OWNERSHIP AND FORMS OF HOTEL OWNERSHIP INTRODUCTION- India is recognized as a land of friendly atmosphere and hospitality at globe.

GUEST IS GODis the typical Indian traditon. Today hotel industry is getting momentum not only in India but at global level.The W.T.O(world tourism organisation) has estimated that there will be more than 20 million rooms world wide in the accommodation sector by the end of this centuary. The 20th centuary was a turning point in the history of the hotel industry in India.it is this centuary that we find the real growth and development of the accommodation sector.OWNERSHIP has changed from sole proprietors to corporate and big business owners and new enterpreneures have also entered in the field of accommodation sector. In 1904 J.N TATA opened the taj mahal hotel in mumbai.there after a number of other hotels were openedsuch asAjanta,New woodland grand hotel,wild flower hall,oberio hotels east India hotels ltd. Before deeply study we have to know the mean of hotel and its defination

HOTELS DEFINATION A hotel is an intituation or a building in which lodging,meals and other services are provided for the traveling people. In addition, it also provide amenities and facilites like Room services Auto rentals, Banking service,postal services Airline ticketing internet services tour reservation A hotel is a fixed immobile intallation.its products are accommodation+food+beverages and other services can not move to the tourists. OWNERSHIP The word Ownership here referes to legal and encompasses a number of rights and duties. The selection of suitable form of organition is based on various factors such as Capital reuirement,legal formalities,tax incentives Limited liabilities,professional requirement,location,nature of business,size of business Market factors,demographic,geographic,behaviouristic variables etc. A hotel business have following types/forms: 1. Proprietorship 2. Partnership 3. Corporate firm Public Private Govt. MNCs

Propritership when a hotel business is owned,managed and controlled by an individual who is the sole owner and has sole right to profits he/she is called proprietor.however he is liable for the all debts,losses,obligations and taxes of the undertaking.Practically he bring finance,manageactivities,gets profits/income and takes all decisions relating to the business.main features of propritership are: Easy to establish/dissolve It has no existence apart from its owner It is still the most popular form of hotel business organization,on account of the following advantages: Low cost of establishing organisig Quick decision Flexibility in operation Only to file one tax return Free from legal restiction

PARTNERSHIP A hotel business is said to be a partnership form,if it is jointly owned by two or more persons i.e20 in caseof hotel businesss.according to Indian partnership act.1932,partnership is the reltionship between persons who have agred to contribute money or moneys worthand share profit or lossof a business with agrement among the partners to finance,manage the operation and share the profits/losses. ADVANTAGES OF PARTNERSHIP Easy formation Lesser risk Division of labour Large financial resources Better management talent Single tax return

DISADVANTAGES Limiyed financial resources Uncertain existence Unlimited Liabilities Less public confidence

JOIN STOCK COMPANIES Most of the companiesare being incorporated on the basis of joint stock companies. According to haney,company is an artificial person created by law having a seprate entity with the perpetual succession and a common seal.Thus, it is in fact a form of Corporate,that is a seprate legal entity all on its own.

1. Today,approximately more than 50% of hotel business are organized and operated as corporations

CORPORATE FORM OF HOTEL BUSINESS 1. Private co. 2. Public co. 3. Govt. co 4. Foreign co. 5. Holding and Subsiding company 6. MNC In India which are formed and incorporated under the companies act 1956 and under any of the previous companies laws.These companies are of different types. There are various types of companies. The main hotel companies can be divided in to two categories Private hotel companies Public hotel companies Most of the hotels in India are being run by private and public hotel companies.to get the advantages of chain operation,hotels can be owned and operated in varied ways.The main objects of separating a hotel with in the accompany are To reduced the losses of assests in the even of the bankrupty of an individual property To prevent t5he loss of chain and other assests in the event of law suit made by creditors,guests,clients,employees,shop tenants,musicians,or third parties that have a contractual relationship with the hotel To avoid taxation of other earnings of the chain by maintaining seprate corporate for each operation To maintain the agreement made with the landlord or partner in the term of either a rent calculation or profit participation

