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In chapter 2 it discusses franchising began in 1907 by The Ritz Carlton a concept that allows other companies to use other people’s money for growth rather than financing. It is used to rapidly expand businesses. There are some pros and cons for franchising other companies or franchisor some pros is that it increases market share and recognition, also there is up-front fees. The cons to franchising is that there has to be a careful selection of franchises and the difficulty maintaining standards and controls. In a way franchising is reducing your risk of failure thats the key to buying one. Hotels have an economic impact because they provide substantial direct and indirect impact to the communities in which they are located. New hotels or resort can save money on the cost of materials plus the cost of transporting them. The cost of energy has increased so much that the construction found ways to incorporate using natural lighting and building energy-efffcient buildings.
In chapter 2, I learned that franchising, a concept that allows a company to use other peoples’ money for growth rather than financing business began in 1907 by The Ritz-Carlton. There are some pros and cons to franchising. A pro for a franchise company would be the increased market share and recognition. A con would be having difficulty maintaining standards and controls. An interesting fact that I did not know about the real estate Investment trusts is that the investors do not pay corporate income tax and instead are required to distribute at least 95% of net income to shareholders. There are various types of hotels in many different locations all over the world. Several hotel chains have their headquarters in Hong Kong. The Ritz-Carlton and the Four Seasons are generally rated the highest quality chain hotels. These are usually the hotels people stay at with a very high income. The people do not mind paying what they pay to stay there because they know what to expect when they are visiting these types of high quality hotels. Energy-efficient buildings are buildings that encourage the people to “GO Green”. They do not need a lot of air conditioning because they use materials that produce lower temperatures.
In Chapter 2, I have learned a lot about franchising and management contracts. It began in 1907, when franchising was used to expand businesses. Even though franchising has a lot of positive points, it also has its downs such as having high fees. You need to use it wisely. There are several hotels within the United States and international that are involved with having management contracts and hotel chains. For example, Ritz-Carlton would be rated as a high quality chain hotel. About real estate, its interesting how investors don’t pay corporate income tax but they do distribute at least 95% of their income from the business. There a lot of different hotels with different types of rooms and for different type of people.
Franchising and management contracts are the two main forces that allows other peoples money to for growth than financial business. This needs to be used carefully because there are a lot of pros and cons when it comes to financing. There are several hotels within the United States and international that are involved with management contracts and hotel chains. The Ritz-Carlton would be considered would rated a high quality chain hotel. Franchising seems to play a big role when it comes to businesses since it helps out a lot of companies financially.
One of the forces that help to the development of the hotels business was the franchising and management. One of the pioneers was the Ritz Carlton in 1907. Franchises has been use since then for growing instead of financing, also because franchises has the right to use the trade mark and the operating procedures.
The benefits of have a franchise can be national advertising, volume discounts to name some, but it has its disadvantages too such as high fees. To understand better how franchise works, many franchisors offers support services, cash flow, marketing and advertising, assistance with financing to reduce any type of risks.
Alongside franchises, management contracts had its rapid boom since the 70’s offering operational expertise and the management of the property for a certain period of time including years.
Independently the type of hotel business, their economic impact goes to communities directly or indirectly which benefit employees and businesses.
Around U.S it is around 50.800 hotels and motels, all of them are classified by location, price and type, characteristics granted by the AAA Diamond Award. The AAA has been inspecting hotels since 1977, and on an interesting note, less than 2% of hotels are Diamond.
As a trend, hotel business are going on the direction of sustainable and technological business as examples of some. The hotel business has emerge and keep improving as the demands growths.
Franchising began in 1907 by the Ritz Carlton. It is when a company grows by using other peoples’ money. Lodging fees in franchisees are 3-4% of room revenue. Franchises maintain the same standards worldwide. Management contracts provide operational expertise, marketing, and sales clout. It’s interesting that investors are only required to distribute 95% of net income to shareholders, instead of paying corporate income tax. There are 50,800 hotels and motels in the U.S. Locations of hotels are city center, freeway, resort, airport, casino, and convention centers. The most interesting thing I read is that there are hotels as low as underwater, and as high as treetops!
The development and operation of the hotel business relies heaving on management contracts and forming franchises.
The economic benefits that hotels provide are, direct and indirect. Direct being the T.O.T tax (Transient Occupancy Tax) which is the tax charged to hotel visitors, it benefits the community the hotel is located without the residents of said community actually paying the tax out of pocket. The indirect benefit comes from the hotel employees spending their wages in the area and the hotel buying the goods to service their customers.
Vacation ownerships is providing a yearly payment for a vacation property, it can be owned for several years or permanently. The average cost is between $14,000 and $18,000.
