Explain the advantages and disadvantages for Marriott to own and operate hotels versus using a management contract to operate hotels.

Explain the advantages and disadvantages for Marriott to own and operate hotels
versus using a management contract to operate hotels.
Own and operate Model
Advantages
The advantage that Marriott will have by owning and operating hotels is they will have
complete autonomy in their operations. They would not be bound by any procedures and
policies and will have complete independence as far marketing their brand is concerned and
would also be able to take independent financial decisions. By operating and owning hotels
independently, Marriott would be in a position to adapt to changing market dynamics.
Marriott would be better placed to predict returns on investment. Another important
advantage that Marriott would have in owning and operating hotels independently would be
related to obtaining finance from the market which would be relatively easier with a strong
brand name such as Marriott. The Own and Operate model would be more appealing to
institutional investors in shorter term. Another plus point to Marriott in the Own and operate
model would be that they would not require any operations or management team effort and in
terms of access to development design and operations support from their own brand (Collins,
2015). There could be potential growth of the brand including upside business. In the own
and operate model, Marriott would have better control on product quality and capital
expenditure. Moreover, Marriott can adopt marketing strategies that can be tailored to
specific populations and locations ("Hotel Management and ownership”,2017).
Disadvantages
The disadvantages that Marriott would have by owning and operating the hotel would be in
terms of lack of management and consulting insight from an experienced management
contractors and it would have to take on the responsibilities of recruiting, hiring and training
of its staff. Marriott would have to assume higher market and operating risks. There could be
risks vis-à-vis operating loss (Collins, 2015). There could be an impact on credit ratings
including impact on debt capacity and price of share in case of non-performance in the own
cum operate model and the...