foods always can drive up some prices in the short term. We should note, however, that

major climatic changes, such as those that could be brought on by the greenhouse effect

and Earth’s warming, do pose a longer-term threat to world food supplies.

The major change pertaining to food is the growing effort toward reducing food
miles. This term refers to the distance food is transported—in essence, from farm to
fork. By reducing food miles, we can reduce the negative effects associated with

greenhouse emissions from the transportation, among others. Reducing food miles

can also enhance sustainability for related items as they must be produced closer to

the place where the food is served.

LABOR

The Bureau of Labor Statistics (BLS) has developed a long-term forecast of the demand

for labor extending over a ten-year period.13 The labor force is expected to grow at

an annual rate of 0.8 percent between 2006 and 2016, compared with a rate of 1.2

percent from 1996 to 2006. The same study predicts that the greatest growth will be in

jobs requiring advanced education, which bodes well for new college and university

graduates. Management jobs, across occupations, will grow by over 10 percent over
CAREERS IN

H O S P ITAL ITY

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56 Chapter 2 Forces Affecting Growth and Change in the Hospitality Industry

the period. People interested in careers in hospitality management, though, can take

encouragement from the fact that demand for managers is expected to increase the

fastest, as will all jobs in the service industry. The BLS predicts that new management

positions in lodging will grow by over 12 percent; new chef and head cook positions

will increase at just a little less than that.

Employment prospects appear to be about average (or a little less) for some of the

primary hospitality management occupations. What makes that outlook somewhat

uncertain, however, is the relatively high turnover in the industry, highlighted in

Table 2.2. High turnover magnifies the demand for labor because it takes a relatively

larger number of people to keep positions filled, as indicated in Table 2.3.

TABLE 2.2
Employee Turnover in Food Service

RESTAURANT TYPE ALL EMPLOYEES
SALARIED

EMPLOYEES
HOURLY

EMPLOYEES

Full service

Average check under $15 64% 33% 67%

Full service

Average check $15 to $24.99 56% 33% 60%

Limited service

Fast food 73% 50% 82%

Source: National Restaurant Association, “Restaurant Industry Operations Report,” 2008.

TABLE 2.3
Top Seven Reasons for Industry Exit by Former Food Service Employees

1 More money

2 Better work schedule

3 More enjoyable work

4 Pursue current occupation

5 Advancement opportunity

6 Better employee benefits

7 To go to school

Source: Restaurants & Institutions, May 1, 1997, p. 108, based on the Industry of Choice of the NRA Educational
Foundation.

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Supply 57

Cooking and food preparation jobs will increase—again, a little less than the overall

average—by 12.3 percent. Food and beverage server positions, however, will grow by

over 20 percent (22.7 percent). Gaming service workers represent another growth area.14

It is more difficult for us to make projections for the lodging workforce, because in

the BLS categories, lodging workers are often merged into other, larger categories—as,

for instance, with “baggage porters and bellhops,” where bell staff are considered along

with a number of other, somewhat similar jobs in transportation. Similarly, people work-

ing in housekeeping are included in the category of “janitors and cleaners, including

maids and housekeeping cleaners.”15

Two categories related to the travel industry are travel agents, slated to grow

3.2 percent (a direct result of changes taking place in the travel industry), and flight

attendants, a group projected to increase by 18.4 percent.16

The growth that is expected to occur in these various segments of the hospitality

industry means that there will be continued opportunities for hospitality graduates. How-

ever, this growth takes on a different meaning when one adopts a management perspec-

tive. Wherever you observe a growth figure higher than the average of 15 percent for the

workforce as a whole, you may wonder how the industry will go about attracting more

than its proportionate share of workforce growth to that category of worker. Of course, it

is the managers who will have the job of finding people to fill these fast-growing needs.

This is of particular concern during periods of low unemployment. Moreover, competitive

industries, such as retailing and health care, are growing right along with the hospitality

industry. For instance, retail sales positions will continue to grow at about the same rate

as the total workforce, and health care support occupations (those that are most directly

competitive with hourly hospitality jobs) will grow at over twice the average rate, at 33.4

percent.17 As an industry, then, we can expect to face stiff competition for workers.

How will the industry fill these positions? Already in many markets, starting food

service workers are receiving well above minimum wage. In some markets—particularly

those where the economy is based on tourism, employers are offering increased benefits,

bonuses, transportation, and an assortment of offerings designed to encourage hourly

employees to stay with their company. Furthermore, companies are target-marketing

segments of potential employees, such as seniors and other groups. Some operations, for

instance, have held free breakfasts for seniors to get them interested in jobs. Marriott

aggressively targets potential female employees. A Marriott representative stated: “One of the

most difficult challenges in the 21st century is the scarcity of talent. . . . That makes female

leadership a do-or-die business . . . you need to recruit and retain female talent as though

your future depends on it—because it does.”18 Many other companies have also realized

that it is prudent to take more of a marketing-oriented approach to attracting employees.