Chapter 2 discusses that franchising began by The Ritz Carlton in 1907. The purpose of franchising is to use other’s money and expand. There are many drawbacks of franchising but overall, the benefits overpower the negatives. A franchisor will most likely have already made the many mistakes of a new entrepreneur. A franchisor offers support services – reducing the risk of failure. Although the hospitality industry is very successful, it is also very competitive. A new property has difficulty making a profit for the first few years because of constructing cost. Although in the United States there are 50,800 hotels and motels, each has a specific type of target market to accommodate. according to its location. The Treetops Hotel, for example, is literally located in the treetops. However the Ritz Carlton offers more of a luxurious experience rather than wild. I’ve always wondered where vacations began and apparently is began in the French Alps during the late 1960’s where it consisted of a one-time purchase and payment of yearly maintenance fee. Many trends are happening in this era and creativity does not seem to stop. This is an opportunity to those seeking for a future in the Hospitality Management industry.
The ability to own a Hotel business has become an easier process; with contracts implemented in the 1970’s gives owners expertise in marketing strategies, and little to no upfront financing or equity. Additional benefits available do not have to pay corporate income tax benefits, instead requiring distributing 95% of net income for shareholders. Making this an attractive incentive. Management contracts can be for a few years or long term (20 yrs) and can traded as stocks. Hotels provide great economic impact to communities by providing jobs and opportunities for businesses. Types of Hotels differ from luxuriate, boutique, to budget friendly and can provide the extreme outdoor adventures or even a spa like treatment. Surprisingly not only do we get great food from the French, we also received vacation ownership, which was started in the 1960’s in the French Alp’s. All along I thought this was a 1980’s boom created in Central Florida.
Anna W.
HMGT 1101
Chapter 2 summary# 4
Money flows in several ways, just like how hotels participate in the economic system by impacting it “directly or indirectly”. The direct impact is making money, bringing tourist and increasing employment. An example of an indirect impact is when employees spend money (shopping in the area) from their paychecks- from the hotel- it puts money back into the community. Hotels are often located near the center of the city. Also nearby airports, amusement parks or gambling attractions. It is good to stay at a full service hotel or resort, especially if you need Internet or a business center. Limited service is usually just a room and no outside activities offered. Bed and breakfast is a morning inn, condotels are apartment-hotels and a boutique is a hotel that has something unique about it. Boutique hotels are usually. Independent. Unusual hotels are mainly international ad I think Dubai has an underwater hotel.(?)
My bad here’s the grammar correct version:
Anna W.
HMGT 1101
Chapter 2 summary 4
Money flows in several ways, just like how hotels participate in the economic system by impacting it “directly or indirectly”. The direct impact is making money, bringing tourist and increasing employment. An example of an indirect impact is when employees spend money (shopping in the area) from their paychecks- from the hotel- it puts money back into the community. Hotels are often located near the center of the city. Also nearby airports, amusement parks or gambling attractions. It is good to stay at a full service hotel or resort, especially if you need internet or a business center. Limited service is usually just a room and no outside activities offered. Bed and breakfast is a morning inn, condotels are apartment-hotels and a boutique is a hotel that has something unique about it. Boutique hotels are usually independent. Unusual hotels are mainly international and I think an unusual one is Dubai, because it has an underwater hotel.(?)
Franchising is a term used to describe a concept that allows companies to use other people’s money for growth. Franchising can lead to increased market share and up-front fees. Since the 1970’s management contracts have been responsible for the hotel industries rapid increase. The United States lodging industry consist for 50,800 hotels and motels. Vacation Ownership is the fastest growing segment of the travel and tourism industry. Some of famous hotel chains have their headquarters in Hong Kong.
In chapter 2 is mostly about Franchising and management contracts. This is very important in the development and operation of a hotel. The idea of franchising was created in 1907 by The Ritz Carlton. This helped upcoming companies to use other people’s money for growth and financing rather using money out of pocket. I learned that there are many benefits and drawbacks to a franchise. Two benefits that stood out to me were, National advertising and a chance to be listed in the franchise directory. Two draw backs were, there are high fees and you must always maintain standards. The economic benefits that hotels provide are, direct and indirect. Direct being the T.O.T tax (Transient Occupancy Tax) which is the tax charged to hotel visitors, it benefits the community the hotel is located without the residents of said community actually paying the tax out of pocket. The indirect benefit comes from the hotel employees spending their wages in the area and the hotel buying the goods to service their customers. I learned that there are also pro’s and con’s for a franchise company or franchiser. The pros are the increased market share and recognition and also the up-front fees. The cons are you have to be careful I the selection of the franchise and how the difficult is maintaining the standards/ control. Overall this entire chapter is about telling you how you should start your franchise or company. It’s about knowing if you should build your own business out of pocket or buy it from someone else is the best way.
