Course Information
HMGT 1101 / Section D420
Professor John Richard Akana
jakana@citytech.cuny.eduMeta
New York Times-
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The Hotel Business,
Two main aspects in the hotel business is franchising and management contracts. Franchising, a form of business in which “a franchisor grants a franchisee the right to use a developed concept, including trademarks and brand names, production, service and marketing methods and the entire business operation model, for a fee.” It began in the 1907 by The Ritz Carlton. There are advantages and disadvantages to the franchising business. A few benefits of franchising are National advertising, lower fee percentage charged by credit card companies and centralized reservation system. A few drawbacks are high fees, CRS accounts for about 7-26% of reservations and conformity. Management contracts is an “arrangement under which operational control of an enterprise is vested by contract in a separate enterprise that performs the necessary managerial functions in return for a fee.” It started rising in the 1970s as well. It allows a hotel to manage a property for at least 20 years. Hotels provide an indirect economic impact to the communities in which its located through the ripple effect. The ripple effect involves the money in which the hotel purchases items to provide service to their guest.
As more countries are becoming more developed, reaching political stability, and joining in global trade, having hotels all over the world is a necessity if more progress is to be achieved. Hotels are often one of the first businesses that people invest in to accommodate business and work travelers, and tourists. And with many hotel franchises already established in developed countries, people may franchise and have an easier time opening a hotel rather than starting from scratch as franchising often provides benefits such as construction plans, advertising, cash flow, and more. Hotels also contribute to other sectors of the economy as they require the purchase of materials for serving guests, including sheets, soaps, and food. There are many different types of hotels for all interests and economic needs, so they can accommodate and be enjoyed by various groups of people.
Chapter 2 was a very interesting chapter, i learned a few things that I’m glad i learned. It talked about how franchises work. So pretty much, buying a franchise is like buying the right to use the brand, the logo, the policies of certain companies. It helps the companies with growth. And it also helps the buyers with certain factor like not worrying about marketing and things like that because buying a franchise is buying a piece of a company that already established itself. So the risk of failing after buying a franchise are slim. Also buying stocks is a good way to invest in companies that either already established themselves or are in the process of making it happen.
Roberto Thompson
Professor Akana
Perspectives in Hospitality Management
Chapter 2
The Ritz Carlton in NYC was the first hotel to start franchising in 1907. Franchising is a concept that allows a company to use other people’s money for growth rather than financing. Franchising is used to rapidly expand businesses. The hotel company that is the largest franchise is Wyndham Worldwide. Some trends of franchising may include factors propelling the growth of franchising; looks/curbs appeal, location, and foreign expansion. During the franchising process, like any other business transaction, there will always be pros and cons. some of these are; the franchise company benefits from this arrangement by receiving, increased market share and recognition upfront fees. And some cons are; the franchise company may experience challenges due to; the careful selection process required when choosing franchise partners.
Raymond Chin
Prof Akana
9/30
Chapter 2
Chapter Two was interesting, I didn’t know the reason why companies wanted to be a franchise or not. If i were to open a hotel or a restaurant, I would not make it a franchise. Even though making a company a franchise it has it benefits like, lower fee percentage charged by credit card company, increase the market share and recognition, up-front fees, and National advertising. All these sounds great but I’m not the type to get others effect my company’s fame. Starbucks is one of the companies who are not franchises and they work fine. They are famous throughout the world without being a franchise. They made their fame through open many restaurants and if they were to ever to be sued it wouldn’t be by someone else’s mistake. I don’t mind working for a franchise just not owning one. Location and types of hotel is very important to make money. It would be wrong to have a luxury hotel in a city like Detroit. It’s best to own a hotel or restaurant that attract tourist and the people living their. For example, I would open a hotel in Manhattan and have a restaurant inside the hotel so people may come to enjoy the food and stay for vacation. New York City is known for the ball drop in New years, Christmas Tree on the holidays and the big parade in Thanksgiving. These types or occasions i would make the hotels base off these events at the end of the year.
Chapter 2
The Hotel Business, show us how a franchise work. Franchising is a concept that allows a company to use other people’s money for growth rather than financing. It helps business to rapidly expand and reduce risk of failure to people who invest in a franchise. The benefits that people can have when they invest it in franchising is that offers many support services often including cash flow, marketing and advertising, site selection, construction plans, and assistance with financing. Therefore, buying a franchise is like buying all the combo. For example, the logo, the right to use the brand and they may offer group buying discounts to members, as well as management training, and continuing education programs.
