Lecture 4 - Introduction to Hotel Operations Lecture 4...

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Introduction to Hotel Operations Lecture 4 Chain Management Company Independent Management Company Third Party Distribution Company REIT Owner, Owner Operator Franchising & Brands Lodging Industry: Unique Characteristics Westin: Creating a Lifestyle Brand
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Chain Management Company Marriott International Four Seasons “Franchise fee” and management fee are combined Four Seasons does not franchise! Case of the Unidentified Hotel (C, B, F, A, G, E, D) The Marriott products (Hotel 7 = D, Fairfield Inn. Hotel 3 = F, Spring Hill Suites) are managed by Marriott. No franchise fees, but management fees are significantly higher.
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Independent Management Company Interstate Hotels – http://www.ihrco.com/
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Third Party Distribution Company
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REIT Owner Host Marriott Case Study At the beginning of 1999 Host Marriott converted from a C- Corp to a REIT and leased its hotel assets to Crestline Capital Corporation , which was spun off from Host as part of the REIT formation transaction. The key issue confronting Host was taxes. .. Hotels had taken advantage of the accelerated depreciation schedules that were available when they were built in the 80s. (Tax Reform Act 1986: 18 yrs - 31.5 yrs) Host was looking at a huge tax liability going forward, expecting to pay upwards of $70 million in taxes in 1999 (almost 45% of cash flow). Convert from a C-Corp to a REIT… no corporate income tax!
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REIT Owner In November 2005, Host Marriott announced that it would purchase 38 domestic and international hotel properties for approximately $4.1 billion. The seller was Starwood Hotels & Resorts, a hotel owner/operator based in White Plains, New York . Starwood would continue to manage the portfolio of 20 Sheratons, 13 Westins, two W's, one St Regis, one Luxury Collection hotel, and one
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Lecture 4 - Introduction to Hotel Operations Lecture 4...

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