Advantages of the corporate form of hotel business ownership 1. 2. 3. 4. 5. 6. 7. 8. Disadvantages 1. More statuory requirweements Seprate legel entity Limited debts and obligations Larger financial resources Transfer of ownership/shares Economies of scale More tax option and incentives Expert management Unlimited management

2. higher expences of formation and organition 3. need to file two tax returns 4. Sepration of ownership and management

REERRAL ORGANISATION Referral orgation are organized on a non profit basis.these are owned and controlled by the members.these association were formed when it was relised thst such orgations were necessary to overcome the harmful publicity that road side publicity recived. Features of the referal organisaiton are as follows Their main purpose was to help yhr individual operator to polish themselves To gurantee the maintainance of proper standard as well as to undertake cooperative advertising and sales promotion campaign Each referral organization operates areservation system It has certain minium standards which each member must meet in order to maintain his mem mbership Each membe pays annual dues and may also be subject to advertising assessments,which is usually based on so much per room per day with maximum daily total The individual operators pass an insepection of facilites,services standard and charecetr.if his business fails to meet these standards he loses the membership of the association and his identification with the organization Each group is patterned by itys own members and thus reflect the character which best fits the section of the travel market to which they cater As the competion from chains grew,the independents found it more vital than ever to go hand together with others to maintain their place in the travel picture and to survive successfully with the growing chain of the industry. Some of the leading examples are 1. suprior motels inc. 2. western motels inc. 3. Emmons walker 4. americas best choice 5. quality court 6. united inc. 7. alama plaza 8. congress motor hotels 9. best eastewrn best western 10. master hoel association 11. American automobile association CO-OWNER CHAIN

In this case 50% of the stock of the hotel is owned by the local investor and 50% by the parent organition.the responsibility of the selection of the site,desining,finacing,buildung and furnishing and the supervision of hotel operation is primarily of the parent company.e.g travel lodge corporation

NEW TENDS Nowadays there are certain options available to hotel companies,a hotel can be associated with the control of the operation of the hotel is tranfered from the hands of the3 owner to chain operator.this relationship could be in any of the following forms 1. Lease agreement 2. Mnagemen contract 3. Fanchise organisation

LEASE AGREEMENTS There are many hotel co.which operate under lease agreement.the different typee of lease agreement.the different type of lease agreement can be explained as follows:

1. Straight lease agreement The straight lease agreement cover and clearly pecify the responsibility by the payment of certain fixed charges like property taxes,fire-insurance,sewer rent,water garbage disposal.it is the interwest of the landlord to have the property tax and fire tax insurance paid by the tenant,so that the amount of rent recived is anet rent.for a successful operation of ahotel on acontinuing basis a hotel lease should be written for a maximum period of twenty years. 2. Profit sharing leases

Most of the hotels are run on the profit sharing lease basis.the hotel is leased in legal terms to an operator,but the owner by an agreement participates in its profit.it gives abenifit to the landlord to get profit motivated and eliminate the causes relating toinflationin a lease deed. There are various methods of the calculating the amount of rent to be paid under profit sharing lease.some of the formulas are3 fevourable to the landlord and the other to the tenant.the most common formula used in such calculation are: A fixed percentage of total revenue A fixed % of gross operating profit A fixed % of total revenue + % of gross operating profit Gauranted minimum rent

3 Sale and lease back agreement many hotels think that it is has not advantage to own such properties: They might have been acquired a time back and it will be advantageous to convert them in to cash The chain doe not want to be a combination of hotel operation company in areal estate co.and therefore wants to dispose of its hotels. designed to afford certain income tax advantages to the buyer of the property

In all such cases a sale and lease back agrreeement is affected.basically ,it is a financing arrangement

