Chapter Summary
Chapter two explains the many different aspects of the hotel business. It describes hotel ownership and development. You learn about franchising, management contracts, referral associations, the economic impact of hotels, the different classifications of hotels and vacation ownership.
Additionally, it provides you with the names of some of the most prestigious and unusual hotels. Talks about the future of tourism and it’s expansion often in combination with airlines with the goal of improving the economic conditions in developing countries.
Key Terms and Concepts
- Capital Intensive – My example: Years ago my father wanted to start a new business by opening a new gas station. Because it was a capital intensive business and required large amounts of expensive equipments and money; he couldn’t do it.
- Fair Return on Investment – My example: My friend Lucy is a baker that works from her home, and receives good financial returns every time she sells a cake.
- Feasibility Study – My example: If I win the Mega Millions Jackpot this week; I will hire project managers to complete studies to determine if my proposed ventures will be profitable as well as what risks I will encounter.
- Direct Economic Impact – My example: The recent visit of Pope Francisco to New York City had a direct economic impact, based on visitors and organizers.
- Indirect Economic Impact – My example: The Budget Manager at the Caesars Palace in Atlantic City, reports quarterly the expenses related to employment for the hotel, and the money spent by the hotel in items to service the guests.
- Franchising – My example: I am reviewing the necessary information to franchise a White Castle Restaurant in Boston, MA.
- Management Contracts – My example: Donald Trump has management contracts for his hotels, resorts and casinos.
- Real Estate Investment Trust (REITs) – My example: All my classmates for HMGT 1101 pooled to buy a hotel and take advantage of the offered benefits under the reits.
- Referral Associations – My example: In an effort to improve the overall occupancy of the hotel; the owner joins a referral association.
- Vacation Ownership – My example: Many people that I know purchased vacation ownership, the first time they visit Orlando, FL or Cancun, Mexico.
