| Heading toward 21st century, with the rapid pace of economic globalization and development in hospitality industry, tourist hotels have been pushed into the financial limelight. Many hotels are expanding their capital scale through different models in international capital market, becoming mega-hotel companies. Some experts believe that in the middle of this century there will be only 20 to 30 mega-hotel companies surviving. Different tourist hotels could share their own unique resources through capital expansion, gain a greater share of the market, reduce costs, and seek economies of scale in operations and management size. Analyzing the growth of these successfully run mega-hotels, we can see going public, merger and acquisition, management contract, and franchise agreement are the main ways of capital expansion, and are frequently used. Some hotel groups focus on using one way, while others choosing all of them.For a well run tourist hotel in a certain scale, becoming a publicly listed companies not only can gain a greater share of the market, seek economies of scale in operations and management size, but also can streamline the capital structure so as to get more profit from investment. Most hotel chains are publicly listed companies. For many hotel companies, going public may be the most logical way to access major equity markets and fund major expansion. Domestic tourist hotels need to list on stock market urgently so as to remove any restrain property right from the operation system. But at present, publicly listed hotels are not so professional in service and management so as to get enough publicity and market recognition, as well as stable profit. Some even lack mid and long term development plan, and often make investment without careful market analysis. Generally, publicly listed tourist hotels have opportunities as well as challenges, and may become the most competitive limelight in capital market.The globalization of the hospitality industry has pushed mergers and acquisitions of tourist hotels into the financial limelight, Economies of scale, globalization, the need to have representation in key markets and access to new markets, and saturation in home markets have all played a part in the movement toward expansion through mergers and acquisitions. Consolidation in the hospitality industry is often viewed as a "survival of the fittest" syndrome. Because of product oversupply and the hotel chains' voracious appetite for growth, firms have been acquiring each other in a feeding frenzy. In the end, the predominance of a few large national and international corporations or mega-chains is likely to prevail. An increase in the percentage of rooms affiliated with major chains, and the growing concentration of roomsin the hand of a few solid organizations such as Hilton, Holiday Inn and Accor - whose international multi-site operations have the capability of attracting a broad customer base.As China has entered the WTO and Beijing has been the host city of 2008 Olympic Games, the domestic hospitality industry shows its vigor by frequent mergers and acquisitions. Equity exchanges were often used for its flexibility. Besides, debt - equity exchanges, issuing stocks or bonds, lender - party sourcing and etc are kinds of ways used in mergers. Of course, only if the merger has improved the income and profitability of both hotels, could it be regarded as a successful operation.Another way to expand capital scale, develop hotel brand name and generate guests market is management contract. This concept allows for the property owner to gain relatively stable profit, and the management hotel to develop their brands and standardization, get expansion quickly. A known brand operator also offers greater assurance of higher room rates and occupancies. In return for providing management and marketing services, the operator receives a basic fee that is commonly a percentage of gross operating profit plus an incentive fee based on profit or cash flow or some variation thereof. There are hundreds of hot... |
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