Chapter 3 Questions & Answers

1. What are the advantages of a management contracts and franchising? Discuss their impacts on the development of the house industry.

-Allowing hotel owners to acquire a brand name with regional or national recognition
-Connecting the hotel to the GDS
-Increasing hotel’s sales, thus its profitability
-Affecting ability of hotel’s owner to secure financing
-Assistance with on-site training, advice on purchasing furnishings & fixtures, reduced operating costs, & free interior design assistance
-Increasing fee payments to the brand
-Growing the business (brand spread)
-Helping pay for fixed overhead of operating that brand

-Secure, and if it has closed, reopen the hotel
-Implement sales and marketing plans to maximize hotel’s short- & long-term profitability
-Generate reliable financial statements
-Establish suitable staffing to maximize customer and employee satisfaction
-Show hotel to prospective buyers
-Report regularly to owners about hotel’s condition

2. Explain how hotels cater to the needs of business and leisure travelers in reference to: resorts, airports, hotels, and vertical integration.
Some hotels are such:

The Hampton Inn & Suites include a second desk chair and larger living rooms for in-room meetings.
The Ramada Inn offers cordless phones.
The club floors at Capitol Hotels in Washington, D.C., include separate concierge services and rooms with three phone lines.
The new 24-hour Xerox Business Center at the Hilton Hawaiian Village provides computer rentals, Internet access and postal services around the clock.
Printers and fax machines are standard features in business-class rooms at the Hilton, Hyatt and Sheraton hotels.
Many leading hotels loan laptops to their guests.
The Starwood Preferred Guest (or SPG) program caters primarily to businesspeople that often travel to major cities in the United States, Asia and Europe. Preferred Guest program members can earn and redeem points in more than 1,000 hotels across nine different brands. Starwood’s partnership with Delta Air Lines and more than 30 other carriers also allows program participants to save on flight costs. The hotel group also has a relationship with American Express; the Starwood Preferred Guest credit card by American Express enables travelers to accrue rewards with every dollar spent.

3. Explain what vacation ownership is. What are the different types of timeshare programs available for purchase?

Vacation ownership is a period of time (days or weeks per year) that you can buy for a specific property (usually a residence at a resort) or multi-destination club, during which the right-to-use the property belongs to you. The idea is that you benefit by “pre-paying” for a vacation place rather than renting it, as you might otherwise do. The profit that would have gone to the rental stays in your pocket. Under a Vacation ownership plan you agree to a one-time purchase price and an annual maintenance fee, Vacation ownership purchasers own their accommodation time and purchase the right-to-use it for a specified number of years.

a) Deeded Ownership
: Deeded ownership is owned for life. You have the right to use it, sell it, let a friend or family member use it, rent it, or pass it on to your heirs. Deeded timeshare ownership is typically sold on a week-by-week basis, but can also be sold as an ownership percentage in the entire resort. Deeded ownership can be sold as either a fixed week, floating week, or points use.
b) Sharehold or leasehold agreement
: A sharehold or leasehold agreement is typically used for recording ownership in foreign countries. Sharehold and leasehold ownership typically comes with the same rights as deeded ownership.
c) Right to use
: Right to use timeshare vacation ownership memberships are good for a certain number of years, then they expire. Right to use memberships are typically sold in 25 year, 50 year, and 99 year intervals. Another way right to use membership packages are sold is by a number of weeks. You have the rights to use a certain number of weeks. You can use them all at once or spread the use out over many years.

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