Management Contract

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19. Discuss the advantages and disadvantages of management contract to both the hotel owner and the management company? The advantage of the management contract is: The management contract incurs minimum risk to the company as compared to sole ownership and joint-venture development since the management company has little or minimal equity invested in the hotel. The hotel management company only assigns a group of professional managers to operate the property for the owner. If political crisis occurs, the management company can withdraw quickly without suffering heavy financial losses. The host governments in developing countries also encourage management contract operations, since they are considered an important management…show more content…
Operational control refers to authority over management decision making and strategic development. Resource commitment is the amount of equity invested in the property. Potencial risk refers to the uncertainty of political and economic stability of a foreign country. The analysis of market entry choices and the three development factors can assist international hospitality companies in identifying the appropriate strategy for entering a foreign market. The appropriate choice of entry strategy can have a major and positive impact on the success of a company’s international operations in both developed and developing countries. 23. What are the three major components of hospitality organizational structures? The three major components of hospitality organizational structures are operational control, resource commitment, and potential risk. 24. How is a strategic plan formulated and implemented? The Strategic Planning Process: Mission &Objectives, Environmental Scanning, Strategy Formulation, Strategy Implementation, Evaluation & Control. 25. What are the three criteria for organizing international hospitality operations? The three criteria for organizing international hospitality operations are: business functions, product lines, and geographic locations. 26. Why didn’t Accor promote its Formula 1 brand in the United States? Accor is now actively
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