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Budget Hotel vs. Luxury Hotel: An operation management perspective
Finance & Accounting
Pages 7 (1757 words)
This paper highlights on the key differences and similarities between a “Budget Hotel” and a “Luxury Hotel” from the viewpoint of operations management. Within the hospitality industry, the positioning concept of both these segment lies at opposite extremes. Although there are some commonalities in the concepts but the differences among them are striking. …
A budget hotel aims to provide a hotel with basic necessities and they are mainly targeted to an audience who are willing to minimize their expenses. It requires you to draw a smaller amount of cash to stay in a budget hotel. They are especially designed for visitors who are willing to spend a nominal amount of money on their stay. Travelers and senior citizens are amongst the frequent visitors of budget hotel.
The budget hotels operate on a low-price model. The level of service is highly standardized and designed to suite “no-frills” convenience customers. Fiorentino (1995) identified budget hotel as “a brand new purpose-designed product concept in the hospitality industry which relies heavily on three factors; branded product concept, value for money, and service consistency”. Jones (2002) identified some of the key characteristics of a budget hotel which are mentioned below:
• Lower prices (Emphasizing the affordability factor)
• Limited facilities and services
• Targeted for the transient market
• Located on major road networks or in secondary urban locations (retail parks)
• Standardized operating procedures and rates countrywide
A survey was conducted in China to identify the critical success factors in the budget hotel segment of the industry. The researchers (Hua, Chan & Mao, 2009) identified that three factors; physical product, service quality and location were amongst the most critical success factors. ...
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