4.Finance For Hotel Development

To understand the nature of supply in the international hotel sector it should be remembered that it is a sector that has high fixed investment costs and it is possible to divorce ownership of assets from their operation, e.g through management contracts.

The capital structure of the sector relates to the source of capital for funding the buildings or fixed resources of the sector. Given the capital-intensive nature of hotel investment,
availability of capital is a key driver in the development of the international hotels and hotel companies. The main sources of capital for international hotel development are :

• Private finance through personal savings
• Loan capital through banks and other sources, often secured on property assets
• Finance provided by specialist investment companies
• Through stocks and shares (equities ) in a company : these can be traded in the stock market
• Government.

In some cases there may also be tourism/hotel accommodation Financed by local cooperatives organisations such as conservation/historical/sporting trusts and associations.major financial arrangements are as illustrated:

In most cases, private finance allows owners to have direct control over the busies. Many operations may be small units that are only partly devoted to the hospitality industry e.g. guest house where room letting makes up only part of a family's income.

Private finance largely depends on personal access to large amounts of capital. thus big businesses of either single or multiple hotels may arise when asset and income distribution is such that it allows sufficient concentration of wealth. Personal ownership will be favoured when capital markets are relatively less developed. it is also feasible that international capital.