Hotel Front Office Management, 3rd Edition

20 CHAPTER 1: INTRODUCTION TO HOTEL MANAGEMENTCompany-Owned PropertyA company-owned property, a hotel that is owned and operated by a chain organization,allows the hotel company developer to act as an independent entrepreneur. Thehotel company developer operates the hotel property in competition with all other propertiesin the area. It uses its own expertise in site selection, property development, marketingand advertising, and operations management. The hotel company developer recruitstalented professions into the organization to manage such properties. It uses thechain’s reservation system. The hotel company developer may set a limit on the numberof franchises so that a majority of the properties remain company-owned.Management Contract PropertyA management contract property, a hotel that is operated by a consulting companythat provides operational and marketing expertise and a professional staff, is similar toa referral property. There are several management contract organizations that developbusiness relationships with existing hotels and operate the hotels as their own. Theirbusiness relationship requires financial accountability and profitability. Management contractcompanies may choose to operate each hotel as a member of a franchise or as anindependent.Independent PropertiesAn independent hotel is one that is not associated with a franchise. It provides a greatersense of warmth and individuality than does a property that is associated with a chain.Independent hotels have particular characteristics, which include an owner who functionsas a manager, room rates similar to chain properties, rooms decorated in different styles,and inviting dining rooms. These hotels may be residential or commercial, with locationsin the center city, suburbia, along the highway, or near an airport. The number of roomscan range from 50 to 1,000. They may offer full services to the guest, including suites,dining room, room service, banquets, gift shop, beauty shop, athletic facilities, swimmingpool, theaters, valet services, concierge, and airport shuttle service. Some older independenthotels have refurbished their suites to capture their share of the all-suites market.With all of these advantages, why aren’t all lodging properties independent? The answerlies with the U.S. economy. The development of large chains and of smaller propertiesoften brings tax advantages and improved profits to investors. Millions of dollarsin capital are required to develop a 2,000-room full-service property. Business, financial,and managerial expertise is more readily available in a company in which there is a poolof skilled experts. Large corporations can also offset financial losses in certain fiscal yearsor from certain properties against financial gains of other companies or properties in theirdiversified portfolios.The independent entrepreneur operates his or her business without the advantages ofconsultation and assistance. This person may have worked for a large chain or gained aTLFeBOOK