Another source of labor will be immigrants, both legal and illegal. The non-Hispanic
white labor force is slowly decreasing, a trend that is expected to continue through 2050.

Hispanic workers following a 3.1 percent per year increase from 2000 to 2010 are expected

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58 Chapter 2 Forces Affecting Growth and Change in the Hospitality Industry

to make up 23 percent of the civilian workforce by 2050. The number of Asian workers

continues to grow and should total 10 percent by the midpoint of the twenty-first century.19

Illegal immigration is like floodwater around a dike—always there and always seeking

entry through any hole in the structure. Repeated crackdowns, like temporary repairs to a

dike, stanch the flow for a time. However, as long as the employment outlook in the United

States is better and wages are several times higher than in Latin America, it is likely that im-

migrants will continue to be an important source of labor in certain parts of North America.

Finally, part-time workers, who have always played a major role in food ser-
vice, will continue to be important. Interestingly, approximately one-half of all food

service employees work part time. This is a far higher percentage of the working

population than in the workforce, overall, which is 20 percent.20 The part-time labor pool

is made up of many people who have other claims on their time and need to supplement

their income. This can make them an attractive source of labor.

Table 2.4 provides a visual description of the net impact that employment fluctuations

can have on staffing requirements.

WORKFORCE D IVERS ITY

The components of diversity include ethnic background and place of birth, education and skill level, income level, gender, age, differing abilities, and sexual orientation.
Organizations have generally tolerated diversity and tried to regulate it. With growing

diversity, however, students of organizational dynamics call for an approach that goes

TABLE 2.4

Staffing Requirements—Chain Restaurant Staffing Requirements

NO. OF UNITS
BEGINNING

OF YEAR
UNITS
ADDED

PERCENT
CHANGE

NEW
MANAGERS

NEEDED1

HOURLY
EMPLOYEES
PROMOTED

TO ASST.
MANAGERS

DEPARTING
TRAINEES

MANAGERS
HIRED
FROM

OUTSIDE

EXISTING
MANAGERS
MOVED TO

NEW UNITS2

Year 1 20 8 40% 60 20 8 48 20

Year 2 28 11 40 83 28 11 66 28

Year 3 39 16 40 119 39 16 96 39

Year 4 55 22 40 165 55 22 132 55

Year 5 77 31 40 233 77 31 187 77

Year 6 108 43 40 323 108 43 258 108

1Assumes 1 general manager and 4 associate managers per unit, and assumes 20 percent annual turnover at existing units.
2Assumes 1 per existing unit.
Source: Thomas Weisel Partners, San Francisco.

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The Impact of Labor Scarcity 59

beyond tolerating diversity to valuing it, seeing people for the contribution they can make

rather than their surface differences. Increased organizational diversity necessarily ben-

efits organizations by expanding their ability to meet the new challenges of the market.

Why is this change toward embracing organizational diversity important? His-

torically, the main component of the workforce has been the white male. Even with

the increasing female workforce participation rate, in 1991, almost 50 percent of those

entering the workforce were white males. African Americans in the labor force, however,

are increasing nearly twice as fast compared to entering white males , and the Hispanic

workforce is growing four times as fast. Because female employment is also growing

faster than male employment, we can forecast a dramatic change in the type of people

entering the workforce. Compared with 50 percent in the early 1990s, white males

now account for fewer than 10 percent of new entrants to the workforce.21 Workforce
diversity has become a permanent fact of life in North America. Because a large part of
the growth will occur among minorities, who historically have had lower incomes than

average, an even larger component of workers probably will come from disadvantaged

backgrounds with poorer educational preparation.

THE IMPACT OF LABOR SCARC ITY

The evidence we have suggests that food service will experience the tightest pres-sure in the hospitality industry as it attempts to keep up with the demand for work-
ers because of the projected growth for new jobs. It is important, however, to keep in

mind that a significant number of U.S. hotels are full-service operations and so have

a commitment to food service, with some—resorts, luxury operations, and convention

hotels—having a very extensive commitment. Accordingly, the hotel industry will not

escape a shortage of labor unscathed.

Both food service and lodging face high levels of employee turnover and increasing

competition from other industries. The interaction of those forces in good times,

when competition from other employers is sharp, almost certainly spells higher prices.

