Chapter 2 focuses on the hotel and lodging business as a whole identity. Descriptions of hotel ownership is listed, along with the development of hotels from the past until present time, and how can hotels be developed into a hotel that can lead to a large attraction which leads to more capital. Methods such as franchising and management contracts are taught. Different classification of hotels are listed, & this chapter teaches the function of each classified hotel. This chapter also discusses vacation ownership and how many can invest to have this kind of privilege. last but not least, trends in hotel development are taught through different key terms.

Management Contracts: Contract between hotel and Hotel management companies. Mainly to form an alliance with owners whom are not able to operate hotels in order to improve their hotels.

Franchising: a concept used for companies to expand by using other investors money. Franchising is beneficial because not only do companies make a profit for selling their rights, but it also gives investors the opportunity to grow financially

Example: McDonalds sell their rights to an investor in order for that investor to run his/her own McDonalds. Both franchisee and franchiser benefit from this because one makes money by selling, the other starts making money from investment.

Capital intensive: any form of development or ownership that requires high capital $$$

Fair return on the investment: Making reasonable profits based on your initial investment

Feasibility Study: The study that indicates markets potential, opponents, demand and supply. This study will determine hotels financial success

Summary Operating Statement: list of revenue and expenses for period of time.

Economic Impact of hotels:

Direct economic impact: Capital made only off of guest that effects local community.

Indirect economic impact: Capital made by anyone other than guests (employees, vendors, firms) that impacts local community.

Vacation ownership: an offer in which someone can invest in having the privileged to vacation in various resorts/hotels, for a short or long period of time; similar to a timeshare

Real Estate investment trusts (REITs): Investors with immense assets in real estate whom invest in the hotel business for a reasonable return on the investment.