Matakuliah : G0424 – Hotel and Restaurant Management
Tahun : 2008

• Sole prorietor
• Partnership
• Franchising and licensing
• Hotel management

Learning Objectives
Students are able
• To identify hotel structures
• To understand the differences between division
• To identify the hotel management concept
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• One corporation owning several hotels
• Parent company with individual subsidiary owning each hotel
• Joint venture & partnerships]
• Leasing, Profit sharing lease,
Sale & leaseback
• Management contract
• Franchise & Licensing agreement
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• Sole proprietorship is the same as one company owning several hotels.
• Some use the term of corporation, ie. PT, Ltd., Inc, Plc.
• Hotels are owned and operated by a single company and act as an independent enterprise.
• The company may use its own expertise in managing the property, start from site selection, hotel developemt, marketing and operation.
• It may use the chain's reservation system.
• Examples: PT. Sofyan Hotel owns Sofyan Cikini, Sofyan
Menteng and Sofyan Tebet.
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The advantages and disadvantages of Sole
Proprietorship
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It doesn't pay corporate taxes but pays personal income taxes on the profit made.
The accounting system is much simpler.
Can have total control over the company
Decision can be made quickly without having to consult others.
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Single owner takes all the risks.
A hard time raising the capital.
Limited liability company.
Hiring employees may be difficult.
All debts are debts of the owner.
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• Holding company is the term used for parent company with individual subsidiary owning each hotel.
• It is a corporation that owns enough voting stock in another firms to control management and operation by influencing or electing its board of directors.
• It may operate hotel chains either using the same name or different brands.
• Examples: Accor group Upper upscale
Mercure
Sofitel
Pullman
Novotel
Suite Hotel Adagio
Upscale and midscale
Economy
Allseasons Ibis
Budget
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Motel 6 Etap Formule 1

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Possible to obtain control of another company with less investment.
Easily to get additional debt financing from other
SBU.
Allows for decentralized management
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Complexity and complicated in management and operation.
Growth of monopoly over the companies.
Chance of fraud – double tax report.
Bina Nusantara University

• Joint venture is a contractual agreement joining together two or more parties for the purpose of executing a particular business undertaking.
• All parties agree to share in the profits and losses of the enterprise.
• In partnership, the companies are joined together to run "a business in common".
• A partnership is a type of business entity in which partners
(owners) share with each other the profits or losses of the business undertaking in which all have invested.
Bina Nusantara University

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Opportunity to gain new capacity and expertise
Enter geographic markets or new technological
Access to greater resources,
Sharing of risks with a venture partner
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Takes time and effort to build the right relationship.
Objectives of venture are not 100% clear and communicated.
Different cultures result in poor integration and cooperation.
The partners don't provide enough leadership.
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• Leasing is the way of one person (called a tenant or lessee) to possess property belonging to another person
(called a landlord or lessor) to be managed and operated.
• Profit sharing lease is one type of leasing where the lessee and the lessor are shared the profit earn from the management and operation.
• Sale and lease back is a common type of leasing in hotel industry where the lessor 'sells' the property, the lessee operates and the property will be returned back to the owner after a period of time.
Bina Nusantara University

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Less capital-intensive
The company grows more rapidly.
Leasing shifts risks to the lessor
Leasing may provide more flexibility to a business.
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Bina Nusantara University
If a business must change its operations significantly, it may be expensive or otherwise difficult to terminate a lease before the end of the term.
If the business is successful, lessors may demand higher rental payments when leases come up for renewal.

• A management contract is a contract arrangements to more easily obtain economies of scale, a global reservation systems, brand recognition etc.
• It is used when the company is lack of local skills to run an operation.
• A management contract can involve a wide range of functions, such as technical operation of a production facility, management of personnel, accounting, marketing services and training.
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 It is an alternative to foreign direct investment.
 It doesn't involve high risk
 High yield return on investment
 It has limitation of contract time periods.
 There is restriction on entry arrangement.
 Fee of 3.5% of total revenues and 6-10% of gross operating profit should be paid to 'brand'.
Bina Nusantara University

• Franchising refers to the method of practicing and using another person's philosophy of business. The
"franchisors" authorize the proven methods and trademarks of their businesses to "franchisees" for a fee and a percentage of gross monthly sales.
• The verb license means to give permission. License may be granted by a party ("licensor") to another party
("licensee") as an element of an agreement between those parties. A shorthand definition of a license is "a promise (by the licensor) not to sue (the licensee)."
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 A well run franchise would offer a turnkey business: from site selection to lease negotiation, training, mentoring and ongoing support as well as statutory requirements and troubleshooting
 Franchisors are able to expand rapidly across countries and continents
 For franchisees, the main disadvantage of franchising is a loss of control.
 Starting and operating a franchise business carries expenses.
 The franchisor/franchisee relationship can easily cause conflict if either side is incompetent (or acting in bad faith).
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 The possibility of local company to product and market the product.
 Licensor get a royalty.
 Such agreements usually involve the use of the trademarks, patents technical know-how, specialized equipment, training, etc.
 Earn some money without many hesitation
 It may be difficult to find a suitable local firm.
 Lose control of your technical
"know-how".
 Local partner may not fulfill his part of the agreement.
 The licenses may become an eventual competitor.
Bina Nusantara University

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• Hotel can be managed with various kinds of concept.
• It can be in a single or mixed concept.
• Each concept has its own benefits and costs.
Bina Nusantara University 21