Management Hospitality Real Estate

Question: Compare and contrast the financial and non-financial objectives of owners and operators iin the hospitality real estate industry. Discuss Whether it is realistic to assume that these two parties have shared goals and outline the conflicts that can arise with examples as appropiate? Answer: Executive Summary The financial and the non financial objectives of the operators and the owners in the hospitality real estate industry have been studied. The report has discussed the common goals of the operators and the owners. The situations that lead to conflict between the owner and the operator have also been discussed. The major role of the operator and the owner is to maximize the profitability of the real estate business by serving the customers satisfying their need and preferences. Introduction Real estate, hospitality and construction companies have adopted new approaches to address the regulatory requirement and financial risks affecting these sectors. These sectors have expanded globally (fatf-gafi.org, 2007). Sustainable growth is the key objective of the hospitality and the real estate sectors. The real estate sector is the critical sector of the economy. It has huge multiplier effect on the economy of the country. The contribution of the real estate hospitality industry in the GDP of the country cannot be ignored. The foreign direct investment in the sector has promoted the investment and the developmental activities of real estate sector. The real estate owners invest in the real estate business. They are responsible for structuring the entire business (Ey.com, 2015). The role and responsibility of the owners cannot be ignored. They are responsible for arranging the financials for the organization. The non financial expenditure is borne by the owners. On the other ha nd the operators are responsible for undertaking the business decisions in the hospitality real estate business after consultation with the owners. The management of the operation of the real estate hospitality business is undertaken by the operators (Wagener, Gorgievski and Rijsdijk, 2010). The operators are not engaged in any kind of financial investment in the organization. However they are responsible for enhancing the profitability of the organization along with the good will. The real estate hospitality industry is a large industry. The operators and the owners work in collaboration for the success of the real estate hospitality industry. Sustainability issues are faced by the real estate industry. In this respect it is mandatory for the owners and the operators to work in collaboration to address the sustainability issues concerning the real estate business. The operators are responsible for improved delivery of the real estates and evaluation of the project (Tajeddini, 2010) . Analysis and Review Financial and Non Financial objectives of the owners in real estate industry Financial objectives of the owner The real estate hospitality industry is one of the key contributors of the economic growth of the country. The owner of the real estate hospitality industry is to maximize the profitability of the organization. The owner of the real estate hospitality industry is responsible for planning, organizing, directing and controlling the resources of the company. The financial objectives of the owners are as follows Financial Decision making The business owners utilize the financial information to make the business decisions. The major objective of business management is to provide the owners with the information for undertaking the key business decisions. The owners search for information that is relevant and useful (Turner and Guilding, 2010). For this purpose the owners take the assistance of the financial managers. They act as intermediates between the owners of the business and the operational managers. This reduces the burden of the owners and the financial decision of the owner is accurate and leads to positive results (Vitez, 2015). Profit maximization Business owners of the real estate hospitality industry aim at maximizing their profit. They face threat of immense competition in the industry. Thus it is hard for the real estate business owners to keep the same margin of profitability (Schniederjans, Hamaker and Schniederjans, 2004). In this regard the owners have to implement new strategies to maximize the profitability of the organization (Xiao, O'Neill and Mattila, 2012). The increase in the profitability of the business will maximize the value of the share holders. The investors will gain confidence of investing in the organization. The EPS of the organization will increase. All the major decisions of the business in the hospitality real estate industry lie with the owner (LIN, LEE and WU, 2010). The decisions whether the investment, financing or dividend activities should be undertaken lies in the hands of the owners. Profit maximization is achieved with respect to new project implementation, acquisition of the assets, raising capital and distribution of the asset (Kang, Lee and Huh, 2010). Financial risk management Another major financial objective of the owner of the business organization is management of the financial risk in the real estate hospitality business (Fabozzi, Shiller and Tunaru, 2010). The management of the risk ensures that the company will not face any undue risk during various financial situations (Brigham and Daves, 2013). The financial room can result from financial returns which are inadequate in nature, increase in debt financing and situations of unfavorable loan (Evans, Campbell and Stonehouse, 2003). The lack of availability in the business credit and instability in the financial investment can result in risks for a real estate hospitality industry (Shiller, 2008). During favorable economic condition, the real estate sector is in boom but in case of low economic activity the real estate sector faces severe financial risks. The owners of the business have to implement strategies to mitigate the risk (Farrell, 2015). Non Financial objective of the owner Apart from the financial objectives, the owner of the real estate hospitality industry shoulder upon himself the non financial objectives of the business. They are as follows Serving customer The owners of the business play a critical role to analyze the need and wants of the customers. The objective of the owner of the real estate hospitality industry is to lay the structure of a financially successful business (Dominici and Guzzo, 2010). For this purpose, it is important to serve the customers and meet their requirements in order to generate good will. The owner of the organization regularly