10 Questions
What is one of the primary reasons for engaging a hotel operator?
To secure financing from banks, which often require professional management
According to the passage, what is one potential benefit of engaging a branded hotel operator?
Guests are willing to pay higher rates for a branded hotel product
Which of the following is NOT mentioned in the text as a potential advantage of engaging a branded hotel operator?
Opportunity for legal and tax advisory services
According to the passage, what is a potential drawback of engaging a branded hotel operator?
Higher operating costs due to the fees charged by the operator
What advice does the text provide regarding the decision to engage a branded hotel operator?
Thoroughly investigate the options, as management agreements are long-term commitments
What is the typical range for the length or term of a management contract?
10 to 25 years
Which of the following statements about management fees is correct?
Incentive fees are often calculated as a percentage of adjusted gross operating profit (AGOP).
What is the purpose of adjusting gross operating profit (GOP) to arrive at adjusted gross operating profit (AGOP)?
To calculate the incentive fee for the operator.
Which of the following is NOT typically included in the adjustments made to gross operating profit (GOP) to arrive at adjusted gross operating profit (AGOP)?
Marketing expenses
What impact can unpaid or subordinated management fees have on the value of the investment?
They may become debts chargeable upon the property, reducing the value of the investment.
Learn about the rationale behind engaging a hotel operator for a hotel project, including the impact on financing and risk reduction. Understand how professional management can lead to increased profitability for debt service.
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