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According to the China Tourism Academy, there are 2 million hotel rooms in China in 2011. By 2016, this number is expected to reach 5 million. Currently, 1,700 starred hotels are under construction in China. And nearly 70 percent of the world’s first-class hotel groups have established a presence in China, regarding the country as a major investment market for the next decade.
Amid the rapid expansion of the hotel industry, there are also huge risks. For hotel management companies, these risks are mainly in the expanding demand in investment and management. It is essential for them to maintain stable and powerful control over the risks and achieve win-win cooperation with hotel owners.
Hotel management consists of four stages—contract signing, engineering and technical support, opening preparations and regular operations. Risk control should cover all these stages.
Once a hotel management contract is signed, it will have the force of law for 10 to 20 years. So before signing the contract, it is essential to be clear about the qualification, property rights and debt of the partner, to avoid risks in long-term cooperation.
First, we should ensure the company possesses the legal qualifications and adequate capital for regular operations. Second, we need to make sure the hotel owner owns the whole property of the hotel and its ancillary facilities or the right to use them, and has legally acquired the land use rights, within the contract period. Third, it should be made clear the hotel owner must shoulder all the claims and debts that emerged before the company operating the hotel was registered.
During the engineering and technical support stage, it is essential to implement construction and decoration standards. The hotel’s design and functional layout directly affect its future operations. First-class international hotel groups all have unified standards. The standards clearly define the theme, color and decorative style of member hotels and regulate the hotels’ functions, spatial parameters and energy consumption targets. A full implementation of these standards can ensure the hotels best match customers’ expectations.
Team building, facility installment and business license application are the key tasks at the preparation stage before the hotel is opened.
The 10 months before the hotel is opened is the preparation stage. At this stage, we should select hotel managers and the whole management staff, establish the preparatory office and launch the recruitment of all the working staff. All the hotel rooms, restaurants, conference rooms and office facilities should be ready. And all the necessary consents, approvals, licenses and permits should be acquired and come into effect. The hotel management group should keep a record of all these certificates in the meantime.
Duty segregation, operating standards and security are the key for risk control at the regular operations stage.
A clear segregation of duties will ensure a fluent hotel management. Also, the hotel management group should guide and supervise various departments of the hotel to implement management based on the operating manual. It should establish unified room reservation systems and financial control systems, to achieve the most secure source of income and financial management. In addition, a security control mechanism should be developed so that the management team can be active in the maintenance, debugging and updating of hotel facilities.
The rapid expansion of the hotel industry is irreversible in China. Both hotel management companies and hotel owners should attach great importance to the risks emerging at different stages. Prevention is far better than emergency actions.
Amid the rapid expansion of the hotel industry, there are also huge risks. For hotel management companies, these risks are mainly in the expanding demand in investment and management. It is essential for them to maintain stable and powerful control over the risks and achieve win-win cooperation with hotel owners.
Hotel management consists of four stages—contract signing, engineering and technical support, opening preparations and regular operations. Risk control should cover all these stages.
Once a hotel management contract is signed, it will have the force of law for 10 to 20 years. So before signing the contract, it is essential to be clear about the qualification, property rights and debt of the partner, to avoid risks in long-term cooperation.
First, we should ensure the company possesses the legal qualifications and adequate capital for regular operations. Second, we need to make sure the hotel owner owns the whole property of the hotel and its ancillary facilities or the right to use them, and has legally acquired the land use rights, within the contract period. Third, it should be made clear the hotel owner must shoulder all the claims and debts that emerged before the company operating the hotel was registered.
During the engineering and technical support stage, it is essential to implement construction and decoration standards. The hotel’s design and functional layout directly affect its future operations. First-class international hotel groups all have unified standards. The standards clearly define the theme, color and decorative style of member hotels and regulate the hotels’ functions, spatial parameters and energy consumption targets. A full implementation of these standards can ensure the hotels best match customers’ expectations.
Team building, facility installment and business license application are the key tasks at the preparation stage before the hotel is opened.
The 10 months before the hotel is opened is the preparation stage. At this stage, we should select hotel managers and the whole management staff, establish the preparatory office and launch the recruitment of all the working staff. All the hotel rooms, restaurants, conference rooms and office facilities should be ready. And all the necessary consents, approvals, licenses and permits should be acquired and come into effect. The hotel management group should keep a record of all these certificates in the meantime.
Duty segregation, operating standards and security are the key for risk control at the regular operations stage.
A clear segregation of duties will ensure a fluent hotel management. Also, the hotel management group should guide and supervise various departments of the hotel to implement management based on the operating manual. It should establish unified room reservation systems and financial control systems, to achieve the most secure source of income and financial management. In addition, a security control mechanism should be developed so that the management team can be active in the maintenance, debugging and updating of hotel facilities.
The rapid expansion of the hotel industry is irreversible in China. Both hotel management companies and hotel owners should attach great importance to the risks emerging at different stages. Prevention is far better than emergency actions.