4900 Majestica Hotel in Shanghai case

4900 Majestica Hotel in Shanghai case - M ajestica Hotel in...

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Majestica Hotel in Shanghai? Case 9 To: Prof Jung- Chin Shen June 13, 2007 Prepared by: Group 3 Abigail Dalogo 208 151 276 Wioletta Fidera 206 487 193 Aloysius Govias 206 696 090 Neha Prasad 206 480 529 Qiong Yang 207 327 356 Bo Yin 205 724 125 Katie Yu 206 488 225
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Summary: Majestica Hotels Inc. is planning a late arrival into the Asian Pacific hotel industry. It is currently in midst of negotiations with CPS (Commercial Properties of Shanghai Ltd) a government subsidiary assuming the role of owner and Majestica as the operator of the hotel. However the negotiations have reached a deadlock with many issues that need to be resolved before an agreement may be reached. The dispute reflected the conflict between Majestica’s operating philosophy and CPS’s own approach as the owner. Issues and Analysis: Length of the contract term 50 year contract : a 50 year contract as suggested by Majestica means that it would give both parties ample time to adjust and fully establish the hotel in China’s industry allowing Majestica to concentrate on its own ownership plans for the future. However it could also prove to be too long for the saturated market in Shanghai. 30 year contract : although not as long as the 50 year contract, a 30 year contract is still long term for Majestica to establish this hotel and gain knowledge on the hotel industry from this strategic alliance. Additionally the operation period may also be extended to another 30 years giving Majestica an exit strategy in case of failure. Name of the Hotel
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This note was uploaded on 01/26/2010 for the course ADMS 4900 taught by Professor Jungchinshen during the Spring '10 term at York University.

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4900 Majestica Hotel in Shanghai case - M ajestica Hotel in...

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