PowerPoint(tm) - Hotel Management And Ownership

HOTEL MANAGEMENT AND OWNERSHIPCopyright Texas EducationAgency, 2011. All rightsreserved.

CopyrightCopyright TexasEducation Agency,2011. All rightsreserved.Copyright Texas Education Agency, 2011. These Materials arecopyrighted and trademarked as the property of the Texas EducationAgency (TEA) and may not be reproduced without the express writtenpermission of TEA, except under the following conditions:1) Texas public school districts, charter schools, and Education ServiceCenters may reproduce and use copies of the Materials and RelatedMaterials for the districts’ and schools’ educational use withoutobtaining permission from TEA.2) Residents of the state of Texas may reproduce and use copies of theMaterials and Related Materials for individual personal use only,without obtaining written permission of TEA.3) Any portion reproduced must be reproduced in its entirety andremain unedited, unaltered and unchanged in any way.4) No monetary charge can be made for the reproduced materials or anydocument containing them; however, a reasonable charge to coveronly the cost of reproduction and distribution may be charged.Private entities or persons located in Texas that are not Texas publicschool districts, Texas Education Service Centers, or Texas charter schoolsor any entity, whether public or private, educational or non-educational,located outside the state of Texas MUST obtain written approval fromTEA and will be required to enter into a license agreement that mayinvolve the payment of a licensing fee or a royalty.For information contact: Office of Copyrights, Trademarks, LicenseAgreements, and Royalties, Texas Education Agency, 1701 N. CongressAve., Austin, TX 78701-1494; phone 512-463-7004; email:copyrights@tea.state.tx.us.

Hotel ManagementCopyright TexasEducation Agency,2011. All rightsreserved. Management and ownership are not the samething Hotel Management is the day-to-day runningof the hotel (also called hotel operation) One person (or company) can own the hotel,and another person (or company) can manageit. The owner can buy the hotel as an investmentbut not know anything about running a hotel A hotel management company will be hired tomanage the hotel It is often difficult to know who actually ownsthe hotel

MANAGEMENT CONTRACT Management companies operate propertiesowned by other entities Owner retains the financial and legalresponsibility for the property Management company operates the hotel, payshotel expenses and receives an agreed upon fee After operating expenses and fees have beenpaid, remaining profit goes to the ownerCopyright TexasEducation Agency,2011. All rightsreserved. Owner then pays debt, insurance, taxes etc.

Hotel Management Example A:– Investor (with not hotel experience) builds and ownsa hotel– Investor hires Hilton Management company tomanage the hotel– Hotel has Hilton name and must follow Hiltonstandards Example B:Copyright TexasEducation Agency,2011. All rightsreserved.– Investor (with no hotel experience) buys a Hiltonfranchise– Hotel management company hired to manage thehotel for the investor– Hotel has Hilton name and must follow Hiltonstandards

OWNERSHIP Two basic structures of ownership1. Independent Hotel2. Chain Hotel Many chain hotels tend to be a mixtureof several types of ownership– Management Contracts– Franchises– Referral GroupsCopyright TexasEducation Agency,2011. All rightsreserved.

INDEPENDENT HOTEL Single-unit business not connectedwith any other business Examples: Family-owned-andoperated hotels and B&Bs. Usually one owner (proprietorship,partnership or corporation)Copyright TexasEducation Agency,2011. All rightsreserved.

INDEPENDENT HOTELAdvantagesCopyright TexasEducation Agency,2011. All rightsreserved. Autonomy (policies, procedures,marketing and financial obligations) Marketing tailored to specificpopulations/locations Flexibility in management Easy adaptation to changing marketconditions

INDEPENDENT HOTELDISADVANTAGES More money spent on nationaladvertising No volume purchasing power Travelers prefer to stay with brandsthey recognizeCopyright TexasEducation Agency,2011. All rightsreserved.

CHAIN HOTEL Multiple-unit businesses that have thesame brand name and possibly the sameownership (proprietorship, partnershipor corporation) Chain hotels may be:– Management contract– Franchise– Referral groupCopyright TexasEducation Agency,2011. All rightsreserved.

CHAIN HOTELAdvantages Brand name; strong brand identity Owner develops brand identity throughadvertising, public relations & promotions Brand loyalty Frequent guest program Supplies purchased in large quantity Centralized & specialized services (training,site selection & information systems) Central Reservations CenterCopyright TexasEducation Agency,2011. All rightsreserved.

CHAIN HOTELDISADVANTAGESCopyright TexasEducation Agency,2011. All rightsreserved. Strong control over individualproperties (minimum standards, rules,policies and procedures) Less flexibility in managementprocedures

FRANCHISE HOTEL A unit of a chain that has been purchased by anoutside owner (franchisee) The outside owner runs the franchise in theway required by the chain owner (franchisor) Copyright TexasEducation Agency,2011. All rightsreserved.Established standards for design, décor,equipment and operating procedures

FRANCHISE HOTELADVANTAGESCopyright TexasEducation Agency,2011. All rightsreserved. Strong brand name Travelers prefer to stay with brands theyrecognize Consistent established product and level ofservice National or international central reservationsystem National advertising Management training programs Advanced technology Central purchasing Architectural, construction and interior designconsulting

FRANCHISE HOTELDISADVANTAGES Strong control over individualproperties (minimum standards, rules,policies and procedures) Less flexibility in managementprocedures Must pay a fee to franchisorCopyright TexasEducation Agency,2011. All rightsreserved.

REFERRAL GROUPSAdvantagesCopyright TexasEducation Agency,2011. All rightsreserved. Independent hotels that have bandedtogether for a common purpose Hotels are not replicas but offerconsistency in level of service Hotels within the group refer gueststo other affiliated properties Offer central purchasing services(interior furnishings, bath amenities,linen and towels, and restaurantitems)

REFERRAL GROUPSDisadvantagesCopyright TexasEducation Agency,2011. All rightsreserved. Members must maintain certainoperating standards Limited control over members on agreedupon items A member can leave if it becomesdissatisfied The group can ask a member to leave ifthe member doesn’t meet therequirements or pay dues. http://youtu.be/3ioXSUGsHlo Cool Careers: Hotel Manager

References/ResourcesTextbooks: Reynolds, Johnny Sue. Hospitality Services Food & Lodging. Second. Tinley Park: The GoodheartWillcox Company, Inc., 2010. Print. Lodging Management Program Year One. AHLA Educational InstituteWebsites: 20 Questions before starting a BusinessMany people dream of having their own business. To see if starting a business is right for you, askyourself these important 20 efore-starting-business Is Entrepreneurship for You?Becoming a successful entrepreneur requires sound planning, creativity and hard ou Master in ManagementManagement consists of planning, organizing, staffing, leading or directing, and controlling anorganization for achieving a goal and a person handle the entire organization is known to be as ous-managers-who-changed-the-world.html Top Hotel Owners & OperatorsA list of ownership and development companies and third-party management companies who focuson the lodging ources/top-hotel-owners-operators/Copyright Texas Education Agency, 2011. All rights reserved.

Hotel Management Management and ownership are not the same thing Hotel Management is the day -to-day running of the hotel (also called hotel operation) One person (or company) can own the hotel, and another person (or company) can manage it. The owner can buy the hotel as an investment but not know anything about running a hotel