The hotel and motel industry in the US consists of about 30,000 companies that operate 50,000 individual locations, with combined annual revenue of $80 billion. While most companies operate just one hotel, 150 companies operate more than 10, and some operate hundreds. The industry is highly fragmented. The 50 largest companies control only 40 percent of the market; however, many independent companies are franchisees of regional or national chains. Only about a third of hotels in the US are not affiliated with a chain. While the operations of hotels that belong to small and large companies are basically the same, the name recognition of large chains is often an advantage in attracting customers.

The basic operations of hotels and motels consist of providing sleeping accommodations, housekeeping, maintenance, and a variety of personal services. In addition, hotels may provide restaurants, meeting rooms, event hosting, business services, and resort services like golf, tennis, swimming pools, fitness centers, etc. The operating expenses of a hotel are related mainly to labor, putting a premium on efficient personnel management. Revenues depend both on occupancy rates and the prices charged for rooms.

Marketing is the chief concern of all lodging companies. Hotels and motels attract business and tourist (leisure) travelers. About 60 percent of travelers are on business. Instead of trying to appeal to all travelers, hotels usually specialize in a particular market segment, which is typically defined by price, service level and location. General price categories are luxury, mid-scale and economy. Service levels are full-service, limited-service and all-suites. Location categories include urban, suburban, airport and resort, among others.

The operations of hotels and motels are largely regulation-free, except for local ordinances and state franchise laws. Hotels are often subject to special local taxes. Revenue for many hotels is highly seasonal and depends on the health of both the local and national economy. The industry is highly capital intensive and therefore sensitive to interest rates and the availability of capital

Clubs

There are three main types of private clubs: Country Clubs, City Clubs and Yacht Clubs. For most purposes the needs of City and Country clubs are seen as similar, but with differences that are significant. City Clubs are located in metropolitan areas and focus, not only on individuals, but also on business members. Dining is seen as the most important benefit of membership, followed by athletic and social use. Country Clubs are more focused on family social activities with golf being as important a component as dining.

Both clubs earn a large part of their income from dues (35% for City and nearly half of all income, 49% for Country); however City Clubs see an equal amount from food (34%), while Country Clubs see only 22% income from food. Other income streams include beverages, sport activities, rooms (for City) and other. The highest expense for both clubs is payroll and related costs at about 56%, with operating expenses accounting for 33% (Country) and 25% (City). Other expenses are cost of food, cost of beverage, rent, taxes and insurance. For either type of club, there are important current trends that are re-shaping the industry.

Industry Trends by Category

City Clubs
• Dining – most important
• Athletic – attract younger members
• Business – reconcile social use and business
• Travel – reciprocal clubs
• Family – reconcile with older members
• Golf
• Social Use – reverse migration

 

Country Clubs
 • Increasing Diversity of Members
– 54% of population to be minority by 2030
– More than 85% of members are white males
– Will customs and traditions cope?
– Golf 20/20
• 5.5 million to 11 million by 2020
• Competitive Environment
• Social Activities

Food and Beverage

• All types of facilities are needed

• Different ages, Different options

• Lower price and Faster service

• Quality vs. Portion Size vs. Price

Changes in Demographics

• Population is changing and people are living longer
• The need to provide family-oriented services will soon peak
• Number of older club members will increase
• Number of younger workers will decline
• A shortage of 10 Million workers is expected

The Future of Golf in America

The frenzied construction of US golf courses peaked in 2000, along with the stock market, but excess capacity continues to plague the sport. Meanwhile, demand is falling, as evidenced by the recent drop in annual rounds played.

In 1950 there were 3.5 million golfers, which had increased to 26 million golfers in 2002. However, currently golf gains 3 million players each year, but loses exactly the same amount of players - 3 million. There were 224 new course openings in 1990 and only 237 openings in 2003. With these flat statistics, many are asking, "Is Golf Dying?"

With member satisfaction being the key to a golf course's success, there are still several challenges to recruiting new players and keeping current players.

• Certain Areas Overbuilt
  
• Stock market woes crimped income of many seniors
  
• Corporations slashing expense accounts; less memberships paid for
  
• Work ethic – scared of losing job – staying at office rather than golf
  
• Societal changes – “soccer mom” “dance recital dad”

Other Industry Trends

Workplace issues for clubs include Employee Dishonesty on the Rise, Skills Lacking, Workplace Diversity Increasing, Unemployment Increasing, Immigration and Naturalization Service initiatives.

Privacy issues are coming to the forefront, such as: Facility Access, Public Accommodation Legislation and
Legal Challenge to Access.

Always an issue, the cost and coverage of insurance becomes even more of an issue in wake of this year’s damaging hurricane season. Costs are increasing while coverage concerns center on how coverage is determined, by fair market value or replacement cost.

Accounting Services to the Hospitality Industry

Even though each sector of the hospitality industry has its own unique requirements, accounting firms can provide a variety of standard services to the industry, which include:

• Audit
• Review
• Compilation
• Tax compliance
• Tax consulting
• Cost segregation studies
• Information Technology
• Operational reviews
• Internal control reviews
• Strategic planning
• Membership surveys
• Board of Directors education/consultation

Positioned to Serve the Hospitality Industry

PKF North American Network is uniquely qualified to support the hospitality industry through its member firms and their affiliation with PKF Consulting, a leader in service to the industry.

Kevin Reilly of PKF Witt Mares, is a well-know national authority in club taxation and produces Clubs in Town & Country, a premier benchmarking publication for the private club sector. He is on the committee to update the uniform system of accounts for clubs.

Robert Mandelbaum, Director of Research Information Services for The Hospitality Research Group, an affiliate of PKF Consulting, that publishes important benchmarking reports and statistics for the hospitality industry.

PKF also has two representatives on the committee that is developing a new uniform system of accounts for the hotel industry, John Baldante of PKF New York and Robert Mandelbaum of PKF Consulting.

Click on the following link to view active PKF NAN firms in the Hospitality niche:

Member Firm List