Risk Management in Hotel Business Essay

Risk Management in Hotel Business Essay

Length: 1325 words (3.8 double-spaced pages)

Rating: Better Essays

Open Document

Essay Preview

1) Briefly explain the difference between risk control, risk finance and risk transfer.
Risk control, risk finance and risk transfer are the 3 major methods of managing risk. These can be broadly classified as: (A) loss retention (includes risk control and risk finance), and (B) loss transfer. With retention, a business retains the obligation to pay for part or all of the losses itself, while risk transfer allows business to transfer risk to another party.
Risk control is the actions that reduce the expected cost of losses by reducing the frequency or the size of the losses. The pre-loss action that reduces the frequency of losses is called loss prevention methods and the post-loss action that reduces the severity of losses that do occur is called loss reduction methods. Such as smoke-activated sprinkler systems is loss reduction method. But many types of loss control influence both the frequency and the size of losses, such as airbags installed in cars.
Methods used to obtain funds to pay for losses that occur is called risk financing, which could be classified as pre-loss and post-loss methods. Funds that are set aside prior to a loss such as retained reserves or cash flows from ongoing activities are pre-loss risk financing. The post-loss risk financing, such as arranging overdraft from bank or contingent capital, are funds that are injected after a loss, but usually with pre-loss agreed terms, so that the firm don’t have to negotiate from a position of weakness.
Risk transfer includes buying insurance or finite risk insurance before loss take place or issue equities after a loss occur and let the shareholders share the risk in order to elicit a return. Hedging is also a way of transferring risk in financial markets. Basically,...


... middle of paper ...


...s in room rates and occupancy level. Also the Group’s reputation depends on the relationships with its external stakeholders and business partners.
There are two types of tactical risks impacts upon the Group. One is the risk of losing franchise and management agreements. This is an inherent risk for hotel industry and the Group’s light-asset business model. The intensive competition within the hotel industry may reduce the number of suitable business opportunities offered to the Group and may increase the bargaining position of property owners seeking to become a franchisee or manager.
IHG’s wide geographic spread and fee based model means that it is exposed to a wide range of risks. In general, events will affect specific hotels or in all but the most significant countries are not expected to have a material impact on the Group’s results. (IHG annual report, 2012)

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Hotel Risk Management Essay

- Hotel Risk Management Introduction The Checkers is one of India s finest luxury hotels offering the best in international dining experience along with warm Indian Hospitality. The Hotel is located in center of the Chennai s emerging commercial area in a unique resort atmosphere that promises peace and tranquility. Just 15 minutes from the airport, located in the center of Chennai's commercial area, the hotel's beautiful rooms will win the heart of every traveler. The Checkers provides the following facilities: 15 rooms, Superior and Presidential Suites and Jacuzzi, Non Smoking rooms, Bar and 24 hr Coffee shop and Restaurants, Two Banquet halls, Business Centre, Indian and Oriental Restaurant...   [tags: Business Risk Management]

Free Essays
1455 words (4.2 pages)

The Management Of A Hotel Essay

- After reading the first part of the report, the things I would see as priorities would be initially to develop the knowledge bank on the hotel business overseas. Whilst the process of running a hotel in one country will be very similar to that of running one in another country, there are a number of things the business will not understand, and to avoid risk they need to quickly grasp the peculiarities of the local market quickly. Utilising the team of consultants employed will be critical, no information they provide should be ignored, it will all help....   [tags: Hotel, Management, Hotels, Hotel chains]

Better Essays
1577 words (4.5 pages)

Essay on Career Path For A Hotel Resort

- A career is a type of profession that a person or adult goes into after high school. The career position that I find the most interesting is business. There are many types of business ventures like franchise, entrepreneurship and local or Mega adventure ventures.The career path that I would like to go into business outside of the United States. I would like to open a Hotel Resort in the islands in the caribbean, I would like to go into this type of career path because it is a much easier way to gain profits (Money) and work around your own schedule....   [tags: Hotel, Resort, Business, Corporation]

Better Essays
825 words (2.4 pages)