monitors the standards of delivery, quality of the product and after sales service (Fantazy, Kumar and Kumar, 2010). Welfare management The owner of the real estate hospitality business is responsible for setting objectives for the welfare of the employees and the stakeholders of the organization. The welfare management is done according to the pay and conditions (He, Li and Keung Lai, 2011). Relationship with the suppliers The owners of the real estate hospitality industry have to maintain trading relations with the suppliers (Sltten and Mehmetoglu, 2011). The large business organizations have considerable buying power with the suppliers and they should take care of the buying power. The owner has to meet the supplier objectives which include the timely payment of the suppliers along with the quality of the products supplied by the supplier minimizing the harmful externalities (Shaw, Bailey and Williams, 2011). Financial and Non Financial objectives of operators in real estate industry Financial Objectives of the operators The operator plays the pivotal role the business especially in the hospitality real estate business. The precise task of the operation manager depends on the size and magnitude of the organization. The business operator of a real estate hospitality industry has to possess a range of business and interpersonal skills to succeed (Yu, 1999). The operator of the real estates business has to manage the business operations and look for new ways of doing business to increase the market share of the business (Nadiri and Tanova, 2010). Financial management The operators of the real estate hospitality industry are responsible for controlling the cost of the business, budgeting and keep a track of the financial income and expense of the business. They are responsible for managing the supply chain and other resources of the company to minimize the cost of production (Han, Kim and Hyun, 2011). The operators are responsible for making business forecasts, manage the sales reports, financial statements to minimize the unnecessary costs and maximize the profitability of the organization. Various tools are used by the operators to maximize the profit. These tools include the cost benefit analysis to improve the efficiency of the real estate hospitality business. The modern operation managers work towards improve the sustainability practice of the organization in order to improve the financial equation. The operators working at the managerial level are responsible for setting the goals of the organization (Deroos, 2010). They establish the vari ous policies of the departments of the organization. The goal set by the operation managers includes forecasting the sales, planning of the sales and managing the promotional activities of the business. The operators co-operate with the other managers of the business to establish the various new procedures in the real estate hospitality industry to increase the market share and profitability of the business and put them into effect (Lewis, 2015). Non Financial objective of the operators Apart from the financial objectives the operators of the business are responsible for managing the non financial objectives of the business. These include increasing the quality of the product , enhancing the communication with the stakeholders and the suppliers and improving the quality of service to the customers (Dodds and Kuehnel, 2010). Improvement of the operational efficiency The operator in the hospitality real estate business is responsible for improving the operational system of the business. It includes improvement of the policies and procedures of the organization in order to support the mission of the organization. The operator is responsible for managing the reporting and flow of information within the organization. This will improve the efficiency of the organizational process. The operator is responsible for assisting the owner of the business in key decision making (Belcher, 2015). Increasing communication The operation managers are responsible for improving the relationship with the stakeholders and building interpersonal relationship with the stakeholders and suppliers. This is done to ensure that there is no interruption in the flow of work. The operator is responsible for facilitating the communication between the employees and the various departments. The operator working at the managerial level is involved in resolving the disputes of the organization or the disagreements. The operation managers cooperate in high level decision making with the other top executives of the organization. Controlling the resources The operator is responsible for controlling the resources of the organization. The real estate hospitality industry is dependent on the suppliers. The resources are controlled by the operation manager to see that the resources are utilized in an effective manner. It is ensured by the operator that the organization is using its resources properly so that the organization can maximize its business. Improving customer service The operators have to pay attention to enhance the service to the customers. The expectation of the customers is increasing and there is increase in the number of alternative available for the real estate owners. Thus improvement of the service to the customers is the key factor in enhancing the business. The operators are engaged in formulating strategies that will enhance the service to the customers. They formulate new strategies and innovative ways to improve the business. They deliver the products on the basis of the customers need. Enhance customer loyalty The operators are responsible for increasing the loyal customers. This will enhance the profitability of the business. They have to keep up with the trend of the customers and build a personal relationship with the customers to understand the need of the customers. It is ensured that the personal choice and preferences of the operators are given preference. The customer does not have to wait for the preferred choice for long (Lee and Way, 2010). This will increase the number of loyal customers and increase the number of bookings in a particular hospitality real estate industry. The operators emphasize on enhancing the relationship with the customers (Farnen, 2015). Comparison and contrast of the financial and non financial objectives of the owners and operators In the hospitality real estate industry, the owners and the operators play major role in taking the major decisions of the organization. The hospitality industry is based on serving the customers. Thus the combined effort of the owner and the operator is imperative for the success of the hospitality