Even in slower times, it suggests that hiring and retaining workers, especially in the skilled

and supervisory categories, will be difficult. The food service and lodging industries have

recognized the labor crisis for some time, however. In addition to raising wages, many

operators have enhanced benefit programs and instituted support services, such as

generous family leave policies. On-the-job efforts to recognize supervisor performance

and to provide career ladders for successful people are becoming a more prevalent. .

Attracting good people and keeping them once they are in place is simply cost-effective

management of human resources.

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60

SUMMARY

Demand, ultimately, means customers. We looked at how one customer group, the baby boomers, has changed the hospitality industry. Our customers’ average age is increas-
ing as the boomers move into their senior years. We also looked at two other cohorts, the

GenXers and the echo boomers. Family travel continues to create demand for child-friendly

hospitality. The slow but steady growth in the over-65 population foreshadows the explo-

sion in that age group in 2011, when boomers start to turn 65. We discussed four other

demographic changes: diversity, working women, changing families, and changing incomes.

Working women are an established workforce fact. Seventy-five percent of women

in their childbearing years work, and as many as 90 percent work sometime during the

year. Two-income families mean more demand for food service and for travel but more

pressure on time, making shorter vacations popular.

Labor shortages have made it even more critical for operators to retain qualified workers. (Courtesy of Bon Appétit
Management Company.)

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Summary 61

Families without children—empty nesters and those who chose not to have

children—have higher disposable incomes and make up a fast-growing group. The growth

in single-person households is partly the result of a later marriage age because of
longer times spent in education. Another single-person household group is widows, as

wives tend to outlive husbands.

In the changing income trends, we find the winners are college-educated people,

affluent retirees, and women in full-time work. The number of middle-class households

is increasing, but their proportion is declining as upper- and lower-income groups in-

crease more rapidly.

The factors of production we considered are land and its produce and labor.

Available locations are a category of land that is important to all segments of hospitality,

as they continue to become scarcer. Environmental pressures add to the difficulty

of finding new locations. Although food supply is expected to be adequate, short-

term weather problems or a major change in the climate could lead to scarcity and

higher-cost food.

The other factor of production we considered, labor, offers good news and bad news.

There will be plenty of jobs for people who seek hospitality management careers—but these

managers will face the difficult challenge of keeping the operation staffed. The industry’s

growth and high turnover continue to require a greater share of a slow-growing workforce.

Moreover, there will be stiff competition from other industries for the workers we seek.

To fill the demand for workers, wages are rising at many hospitality firms, as are

fringe benefits and bonuses. Sources of labor supply are being targeted, such as “rest-

less retirees.” Immigrants and part-timers will continue to be an important part of the

hospitality workforce.

Key Words and Concepts

Demand
Demographics
Baby boomers
Generation X
Echo boomers
Generation Y
Diversity
Two-income families
Family composition
Empty nesters
Single-person households

Middle class
Income distribution
Activities, interests,
opinions
Psychographics
Environmental pressures
Food supply
Food miles
Immigrants
Part-time workers
Workforce diversity

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62 Chapter 2 Forces Affecting Growth and Change in the Hospitality Industry

Review Questions

1. How would you define the term demand? What critical changes in demand do you
foresee in the future? Why?

2. Why are the baby boomers so important? What impact do you see them having
on the hospitality industry in the next few years? In the longer-term future?

3. Besides the baby boomers, what other significant age groups were discussed in the
chapter?

4. Trace the impact of the boomers on the hospitality industry. What impact do you
think your age group will have on food service? On lodging?

5. What are the main elements of diversity discussed in this chapter? What are the
major trends related to diversity? What are their likely effects?

6. Discuss the growth in the proportion of women working. What changes have
working women experienced as they relate to the hospitality industry? What does

the future appear to hold regarding women in the workforce?

7. What is the largest household type? What are some rapidly growing household
types? What kind of customer for hospitality is each of these groups?

8. Is the middle class shrinking? Which income groups are growing in absolute numbers?
In proportionate share of population?

9. What categories of land as a factor of production are important to the hospitality
industry? What is likely to affect the cost and availability of those factors?

10. The food service workforce is expected to grow at about the pace of the total
workforce. In spite of this, what factors make the need for food service workers

problematic? How does this issue affect the hotel business? What are some

sources of supply that can be tapped?

Internet Exercises

1. Site name: Look Smart-Find Articles (American Demographics)
URL: findarticles.com/p/articles/mi_m4021

Background information: Find Articles has articles from thousands of resources, with

archives dating back to 1984. This search engine allows you to search for exactly

what you need, from millions of articles not found on any other search engine.

Site name: Ethnic Majority

URL: www.ethnicmajority.com/demographics_home.htm

Background information: Although race relations in the United States have continued to

improve since the Civil Rights movement of the 1960s, we are still a long way from

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Summary 63

being a “color-blind” society. EthnicMajority.com was launched in 2002 to educate,

assist, and empower African, Hispanic, and Asian Americans to achieve advance-

ment in politics, business, at work, and society in general.

