Foundations of Lodging Management Ch. 1-4

average revenue generated by each hotel guest
Occupancy Rate
Used to measure performance
Total room sold/Total rooms avail.
Franchise Agreements
-on average will equal from 3% – 15% of revenue the hotel generates from selling rooms.
-Fees paid to a franchisor are negotiable part of the franchise arrangement
-Franchisor pays how much?
Average Daily Rate : total revenue from room sales/ total # of rooms sold
Opaque Rate Model
person “bids” on room and doesn’t know that it looks like.
Merchant Model
Examples are:,,, etc.
4 functions of management
The amount of profit made from room sales divided by the # of rooms available to sell

-Gross, Operating, Profit, Per, Available, Room

Gross Operating Profit /Rooms avail. to sell

First tier management companies
Management companies that operate hotels for owners using the management company’s trade name as the hotel brand (Hyatt, and Sheraton are examples)
Second tier management companies
Management companies that operate hotels for owners and do not use the management company name as part of the hotel name. (American General Hospitality, Summit Hotel Management, and Winegardner and Hammons are examples)
The name of a specific hotel group. (Holiday inn and comfort Inn are two different brands)
Management companies
improved management quality
documented managerial effectiveness is available Payment for services can be tied to performance Partnership Opportunities are enhanced
Management contract
Agreement between a hotels owners and a hotel management company under which, for a fee, the management company operates the hotel. Also sometimes called a “management agreement” or an “operating agreement.”
online travel agent; offer travel booking services online; opaque and merchant models.
Global Distribution System
system that connects travel professionals worldwide for the purpose of reserving hotel rooms and other services for clients.
reduction in the value of an asset as it wears out. Non cash expense is often termed a “tax write off” because of the decline in the value of the asset is tax deductable.
increase of value over time
Employee Guest Ratio
the number of employees relative to the number of guests. In the lodging industry this is expressed in terms of employees per room; a 500 room luxury, full service property may have 500 employees: a 1:1 ratio. A 100-room limited service property may have 25 employees: a 1:4 ratio.
after tax profits/total hotel investment= %
Holiday Inn
first chain
Franchise service director
FSD- representative of franchise brand who interacts directly with hotel franchise
Furnitures, Fixtures, and Equipment
line level
employees are paid per hour wage not salary
to serve as a personal teacher AKA guide or coach

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