Question

1-As a hotel owner what are the advantages and disadvantages of using a management company?

2-What are the issues GM's must address when operating a hotel for a management company?

Answer 1

Ques 1.

A management contract is a type of outsourcing agreement where you hire a third party, called a management company, to manage a project, function or work department for you. For example, you might have a management company take over the marketing or bookkeeping on the company's behalf.
One area in which management contracts are common is in the Hotel industry. Here, the term management contracting describes a type of procurement where a single firm (the management contractor) assumes responsibility for managing the execution of the entire hospiatlity project. This method of hospitality management has advantages and disadvantages which are largely the same as management contracting in the broader business sense.

Advantages of management contracts:
1)   Saves Time and Resources: For small businesses in particular, a management contract can save time and resources. Handing over operational control of the marketing or the bookkeeping, for example, means you do not have to worry about these functions. This frees up staff to focus on core priorities such as product development or establishing your position in the hotel industry.
2)   Provides Expertise: For a small business, signing a management contract can help you distribute staff responsibilities in a more efficient way. If your customer services team is having to handle its own bookkeeping, for example, then outsourcing this function will free up time for customer services to do what they do best — keeping customers happy. You'll waste less time troubleshooting problems you're not familiar with, and you'll look better in the eyes of customers too. Customers tend to notice when your back office procedures are below par.
3)   Saves Money: If the business function is important (like accounting) but not yet large or important enough to justify hiring a full-time employee to handle it, then management contracting could be the ideal solution. Most contracts are structured so you're only paying the management company for the services it provides. This can save you money, especially if you pay the company according to the profits they generate or the money they save.

Disadvantages of management contracts:
1)   Reputation Damage: Signing a management company means you're trusting your business reputation to people who are located outside of the business. There's much less transparency into what these people do each day, and you don't have the ability to step in and course correct if the company falls behind on performance goals or timelines.
2)   Conflict of Interest: The best management companies have a lot of clients. Conflict of interest issues are fairly common, and you must resolve these if you don't want your confidential information falling into the wrong hands. Be aware, too, that some third party suppliers will block you from signing a management contract. These companies have specific terms which prevent their information being handled by another entity.

The Bottom Line
Management contracts are an established way to share the burden of running your company, especially when you are lacking time or resources in a specific area. The management company will receive an agreed fee for its services, so you know upfront what the cost burden is, while ensuring that tasks are performed to the highest of standards.

Ques. 2

Here are a few issues General managers face:

1)   Changing Customer Expectations: With the development of administrations like Uber and different applications that make moment results potential, purchasers are starting to anticipate a similar degree of comfort, personalisation, and productivity wherever they go. A few inns may need to overhaul programming and different advancements just to stay aware of the requests of their visitors, and others may need to enlist IT advisors or well informed staff to help with execution and preparing. Inns must stay aware of their visitors, which is more enthusiastically than it's at any point been.

2)   Keeping Up With The Latest Technology: Increasingly, inn visitors are turning out to be well informed and request and expect comforts like Wi-Fi, USB ports, progressively electric outlets, level screen TVs, etc. Lodgings can likewise streamline work processes and frameworks utilizing the most recent innovation, which is frequently costly however advantageous. This expects chiefs to keep awake to-date with new improvements, and locate the correct applications and programming to meet their evolving needs. "Future sealing" is about unthinkable during a time where headway is consistent, and inns make certain to have various needs after some time.

3)   Long and Irregular Working Hours: This is nothing new in the persevering neighborliness industry. Because of progressing requests and the idea of the inn business, mindful people should be nearby about all day, every day. Regardless of whether those obligations are separated among a few people, as they normally seem to be, an administrator's hours are frequently long and unpredictable.

4)   Maintenance and Renovations: Here, as well, client and official desires are moving quick. The GM's must stay up with the latest, and up to the models of the visitors. Continuous development, redesigns, upkeep, and innovation expenses can include quick. This makes adjusting the books significantly harde