Site name: About.com

URL: marketing.about.com/od/demographics/a/generationmktg.htm

Background information: Provides information on a wide variety of topics and in-

cludes links to other resources.

Exercises:

a. Identify the generation in which you belong (baby boomer, Generation X, Generation

Y, Millennials). Research the characteristics of your generation using the Web sites

listed here or through a Google search. If you were to start your own restaurant, how

would you market it to others in your generational group? What types of foods

would you have on the menu that would appeal to your generational group?

b. Using the Web sites listed here and/or a Google search, identify the differences

among these generational groups: Baby boomers, Generation X, Generation Y, and

Millennials. What techniques would you use to market to each generational group?

c. Using a Google search on “managing different generations,” identify the different

managerial styles needed to manage the workers from different generational

groups (baby boomers, Generation X, Generation Y, and Millennials). What

motivates each group, and how do the groups differ?

2. Site name: U.S. Department of Labor, Bureau of Labor Statistics
URL: www.bls.gov

Background information: The Bureau of Labor Statistics (BLS) is the principal fact-finding

agency for the federal government in the broad field of labor economics and statistics.

Exercises:

a. Describe the information that can be obtained from the BLS Web site and

how this information could be helpful to a hospitality management student.

b. Under “Wages, Earnings, & Benefits,” determine the average annual salary for

both food service managers and lodging managers. How does the state you

live in compare to the national average for these occupations?

c. Click on the “Occupational Outlook Handbook” link. Search for either lodging

managers or food service managers. Describe the information that is available

from BLS regarding these two occupations. What is the employment outlook

for these two occupations?

3. Site name: Site name: U.S. Census Bureau
URL: www.census.gov

Background information: The U.S. Census Bureau is the federal government’s leading

source of data about the U.S. people and its economy.

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64 Chapter 2 Forces Affecting Growth and Change in the Hospitality Industry

Exercises: Search the latest “Data Profiles-ACS” for a state/region/city selected by the

instructor or choose your own. Scan both the “Tabular Profile” and “Narrative Profile”

for the state/region/city that was selected.

a. Describe the type of demographic data that is available from the U.S. Census

Bureau for the state/region/city you selected.

b. How diverse is the geographical area you selected in terms of ethnic makeup?

Which ethnic groups are the largest, and which are the smallest?

c. What is the mean household income for the area selected?

d. What percentage of the population has an associate degree or higher?

e. What percentage of the population works in the leisure and hospitality industry?

How does this percentage compare with other occupations in the same area?

f. Discuss why you think demographic data might be useful to a manager in the

hospitality industry.

Notes
1. Pamela Paul, “Meet the Parents,” American Demographics 24 (2002): 42–47.
2. U.S. Bureau of Labor Statistics, Consumer Expenditure survey, 2003.
3. “The New Consumer Paradigm,” American Demographics (April 1999): 11 (www.american-

demographics.com)
4. VOX: Online Marketing, July 1, 2009, www.marketingvox.com.
5. U.S. Census Bureau, “Projections of the Resident Population by Age, Sex, Race and Hispanic

Origin: 2000–2050,” January 22, 2006.
6. Joan Raymond, “The Multicultural Report,” American Demographics (November 2001): S3–S6.
7. Ibid.
8. U.S. Census Bureau, “Income in the United States, 2002,” January 22, 2006.
9. U.S. Census Bureau, “Women Workers, 2008,” July 1, 2009.
10. U.S. Census Bureau News, “America’s Families and Living Arrangements, 2008.”
11. Ibid.
12. For a fuller discussion of the importance of locations and site selection, see Dennis

Reynolds and Kathy McClusky, Foodservice Management Fundamentals (Hoboken, NJ: John
Wiley & Sons, 2011), especially Chapter 3.

13. Arlene Dohm and Lynn Shniper, “Occupational Employment Projections to 2016,” Bureau
of Labor Statistics Monthly Labor Review (November 2007).

14. Ibid.
15. Ibid.
16. Ibid.
17. Ibid.
18. Robyn Taylor Parets, “Woman Talk,” Lodging News (May 2001).
19. Mitra Toosi, “Monthly Labor Review” (May 2002).
20. Bureau of Labor Statistics, “Employed and Unemployed Full- and Part-Time Workers by

Age, Sex, and Race,” July 19, 2002, www.bls.gov/cps/cpsaat8.pdf.
21. Bureau of Labor Statistics, “Employment Projections,” July 19, 2002, www.bls.gov/emp/

home.htm.

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