In chapter 2, we begin with focusing on the Franchising aspect of the hotel industry and its importance. Originated by The Ritz Carlton, in 1907, It allows a company to use other peoples money to further their growth for their hotels. There are downsides as well as benefits for both parties involved. As for the hotel that is franchising, they have the luxury of being listed in the Franchisers directory as well as National Franchising. The franchiser will also have and increased market share as well as more recognition, the negative for them is that they must be very careful in whom they chose to represent them, the same issue can be had for the Franchisee, they must maintain the standards that are provided. Although there are obvious risks involved for both parties, it seems as if this can only hold a benefit in my book. The fact that you would trust a company to maintain the good name of your company should have been set in stone before a deal were to be put in place, I would assume that many steps should and have been taken in order to have enough trust to put your name on the line. The AAA Diamond Award is something that interested me, I believe there was a mention of this in one of the “Oceans Eleven” movies and that seems to be the case, as it is a grading system for hotels, less than TWO percent have a 5 star rating??? That seems to be the dream now. As I read on, my experience within a condominium made the Condotels and Mixed-use hotels stand out to me. In my previous research about the Trump International in Chicago, I found out that this building was part hotel as well as part residential, that makes me believe that my experience with condominiums may seem valuable when seeking a hospitality career. I must say though, a bed and breakfast always just seems comfortable to me, like mom waking me up on a saturday morning with some breakfast, which I’m assuming is some of the lore within this tip of hotel.
The two main driving forces in developing a hotel are franchising and management contracts. Franchising allows a company to use peoples’ money for growth than financing. It is used to rapidly expand businesses. Some advantages of franchising include national advertising, participation in volume discounts and being listed in franchisor’s directory. The disadvantages to franchising are high fees, and conformity. Management contracts have been responsible for the industry’s success since the 1970s. It always a hotel company to manage the property for years.
Liz Cardenas
Chapter 2
In this chapter I learned about franchising. It all began in 1907 by The Ritz Carton. According to the reading franchising is the practice of the right to use a firm’s successful business model and brand for a period of time. Moreover, franchising is a business strategy for getting and keeping customers. The advantage of franchising is to rapidly expand businesses. The franchisee is granted the rights to use trademarks, operating procedures and other business procedures. As a hospitality management student, the reading gives me a clear understanding about the options there is to start a business. In my case, I want to open my own restaurant in NYC yet I rather start my restaurant at my own risks. In franchising there is not always a guarantee you going to success. There are lots of fees, regulations, taxes and more things to follow in a franchising contract. That’s just my point of view!
In chapter 2 I learned about franchising companies and if they were beneficial to our future.While going into the field of hospitality you can decide to either work for a franchise or start your own business. In most cases franchise end up buying failed entrepreneur projects. Franchises have a very strong support system that include cash flow, advertisement,marketing, sites, building constructors and more. Franchises offer small business owners to buy into a franchises business which can help the business stay afloat while the franchise adds that under their name.The benefit of the franchise becoming involved in your business is that they offer training programs and special promotions.
Chapter 2 is all about hotels and different business endeavors related to hotels, such as franchising and contract management. Franchising and contract management are the two main driving forces in the development and operation of hotels. They can both lead to a rapid growth of a company due to great advantages such as national advertising and a centralized reservation system. Franchises can greatly relieve the stress of failure from a new entrepreneur because they are not going into a business alone that may or may not do well; they are becoming a small part of a big business that has already proven to do well, and they are given many support services from the franchisor to help them even more. To my understanding, the main difference between a franchise and contract management is that franchising sells a method of doing something whereas contract management actually does something for a certain period of time.
Chapter 2 also had the different types of hotels and what clientele they may appeal to. For example, a freeway hotel/motel will be a conveniently-placed, reasonably priced place that will appeal to someone who might be on a long trip and needs to rest for the night; whereas an all-suite extended stay hotel would be just the opposite.
As the chapter came to a close, I found the slides about the international perspective very interesting. I never thought of the hotels being such a major part of the global economy until now. I never realized that hotels can make or break a society in the way that they do. “In developing countries, once political stability has been sustained, hotel development quickly follows as part of an overall economic and social progression.” This one sentence says it all. Once a country is fully developed hotels will inevitably begin to be built allowing for social and economic progression. When I first read that, I immediately thought of a game of Monopoly and how you need to have hotels on your properties if you hope to make any money.
Franchising and management contracts are the two external factors that trigger the development and operation of the hotel business. Franchising began in 1907 by The Ritz Carlton. The concept of franchising is that a company grows through the use of other people’s money instead of having to be financed. Once the person who paid the company with the franchise, they have the rights to use the company’s trademarks, opening procedures, and other business procedures. Some of the pros and cons for company franchisor: Pros is that they increased market share and recognition and have up-front fees. The cons are that they need to be careful with selecting franchisees and its difficult to maintain the standards and the controls. There are also referral associations that are similar to franchises but a lower cost. They also share the centralized reservation system and a common image. Each independent hotel refers their guests to the other member hotels. Furthermore, there will be indirect economic impact of hotels around the area where a hotel is located.This is because employees spend money around the area and also the hotel purchases items to serve the guest.
In chapter 2 it was also mentioned that a vacation ownership is a one time purchase price and a yearly payment in which purchasers own their vacation either forever or for certain amount of years. The average cost is $14,800 and $18,500. Vacation clubs or point-based programs provide accommodations in multiple resorts. Moreover, Sustainable/ Green lodging is about hotels using local materials, using natural lightening for lodging construction and building energy-efficient buildings. Last but not least some of the trends are; capacity control, safety and security, assets and capital, technology, diversification within segments, rapid growth on vacation ownership, and increased numbers of spas and treatments.