MANAGEMENT CONTRACTS the contract

A management contract is an agreement between aproperty owner

and ahotel management company .the rights and responsibilities of each party are clearly specified within

ADVANTAGES OF MANAGEMENT CONTRACTS The main advantages to the property owner are The management group is followed to increse profits through the uses of their mamagement and talent without the large intial invstment and risk of the ownership. Management contract is an agreement between a management resonbility for the hotel 3. The most common method for calculation fees under the management contract are: 1. A fixed % on total revenue of the hotel 2.A fixed % based on the gross operating profit 3.A combination of the above two methods

co.(operator)and aproperty owner(investor) whereby the operator assumes complete managerial

Benefits to investors Availability of proffesional management Profitable affiliation Borrowing power and possible operation investment

Cost to investors Payment of management fees: The following are the different methods used for the determinig the fees structure for management contracts: 1. A fixed %(3 to8%) of a denfined gross revenue 2. a fixed % of a defined operating income.it varies between 15% to25% Required facilities and standards:

As per management contract ,the operated hotel must meet certain physical specifications pertaining to the size,layout,design and dcor.therefore the operator actively participate in the planning of the new hotels as well as renovation of the exiting ones. Costs to operator The operator has to provide a number of management services to the investor To provide the standard franchise services like reservation system,chain advrtising etc. To provide a staff of regional managers and other specialistists in the area such as foood and bevrage,accounting,marketing and engeneering. THE TERMS OF THE AGREEMENT covered while negotiating amanagement contract: The management agent must be employed as the exclusive operator of the property.

ACCORDING to stepen w.brener,senior vice-president,helmsley-spear the following points should be

Agreement must include detailed budget and policy clause allowing the owner and his consultant the right to review and recommend Agent is responsible for maintanig books and records .those must be accessible to owner or his representative Owner must agree to provide all necessary insurance The agreement must contain a fire clauses as well as a condemnation clauses Both parties must agree to work together to create suitable plans and specifation Agent must agree to properly and efficiently open and operate the business as soon as possible Agent is solely responsible for hiring and discharging all help Agent agree to provide supervisors services of all its executive and special departments The agreement must contain a fire clauses as well as a condemnation clauses Agreement must include detailed budget and policy clause allowing the owner and his consultant the right to review and recommend A fixed basis for payment of the mamagement fee is special out explicity in the contract Defining the fixed % of gross sales for repairs and maintenance is also a necessisty The agreement must contain a fire clauses as well as a condemnation clauses The cancellation clause is casually included.

FRANCHISE ORGANISATIONS

A franchise is an agreement between a hotel company and an independent hotel owner whereby for the owner is allowed to use the name th\e trade marks and various services offrerd by the chain DEFINATION:lococo j an expert on the frachise system has cleanliness. Franchise services: The different services offered by a franchise can be sub-divided into the following broad categories: Methods Technical assistance Marketing

said,The brand name or service must remain a symbol of high standard of quality,services and

BENEIFITS TO FRANCHISEE 1. instant identity 2. reservation services 3. advertising and sales 4. procedure manual 5. management assistance 6. group franchising 7. protection against competion 8. joint venture

BENEFITS TO FRANCHISER Inexpensive and low risk method of expansion: The franchising allows its hotel chain to extend their royalities are attractive to publicity held hotel companies. Allied expansion:

opportunities with minium capital and personal investments.moreover the cash flow franchisee fees and

To support franchises and company owned operation,manyn hotel chain developed packages etc.

allied business-intererior desining,building contractors,furniture equipment and supply dealers,tour

These organitions assists in the selection and trhe development of trhe site,construction,accounting and thew advantages registration. more large companies are entering the field,there have to be advantages that out-weight disadvantages

control.therefore,an identification is streesed and each has itrs own entrance,sign and slogan.it all provides

The holiday inn is the largest hotel operator in the world and controls more than 100 units.since more and