Franchising and management contracts two main forces in development and operation of hotels.
Began in 1907 Ritz Carlton.
Uses other people’s money for growth rather than financing.
Pros for franchisor increased market share and recognition and upfront fees.
Cons Difficulty in maintaining standards and controls. Careful in selection of franchises.
Management Contracts
Little or no upfront financing or equity involved
Responsible for rapid boom in 70’s
Hotel Development
Built by a developer to make a reasonable return on this substantial investment.
Profits difficult because of higher cost of construction and the need to become known and gain a good market share
Economic Impact Hotels provide direct and indirect economic impact to communities surrounding
Different Type of Hotels
City Center, Resort, Airport, Convention Bed in Breakfast Etc,,
The Oriental Hotel in Bangkok, Thailand has been rated #1 in the world.
The Ritz Carlton and the Four Seasons are generally rated the highest quality chain of hotels.
Vacation Ownership
Began in the French Alps in late 1960’s
Fastest growing segment of U.S travel and tourism Industry
For a one-time purchase consumers own their vacation forever or for a predetermined amount of years.
Members purchase points that represent either a travel and use membership or a deed real estate product.
Points are then used like money to purchase accommodations.
Sustainable Lodging
By using local materials, a hotel or resort can save money on the cost of new materials plus for transporting them
The cost of energy has increased so much that they will start using natural lighting and energy efficient buildings.
Encouraging a greener earth.
Trends
Some trends are capacity control, safety and security, technology, globalization and increased vacation ownership.
Andrea Shamlall
HMGT 1101
Chapter 2 Summary
Within a hotel business, franchising and management contracts are the main factors behind how a hotel business is setup. Franchising began in 1907 by The Ritz Carlton. Franchising is a concept that allows a company to use other peoples’ money for the growth rather than for financing. Franchising is used to expand businesses. Some of the benefits of franchising to the franchisee would be they have a standard set of plans, they are included in many discounts, and lower fees are charged by credit card companies. Some of the drawbacks to the franchisee would be the high account fees, conformity, and standards must be maintained. Some of the pros for franchise company/franchisor would be the increased market share and recognition and up-front fees. While, the cons would be careful in the selection of franchisees and difficulty maintaining standards and controls.
Referral Associations have similar benefits to properties, as do franchises at a lower cost. Each independent hotel refers guests to each of the other member hotels. Management contracts are responsible for the hotel’s industry’s rapid boom since the 1970s. It allows the hotel company to manage the property for a period of 5, 10, or 20 years. Hotels provide direct and indirect economic impact to the communities in which they are located. Hotels are classified by the location, price, and types of services offered. The Ritz-Carlton and the Four Seasons are generally rated the highest quality chain hotels. Vacation ownership is the fastest growing segment of the U.S. travel and tourism industry. By using local materials, a new hotel, or resort can save money on the cost of materials plus the cost of transporting them.
Chapter 2 is about Franchising. Franchising & management contract are the two main focus in the development & operation of the hotel bussiness. It allows a company to other people’s money for there bussiness. The benefits of a franchise is a standard set of plans, national advertising, centralized reservation system and lower fee percentage charge by credit card companies. The Franchising is responsible for the hotel’s industry rapid boom since the 19 70’s. The franchises allowed the hotel company to manage the property for a period of 5,10 or 20 years and the company would usually receive a management fee of 2 – 4.5% of gross revenue. If the company decided to use the franchises for a event, the franchises may want logos on invitation and placed throughout the venue.
Vacation ownership is a fast growing segment in the US travel and tourism industry.For a one-time purchase consumers own their vacation forever or for a predetermined amount of years, they can cost from between $14,800 to $18,500.
Chapter 2 Summary
Franchising began in 1907 by the Ritz Carlton. When owning a franchise, there a couple of benefits. Several examples are standard set of plans, national advertising and centralized reservation system. Some pro’s for franchising is an increased market share and recognition and a con will be the difficulty maintaining standards and controls. Each hotel is classified, it depends the location, price and type of services. Less than 2% are classified as AAA. There are differently locations of a hotel, city center, resorts, airport, freeway hotels and motels, casino and conventions. Oriental hotel in Bangkok, Thailand has been rated to be one of the best hotels. Some hotels are unusual than others. Some are treetops hotels, ice hotels, and underwater hotels!