Classification of Hotels: A Comprehensive Guide


Classifying hotels into different types is not an easy task this industry is so diverse that many hotels do not sit into a single well defined category. We can do classification of Hotels based on following categories.

Classification of Hotel
Classification of Hotels on the Basis of Various Factors

Hotels are classified on the basis of

  • Size
  • Target Market
  • Level of Service
  • Ownership and Affiliation

1. Classification of Hotels on the Basis of SIZE

Depending on the number of rooms, hotels are classified as

Under 150 rooms

150 to 299 rooms


300 to 600 rooms

More than 600 rooms


Depending on the clientele hotels are classified as

  •  Commercial hotels- business clientele.
  • Airport hotels- transient or stop over for airline passengers.
  • Suite hotels- VVIPS, dignitaries, long staying guests.
  • Extended stay hotels- Long staying guests.
  •  Residential hotels- generally for diplomats.
  • Resorts- Recreation and leisure for holiday makers.
  • Bed and breakfast- travelers.
  • Timeshare and condominiums- Holiday makers.
  •  Casino- gambling / games.
  • Conference centers / Convention hotels- for conferences, seminars and conventions.
  • Heritage Hotels

a) Commercial Hotels

These are the type of hotels which provides lodging, meals and other services typically target business clientele, but also for travelers and other paying guests. These hotels usually provide services of a Business Centre and they may also have a Business floor/ Club Floor services of which are offered to their guests.

LocationCommercial area, down town areas, business districts & also in the heart of the City.
ClienteleBusinessmen or corporate

Services / Facilities – Good conference rooms & also secretarial services. They also have Highly specialized Business Centre’s. Services offered in a business centre include: Lounge with reception area, sitting area, with newspaper, national & international, magazines, televisions, Reuters, Conference Rooms ranging from capacity of 2 to 25 people, Secretarial Services, Stationary, Photo Copier, Fax, Binding, lamination, Interpreters can also be arranged. Computers & internet connectivity also a guest can hire mobile phones & laptops from business centers. It may also have a small library.


Services offered in a business floor/ club floor include: They may have 2 phone lines, Fax Machine, Coffee Maker, Internet Facilities, Business Kit & Large Study Table , Mostly junior suites Separate reception to save time c/a club lounge or club reception area. These are mainly for Businessmen Lounge may serve breakfast, high tea & cocktails too.

b) Airport Hotels

These types of hotels typically cater to business customers, passengers with overnight stays or canceled flights, and airline employees. Some hotels may offer free transportation between the hotel and the airport. they want to minimize ground traffic. Another appeal of these hotels is that guests can pay for their room by the hour rather than by the day.

LocationNear airports
ClienteleStopovers, airline staff.
Service / Facilities Exchange rate / airport transverse travel desk (book tickets & updated High Schedule), more staff at night shift. Also transit hotels, length of stay is not long.

c) Suite Hotels

These hotel types are the latest trend and the fastest growing segments in the hospitality industry.

The main attraction of these hotels are the rooms with a living room and a separate bedroom. Hotels with suites generally have a smaller and more limited audience in exchange for a fuller living room. Guest areas and services than other hotels. This also helps keep all suite hotel room prices competitive in the market. Professionals such as accountants, lawyers, business people and executives find the all-suite hotels particularly appealing as they can work and entertain in an area other than the bedroom.

LocationNot in commercial areas, but in posh areas
Clientele VIPs, Diplomats
ServicesHigh profile hotels, not very high facilities

d) Extended Stay Hotels

Extended-stay hotels are similar to all-suite hotels, but generally offer in-room kitchen service. These hotel types are for travelers who are staying longer than a week and do not want to be dependent on hotel services. Extended service hotels usually do not offer F&B services or laundry services etc. Guests consider these types of hotels are “a home away from home.”

LocationNear by a residential area
Clientele Journalists, Students doing research
ServicesExtremely fewer services may have a not so costly. E.g. Lodges

e) Residential / Apartment hotels

Apartment/residence hotels offer guests long-term or permanent accommodation. Typically, guests sign a lease with the hotel for a minimum of one month to a year. These leases are renewed annually. The rooms usually include living room, bedroom, kitchen, private balcony, washing machines, kitchen utensils, etc. The residential hotel also provides housekeeping, laundry, telephone, and in some hotels, a restaurant and lounge, etc will be present on the premises.