Marketing Plan Of Mercure Hotel Essay

- Executive Summary The marketing concept has developed from merely promoting the company’s products or services into a complete art or a science of generating a lasting brand image in the competitive market. In this context, marketing is defined as the process of formulating strategies while expecting the needs and preferences of the customers so as to attract and retain them. The marketing process involves a succession of activities linked to promotion, formulating marketing strategies, online promotions, broadcasting, and providing good customer service....   [tags: Marketing, Hotel, Strategic management]

Better Essays
1469 words (4.2 pages)

Risk Assessment and Business Management Essay

- Risk Assessment and Management Problem The term risk assessment refers to an objective evaluation of risks to which end the assumptions and uncertainties are clearly put into consideration as well as presented. On the other hand in regards to risk management it has in most cases courted difficulties in the measurement of both the quantities in which risk assessment is concerned (Muzzi, Armando, and Augusto Panà, 2000, pp. 99-103). This is because the potentiality of an anticipated loss and the probability of it occurring have proved pretty difficult to quantify....   [tags: Business Administration]

Better Essays
905 words (2.6 pages)

Essay about Customer Loyalty and Customer Satisfaction in a Hotel

- Customer satisfaction index 1. Safety: Personal safety, Protection safety and Storage safety 2. Convenient: Help unload luggage, Quick checkout, Alternative way of consumption and appropriate reimbursement bills 3. Private: Quiet rest environment, Secret receive a visitor and Hidden gifts distribution method 4. Respect: Initiative to say hello, Call the office and Help them call a car, etc. Customer loyalty: Customer loyalty related to the degree of customer satisfaction, it is a quantitative concept....   [tags: hotel manager, safety, storage]

Better Essays
1949 words (5.6 pages)

Essay about The Global Hotel Industry ( Naics Code # 721110 )

- The Global Hotel industry (NAICS Code # 721110) is an estimated $664 billion dollar industry that specializes in short-term lodging and hospitality for clientele that includes but is not limited to business and leisure travelers, tourists, couples, families, day visitors, and vacationers (MarketLine, 2014). The industry operates many different lodging facilities that include motels, hotels, resorts, spas, and lodges. It is of importance to note though that Casino hotels are not included at all in this industry segment and fall under their own industry due to their primary business being gambling and the plethora of regulations that come with it....   [tags: Hotel, Lodging, Bed and breakfast, Motel]

Better Essays
1273 words (3.6 pages)

Business Strategy For Creative Concepts Hotel Essay

- Organizational structures are key components to developing a successful business. This is particularly true for larger scale businesses. As a business grows, so too does the responsibilities of the organization and the more functions that must be staffed and supported. There is no single correct organizational structure that is a perfect fit for all organizations, and therefore requires various alternatives as well as combinations of structures. Many well-known companies have suffered from failures in organizational design....   [tags: Organization, Management]

Better Essays
860 words (2.5 pages)

Hotel International and the Roaring Dragon Hotel Essay

- Summary This Proposal clarifies about the Roaring Dragon Hotel (RDH) organization and the Hotel International (HI) organization in the year 2002. The RDH was so celebrated internationally being a three star hotel and state guaranteed association that organization didn't think for progression or improvement of the business. Divided from distinctive contenders offering more quality organizations for fewer expenses, RDH still didn't have the concern to enhance the work practices to extend more customers....   [tags: China, organization, management]

Better Essays
822 words (2.3 pages)

The Management Objectives : Driving The Hotel 's Income Generating Potential For Its Owners

- Guest Lecturer #4 - Colliers 1. The management objectives focus driving the hotel’s income generating potential for its owners. Vincent implied three key objectives Colliers set for potential opportunities; how many number of rooms (80+), what services do the building provide for and a high quality condition report. Consequently, they structure their quantitative analysis around occupany rates, room rates per night and ancillary services per room. Running Yeilds were important in stabilising cashflows over the investment horizon....   [tags: Investment, Rate of return, Risk]

Better Essays
1218 words (3.5 pages)