Any development process usually starts with a concept, normally conceived by an individual or resultant of a collective group’s analysis of a challenge or recognition of an opportunity. So, what constitutes a concept? The Concise Oxford Dictionary of Current English (1996: 274) defines the word ‘concept’ as:

The origins come from the Latin, and, more particularly the French word ‘concevoir’, meaning to formulate in the mind or imagine a plan or scheme.

While dictionary definitions are always a good starting point and, in the context of this chapter subject, the Latinate origins are interesting, but for these purposes a hospitality concept could be defined as:

Such a concept must have attributes of a commercial nature as illustrated in Figure 1.1.

As illustrated in Figure 1.1, in hospitality a ‘concept’ normally consists of a service delivered in a purposely designed property, whose quality, atmosphere, service style and content, supported by a specified operation and management in a specific location determine price and define the product.

From the days of travel by coach and horses, followed by the age of steam trains, to the advent of the car, the aeroplane and now, perhaps, the spacecraft, the hospitality industry has historically been driven by evolution in modes of travel. Coach travel was synonymous with the coaching inn; trains gave rise to the great railway hotels in Europe, the Americas and elsewhere in the world where the great cities were joined by steel rails. Travel then was still a luxury, but Henry Ford changed that forever, with the mass-produced car. Volume production at affordable prices led to volume accommodation at comparative pricing in hotels. Market segmentation focused on differentiation in terms of quality and pricing. By the 1950s, Holiday Inn had opened their first motel, and in the UK, the Automobile Association (AA) introduced its quality star rating system.

Travel by most people, however, was primarily still undertaken within national boundaries. In the 1960s, the growth of the airline industry led to the development of the package holiday with its consequential boom in resort developments in the sunny beach destinations worldwide. Similarly, the post-WWII economic recovery led to an increase in international business travel. The airlines became active in hotel ownership and operations, developing their own international chains in competition with expanding US chains such as Holiday Inns, Hilton and Sheraton. Lufthansa owned Penta Hotels, KLM funded Golden Tulip (now part of NH Hotels) and US carriers expanded Intercontinental Hotels, each country having local national chains, such as Trusthouse Forte and Grand Metropolitan Hotels in the UK, Accor in France, and Scandic in Scandinavia.

At that time, it was to the USA that the world looked for the development of new concepts and operational management systems, not least because of their economic prosperity and widespread internal travel. The 1970s saw development of hotels being increasingly funded by local investors with the recognized hotel companies providing their ‘flag’ and operational management and product standards of their product and access to their distribution systems. Owners then used to sign a management contract and effectively handover their asset for periods up to 25 years for a return from the property’s projected turnover. To increase their expansion in the mid-scale sector, Holiday Inn developed their Franchise agreement, a type of agreement now used by many hotel companies. Essentially it provided the local owner/operator with the right to use their flag (now brand), product standards and operating systems for a royalty fee and a percentage of gross room revenue, there being additional ongoing fees for brand marketing programmes, technology and certain other items.

These hotel products became very standardized to facilitate ease of expansion and operations internationally but essentially were similar in facilities provided to the product content of the hotels built at the turn of the 20th century. These included a range of bedrooms with ensuite bathrooms, reception, conference and banqueting rooms, bars, restaurants and the ubiquitous coffee shop. Designed to be self-sufficient, the back of house facilities included a bakery, butchery, laundry, extensive storage areas and a range of kitchens with their associated preparation and chilled storage areas. With computerization in its infancy, administration processes, while standardized, lacked the centralization of today and, consequently, administration management staff and their facilities were much more extensive than today.

Although the format of standardization was primarily a management tool to control and ease the process of development and operational management, it also offered great reassurance to the guest because it ensured a recognized and consistent standard of service and facilities. These were designed to be similar, or of an aspirational standard, to those experienced at the guest’s home. These standards evolved into the early benefits, of what we now recognize as brand value, identified by the immortal quote from an unnamed hotel guest:

Unarguably, for travellers from North America, such product standardization in the 1970s provided added value, as the local alternative products were shrouded in myth. The same standardization approach was applied to the development of package holiday resort hotels and, while many of these properties were developed and managed by local investors, the product content and systems used were cloned from US chains. Many such properties still trade in the older resort destinations with upgraded interior décor but little alteration to their building fabric or range of facilities.

With the increase in wealth in the developed countries and the expansion in internationally based regional offices and manufacturing plants, the hospitality industry enjoyed a boom in development throughout the 1980s. This resulted in an increase in the number of operating companies both on a national and international basis. With increased competition, greater brand name recognition and more effective distribution systems, the industry began to move away from the established quality star rating system and began to explore the potential of market segmentation. Crowne Plaza by Holiday inn and Courtyard by Marriot were early examples of this phenomenon. Simultaneously, product types were developed including airport, all-suite, conferences, health spas, marina, golf and ski hotels. Similarly, resort developments were moving into timeshare multi-ownership and this time saw the creation of destination venues such as theme parks and the other family-based activity parks. Driven by greater consumer wealth and fiercer competition, the demand for continuing growth and return on investment provided the ideal laboratory for commercial innovation. The budget or limited-service product was a classic example. Adapted to suit local conditions internationally, primarily in size, area and number bedrooms per unit, the budget sector witnessed rapid growth and separately provided a new entry level for people for people who had previously only used hotels for vacations rather than short stays.

The Gulf War at the start of the 1990s resulted in a dramatic decline of travel worldwide and, combined with an economic recession for much of the world, the hospitality industry suffered dramatically with low financial performance. Many companies were left unable to service debt and ownership of many hotels fell into the hands of banks and other financial institutions.

Emerging from this challenging period, the industry witnessed a move to consolidation, and the value of brands became a recognized benefit. At the same time some lenders and investors demanded greater transparency and involvement in the supervision of the businesses. Asset and yield management became disciplines through which the owner could manage the manager and, as methods of maximizing the value of individual or groups of hotels. The prevalent attitude of brands, however, was that they required increasing and wider international coverage to be significant players. Improved technology assisted more centralized control and increased the focus on standardization and the depersonalization of the service in the industry. This in turn reduced the demand on staff numbers and skill lev...