Hotel Management Company Case Study

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To have a better understanding of management companies, it is important to first understand what is a management company. For the purpose of this paper, we will confine the definition to the hospitality industry. In the hospitality industry, the management company is an organisation hired by a group of investors or owners of a hotel or hotels to manage their hotels or resorts for a management fee. These management companies are made up of experienced managers who have worked in the hotel sector for some time and have established track records in their respective fields. They usually provide services such as accounting, general administration, maintenance, recruitment, and secretarial services. In short, they run the hotel or resort on your…show more content…
Simply put, the hotel management company handles anything that the owner does not wish to deal with. They will assist the owner in creating a business plan and will work with him / her by giving suggestions regarding design, layout and even the marketing plans for the launch or re-launch of the hotel.
All the owner wants is to see that his investment gives him the proper returns that he expects. In this case, he leaves it entirely to the management company to do the proper groundwork and assessment be it design, location, target markets and expertise that they may hire. Hotel management companies are an excellent choice for any hotel owner as these companies relieve the stress of business operations. Owners want to watch their investments grow without actually managing their establishments and therefore, this arrangement makes good business sense. There are several hotel management companies across the world which gives business owners a wide pool to consider and to choose which ones would suit them
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These contracts may include pre-opening services and include activities like hiring and training staff, purchasing inventories and operational activities that must be done before the first guest enters through the door. With the operating agreement in place, we should look into a summary of the advantages and disadvantages of hiring management companies to run the show for you.

SUMMARY OF ADVANTAGES

• Targeted expertise - the right company chosen will ensure that the expertise is there from the opening day.
• Proven Expertise – A proven track record will ensure that the hotel will be well positioned going by the past successes in running similar hotel properties.
• Pay For Performance – in addition to the agreed fees, owners can incentivise the management companies by tying them to a performance bonus for the revenue generated.
• Partnership Opportunities - Hotel owners with multiple properties can take advantage of the partnership that will be built over time with the chosen company.

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