Budget Hotel vs Luxury Hotel An operation management perspective

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 &amp. Mao, 2009) identified that three factors. physical product, service quality and location were amongst the most critical success factors. …
Among the factors included in service quality, they identified guest safety, security and the speed of guest service to be among the top priorities. In addition to that, the research also indicated that hygiene and cleanliness are also of fundamental importance in maintaining highest service quality. Finally, an attractive location was also imperative for the hotel’s success. Industry experts believe that it takes only 18 months to recoup the investment in China if the budget hotel is located at an ideal location (Hua, Chan &amp. Mao, 2009). The investors of hotel deemed that the geographical coverage of the hotel network was crucial for the budget hotels. The location of the budget hotel is one of the key factors that determine its financial performance. Budget hotels should be located at a place which is accessible with adequate car parking facilities. The model cannot be successful on a premium priced land since the hotel rates are much lower as compared to luxury hotels. The rooms for a budget hotel are as clean as a luxury hotel but they are not extravagantly lavished and decorated with furnishings and designs. The budget hotel operates on the concept of cost leadership. The buildings are constructed of architectural materials to ensure that they are maintenance-free. The grounds are watered by an automated underground sprinkler system. There is a decentralized air conditioning and a heating system to ensure that failures are limited to single rooms not the full hotel as they aim to minimize their total cost. Although Budget hotels provide standardized products and services but there are slight alterations made to the product and service ranges to make