LocationUp market residential area
ClienteleFamilies staying for maybe 2 – 4 years
Services Ample parking, Swimming pool, Gym, Housekeeping, Butler Services,
laundry services it also has a complete kitchen. Are like apartments can have 1 to 4 bedrooms. E.g. Taj Apartments. (Wellington Mews).

f) Resort

Resort hotels are usually located in the mountains, on an island, or in other exotic locations far from cities. These hotels have recreational facilities, landscapes, golf, tennis, sailing, skiing and swimming. Resort hotels offer enjoyable and memorable guest experiences that inspire repeat guests at the resort.

Location Near scenic beauty, can be by a beach or mountains
Clientele Holiday markers, travelers, families
Services Recreation & Leisure facilities Swimming pool, Gym, Indoor & Outdoor Games, Sightseeing facilities, Spa. E.g. Retreat, the Resorts, Taj Holiday Village

g) Bread & Breakfast Hotels

Also known as ‘Mom & Pop’ hotels/ Home stays. These are houses with rooms converted into overnight facilities; this can size up to 20 to 30 guest rooms. They are also known as ‘Home Stay’s’. The owner of the B&B usually stays on the premises and is responsible for serving breakfast to guest. Due to the limited services offered at these hotels the price for room is very less than any full service hotel.

LocationLocated in cultural centers
Clientele Travelers
ServicesBreakfast & Accommodation

h) Timeshare and Condominium

Another new type or segment of hospitality is timeshare hotels. They are sometimes referred to as “vacation interval” hotels. In timeshare hotels, guests purchase accommodation for a set period of time. Unit rented by the management company that runs the hotel. Condominiums are similar to timeshares, but the difference between the two lies in the type of ownership.Units in condominium hotels have only one owner rather than multiple owners, each for a limited time each year.

In a condominium hotel, an owner informs the management company if when he/ she want to Occupy the unit.

Location Mostly Resorts out of the city
Clientele Holiday makers
Services In timeshare the money investors are allowed a free stay. Rest services are similar to that of a resort

i) Casino

These are the hotels that offer accommodation. Various types of games, entertainment, various cuisines, etc. Legalized gambling is the main part for customers. Casinos are also an important part of the hospitality industry. Some of the example of Casino are Las Vegas, Monte Carlo

j) Conference Centre’s and Convention Centers

1) Conference Centre’s

These hotel types focus on meetings and conferences as well as lodging options for meeting attendees. They also offer high quality audio visual equipment, business services, flexible seating arrangements, flip charts, etc. These hotels are mostly located outside of metropolitan areas and have facilities such as golf, swimming pools, tennis courts, gyms, spas, etc.

Location Out of the city for security reasons
Clientele Companies, Corporate floor space for exhibition also a good business center

2) Convention

These hotels have meeting room facilities. Convention hotels are larger compared to conference hotel and are likely to have more than 1,500 rooms. the meeting rooms, ballrooms, exhibition rooms are quite big. They typically serve the convention market for state, regional, national and international associations.

LocationOut of the city for security reasons
Clientele Delegates & VIPs & decision maker service – have large convention hall with all facilities, Accommodation High security

k) Heritage Hotels

India is known as a country of palaces, castles, forts, haveli’s etc. Each state had its own king and they had various palaces for themselves and their family member’s residence. These were built not only in the state capital, but also at various tourist places and business hubs. Both domestic and foreign tourists have inclination to visit these old palaces, forts, etc. The govt. of India, to boost up tourism and to preserve the Indian heritage, started a scheme, where these old buildings could be converted into hotels and they would be christened as “Heritage Hotel”.

The only condition was that, the building had to be built prior to 1950 and there should be no exterior change in the original building plan. Now the govt. of India has modified this rule and now only those buildings which are built prior to 1935 can be converted to heritage hotels.

Heritage Hotels can be further converted into 3 categories:

i. Heritage Grand

This category covers hotels in residences / haveli’s / hunting lodges / castles / forts / palaces built prior to 1920.

ii. Heritage Classic

This category covers hotels in residences / haveli’s / Hunting lodges / castles / forts / places built prior to 1935 but after 1920.

iii. Heritage Basic

This category covers hotels in residences / haveli’s / hunting lodges / castles / forts / palaces built prior to 1950 but after 1935.

