Hotel Management and Operations

Often even before the construction activity commences, the owning entity selects an ap- propriate management company to manage the pre-opening, marketing and sales, selection and training of the opening staff, preparation of the operating budget, and day-to-day operations once the hotel is opened.Manage-
ment companies charge 3–5 percent of revenue for this service. In recent years, management companies have charged 3–4 percent of revenue and 2–3 percent of grossoperating profit so they can be measured and evaluated on both sales and profitability.

The franchise company may offer to pro-vide management services to franchisees.
Marriott International, Inc., for example,manages about 50 percent of all hotels that carry the Marriott flag under 20-year contracts. Independent management companies manage the remaining hotels under long-term
management contracts of up to ten years’ duration, often with several five-year renewal options.