.Management Contracting

Here asset ownership nd operation are separated. This might happen where the hotel owner is, for example, an investment company that has no expertise in hotel managemnt, and enters into an agreement with a hotel operator to run the hotel on their behalf, in return for a management fee. In these arrangements there is clearly anexpectation that the ownersexpect that the contractor wil be able to run the operation more effectively than could themselves.

it is possible that a government, or its agencies , may oerate hotels. However, even when governments played a more active part in hotel ownership, the operation was often put out to management contract and the current decline in direct hotel asset ownership in many countries has further decreased government operation.

The attractions of belonging to a hotel chain largely centres around the ability to gain economies of scale.while hotel units may operate mre effectively as they grow in size , eonomies of scale for hotels laargely express themselves at corporate lavels of the organisation, as well as through the enhanced risk of diversification gained by the possessionof a geographically dispersed portfolio of properties. In many case the popularity of branded operations has both pushed established operators to develop and internationalize their chains further, while also providing salle orators with a clear4 rationale for giving up an element of independence through joining consortium membership or franchising agrements.