3. Classification of Hotels on the Basis of Level of Service

World class service hotels (Pertaining to all the 5 star and 5 star deluxe hotels)

World class service

These are also called luxury hotels; They target top executives, entertainment celebrities, high-level politicians and affluent clientele as their main markets.


They offer exclusive restaurants and lounges, concierge services and also private dining rooms. Bars, shampoo, shower caps and all amenities. Housekeeping is offered twice daily, including turndown service.


Mid ranged service hotels (Pertaining to all the 3 star and 4 star hotels)

Mid-Range Service Hotels that offer mid-range service attract the largest segment of the traveling public. This type of hotels does not offer elaborate services and has adequate staff. They also offer uniformed service, in-room food and beverage service, in-room entertainment, and WIFI.

The property offers a specialty restaurant, cafeteria and lounge catering to both visitors and hotel guests. The types of guests who like to stay at these hotels are business people, individual travelers and families.Prices are lower than luxury hotels because they offer fewer services, smaller rooms, and a smaller selection of leisure facilities and activities.

Economy / limited service / No. frills hotels (Pertaining to all the 1 star and 2 star hotels)

These hotels provide clean, comfortable, safe, inexpensive rooms and Meet the basic need of guests. Economy hotels appeal primarily to budget minded travelers who wants a room with minimum services and amenities required for comfortable stay, without unnecessary paying additional cost for costly services. The cliental of these hotels include families with children, travelling business people, backpackers, vacationer’s retirees etc. These types of hotels might not offer food and beverage facilities.


Hotels can be categorized by ownership. There are various ways of how hotels can be owned and operated:

a) Independent Hotels

In this there is only single property, which owned by a company or an individual who manages the operations of the hotel on their own. Example: The Capitol-Bangalore, The Imperial-New Delhi, Hotel Bawa International-Mumbai.

Advantage and Disadvantage of the Independent Hotels

Advantages Disadvantages
No sharing of profitLosses can’t be shared.
Goodwill is based on individual work ethos and performance.The loyalty may not be much
Avoiding of bureaucracyNo economy of scale(product – room)
Decision making is quickNo sharing of reservation network

b) Chain Hotels

A group of hotels that are owned or managed by one company / organization is called a chain. In general, three or more units constitute a chain, but some major hotel chains have 300 to 500 properties. Example: Starwood, IHG, Accor, IHC, EIH, Hyatt, ITC.


Advantages and Disadvantage of Chain Hotels

Advantages Disadvantages
Brand loyaltyProfit is shared
Sharing of lossesReputation is at stake if 1 property does not perform well
Advantage of bulk purchasingDecision making is slow
Reservation network & marketing & advertising can be sharedBureaucracy is applicable
Better & planned decision making No individuality
Experimentation & risk takingInternal Competition may not be healthy
Exchange of employees & training

For more information about chain hotel take a look on Top National and International Hotel chain in India

c) Management Contracted Hotels

Managing a hotel requires professional expertise. A new entrepreneur with little or no experience in the business may safely choose the services of Management companies, who have the required expertise to manage hotels.

Owners hire management companies to run the hotel for them. As the name suggests, it is a contract between the owner of the property and a hotel operator (Management Contractor) by which the owner employs the operator as an agent to assume the full responsibility for operating and managing the hotel. The operator can be a hotel chain with reputed name and Market image, such as Hilton, Sheraton etc.

d) Franchise

A franchise is the authorization granted by a hotel chain to an individual hotel to use the chain’s trade mark, operating systems, and reservation system in return for a percentage of hotel revenues plus certain other fees, such as advertising fees.

Franchising in the hospitality industry is a concept that allows a company to expand more rapidly by using other people’s money than if it had to acquire its own financing. Franchising is a way of doing business that benefits both the franchisor –who wants to expand the business rapidly- and the franchisee that has a financial backing but lacks specific expertise and recognition.

Some of the well-known franchise chains in the world include Holiday Inn, Ramada Inn, Quality Inns, Comfort inns etc.

e) Referral group / Referral Association

The independent hotels get together & form an association to overcome the disadvantage of being an independent property. Independent operators achieve the marketing benefits of chains without chain membership. The hotels help each other getting more business; they share their reservation network; they help each other in the marketing & advertising of their properties.

You may also like Classification of Hotels on the basis of Star System


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