Before starting any venture it is very important to figure out how the organization is going to…

Before starting any venture it is very important to figure out how the organization is going to build its chain of command. Basically no business is made for short time and for this reason a very careful measurement should be done on ownership. Choosing the appropriate ownership in an organisation depends on nature of business, type of authority, delegation of work, span of organization, type of product, production and operation, legal procedure, financial matters and so on. The basic types of ownership in a business are:

•Sole Proprietorships: This type of business is operated by only one owner. He or she assumes the entire responsibility and financial claims for the business. •Partnerships: It is a business formed by a group of people for mutual profit and liability is usually divided in accordance with capital invested. •Government: Government can have ownership in different areas like centrally or by local government. •Private Limited Company: Private limited companies are quite similar as partnership business and they can offer shares to family members but they cannot make public offering. •Public Limited Company: It is the most advantageous and at the same time complicated form of ownership. It has its own legal entity, needs huge legal requirement, can make public offering and the liability is limited to share capital.

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Types of Hotel Ownership

Different organization demands different form of ownership. In the hospitality industry it is better to have either sole proprietorship or partnership. The reason behind choosing these two types of ownership is the nature of hotel business. This business is not like something giant production or supply chain oriented. On the other hand government ownership discourages creativity. So if it is managed by one person or a group of people then it will be easier to operate rather than panicking with legal papers. The owners can freely concentrate on the business and its customers. As ownership varies from business to business, hotel is no exception in this case. Hotels mainly have three type of ownership to run and manage the business and these are franchise, privately owned and operated and leased. This ownership types are presented below:

1.Franchise Model:

A franchise hotel or chain hotel is very common type of ownership. The operations are basically based on the brand image and through maintaining and using this image the hotel will earn a sustainable profit. Here the hotel’s owner heavily relies on the good image of the brand and if the brand loses popularity with consumers, the owner’s business suffers at the same time.

2.Privately Owned and Operated

This type of hotel ownership is the most common especially in small hotels. Here the owners enjoy full freedom for operation and has to encounter huge risk.


Leased hotels are also privately owned, but the physical hotel building belongs to someone else. These types of arrangements are generally on long-term leases. The lesser will stipulate a minimum rent for the premises and may also include a sliding scale based on total revenue for ongoing rent.

By Hannah Wickford, eHow Contributor

In this current era, the types of ownership observed in hotels are quite diversified the ones in the past. According to Fox, the types of ownerships in the past were mostly corporate body or single owner. But in the coming years more than 50% of the hotel industry will be dominated by franchise business or chain business. Group of hotel will also have significant increase in the future. Now owners are focusing on budget hotels or resorts more than going for any business class or luxury ones.

On the other hand the management system in hotels are mostly decentralised in this business, but now a days the owners are quite willing to change this way of operating business. Owners are becoming more interested in doing centralised control over their business. So according to the observation it can be said that both the group of hotel and chain hotel are the best way to start hotel business. This gives owners a well-diversified option with good opportunity. They can concentrate on several locations with a specialised theme and develop themselves accordingly to offer the best product to their target market. The management system can be either centralised or decentralised based on the nature and demand of the business operation.

4.Explain how and why customers could use the different classification and grading systems when deciding on where to stay.

Different Classification of Hotels

Hotels are classified on the basis of the service, facilities, size, stars, location and many more. At one side there are luxurious hotels for celebrities, on the other side there are budget hotels for normal family need. Through this classification customers can easily identify which one will match their needs best.

•Resort Hotels: Resort hotels are basically built to facilitate customers’ holiday or trip on a certain season. They can be small one offering accommodation and food or big one offering additional services like spas, pools, beach or mountain locations, on-site kids’ activities, restaurants, pool bars and babysitting services. •Airport Hotels: Airport hotels provide facilities for air travellers. They usually have guest for very short time and many of them provide business travellers services as business people are a mass air traveller.

•Economy Hotels: Economy hotels or budget hotels provide basic services to its guest at a cheap rate. These hotels are basically attractive for family accommodations and economic people who do not need luxury. •Suite Hotels: Suite hotels have separate services room for different customers so that there is no interruption between different customers. If they offer both business and family services then they built separate service area so that the customers are not disturbed by each other’s appearance.

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