Prelim 1 Reading Notes - HA 1105 Prelim 1 Reading Notes HA...

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HA 1105 Prelim 1 Reading Notes HA 1105 Lecture 2 Readings 1. What are the three characteristics of services that make them different from products? a. Intangibility b. Heterogeneity c. inseperable 2. To the customer the level of service a hotel offers will first be reflected in what piece of information? a. Customer contact employees 3. When was the modern hotel industry, as we know it, born? What caused the first boom in hotel development? Modern lodging industry started in the summer of 1951 when Kemmons Wilson set out to drive to Washington DC for a vacation and was disappointed by the lack of affordable accommodations. 4. How did the major hotel brands expand their market presence in the late 1960’s and early 1970’s? Did this expansion require a lot of capital? Why? a. The major hotel brands expanded in the early seventies because the interstate highway system was expanded. Easy capital from mortgage REITs fuelded the development. Aggressive franchise sales activity by the major brands also contributed to the rapid growth as hotel companies expanded. 5. The advent of market segmentation marked the maturation of the lodging industry into its present form. What is market segmentation? a. Market segmentation is whereby one hotel company would have several brands aimed at several different niches of customers. The advent of market segmentation marked the maturation of the lodging industry into its present form/ 6. Beginning in 1981, changes in the tax laws dramatically increased the attractiveness of hotels as an investment. What were they? a. Accelerated depreciation schedules allowed hotels to operate at a paper loss, providing substantial tax shelters aginst other sources of income. 7. The “go-go eighties” were a time when hotel development boomed. Several factors contributed to the increasing attractiveness of hotels as an investment. What were they? a. Decreased interest rates
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b. Separation of hotel ownership from management (requires al ot of money to open thte doors to a hotel, but once these fixed costs are covered, a larger and larger portion of each incremental dollar in revenue falls to the bottom line 8. The tax reform act was passed in 1986. How did the act impact the hotel industry? Why did the hotel industry see record supply growth of 7.6% in 1987. a. Tax reform act: earned income could no longer be sheltered by passive investment losses. Impacted hotel industry b/c projects inspired prior to the reform swelled the development pipeline, this lead to an industry record supply growth of 7.6% 9. The separation of ownership from management happened when hotel companies realized that they were really a combination of two businesses. What were the two businesses? a.
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This note was uploaded on 09/20/2009 for the course H ADM 105 taught by Professor Rmccarthy during the Fall '05 term at Cornell University (Engineering School).

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Prelim 1 Reading Notes - HA 1105 Prelim 1 Reading Notes HA...

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