industry. The hospitability real estate industry has grown tremendously over the past years. The rise in competition among the various participants of the industry is increasing the threat for the industry owners. Thus the company will be able to grow with the combined effort of the company owners and the operators of the hospitality real estate industry. Shared goals of owners and operators A profitable relationship between the owners of the hospitality industry and the operators of the same industry is a delicate balance but it requires trust, open communications and alignment of the interest between the owners and the operators. The success of the management and the industry will be defined by partnerships and shared goals. The shared objectives have to be strategic as well as financial in nature. The owner and the operator of the business aim at maximizing the profitability of the business. The owner invests in the real estate industry. The owner is the maximum share holder of the organization. But the operator is responsible for managing the business process (Mller, Kijl and Martens, 2011). There are situations in which the goals of the owner and the operator do not align with one another. But collaboration is seen in many cases. It is important for the owner and the operator to work in collaboration to enhance the quality of service to the customers. Running a succ essful real estate hospitality business is a challenge for the owners. Apart from increasing the profitability of the business, the owner and the operator are engaged in enhancing the service to the customers. Both of them work towards formulating strategies to improve the service to the customers. This is one of the ongoing challenges faced by the owner and the operators. The customer service policies have to be innovated in order to maintain the strength of the customers (Alexandersson et al., 2010). The owner and the operator are engaged in managing the resources of the organization. They devise strategies so that the resources are utilized effectively. This will maximize the profitability of the hospitality real estate industry. This will increase the revenue and reduce the cost of the business. The operators in consultation with the owners looking for employing people who will increase the sales of the organization. The reduction of the cost of the business will increase the bo ttom line of the hospitality business. Both the operators and the owners are involved in finding ways that will keep the customers happy. Since it is a service oriented industry it is important for the operators and the owner to increase the interpersonal relationship with the customers. The operators and the owners are engaged in enhancing the relationship with the suppliers and the stakeholders (Meddour, Rasheed and Gourhant, 2011). Supply chain management is an important tool of enhancing the relationship with the suppliers. This will generate tremendous good will for the organization (Carter and Liane Easton, 2011). The customers will be satisfied with the service of the organization and they will turn to repeat customers. The owners and the operators of the business find ways to be creative and provide good solution to the customers. The queries of the customers are addressed by the owner and the operators and they devise ways to solve the issues. The owners and the operators i nvestigate ways in which they can improve their service to the customers. Outline of the conflicts between the owners and the operators in the real estate industry There are various situations in which the owners and the operators do not share a common goal and the ways they operate are conflicting in nature. The need of the owner varies across organization in the hospitality real estate industry. The lack of sophistication of the owner can lead to conflict between the operator and the owner. The operator in such cases plays the role if a mere employee and not involved the business decisions of the organization. Thus the relationship between the hotel owner and the operator of the hotel is complex. The owner bears the financial risk of the business in the hospitality real estate industry and the success and failure of the business will be responsible for gain or loss of value of the business. The owner transfers the responsibility on the operator (Gorgievski, Ascalon and Stephan, 2011). The impediment of the business is not suffered by the operator of the business. In some case the loss of the business creates conflict between the owner and the operator. The operator can be held responsible for undertaking certain decisions in case of a loss. Due to economic downturn the real estate industry has to suffer. In such cases the profitability of the business declines. The role of the operator becomes crucial in such situations. But the failure of the operator to maintain the business standards leads to conflict between the owner and the operator. The change in policies of the organization by the owner may give rise to conflict between the owner and the operator. The rise in the number of disputes between the owner and the operator of the business results in decline of the healthy working environment in the organization. Conflict between the operator and the owner arises as a result of the lack of similarity in the non financial and financial objectives of the hospitality real estate business (Gupta, Boyd and Kuzmits, 2011). There are situation in which the operator can manipulate the data of the organization or get involved in disputes for his own benefit. These gives rise to conflict between the owner and the operator in the hospitality real estate business. One of the major cases which showcase the conflict between the owner and the operator is the case of hotel owner and operator dispute of Marriot vs Eden Roc. It led to the termination of the hotel agreements. The owners of the Eden Roc Renaissance hotel in the Miami Beach ended its long relationship with the Marriott as its operator. The relationship had lasted for 43 years. From this incident it can be said that the relationship between the operator and the owner is complex (San Romn et al., 2011). Conclusion The owners and the operators of the business share common financial and non financial objectives. There are certain cases when the opinion of the owners varies with the operator. This gives rise to conflict. The financial objective of the owner and the operator of the hospitality real estate business are to maximize the profitability of the business. This is achieved by enhancing the relationship with the customers. The hospitality real estate business belongs to the service industry; in such case serving the customers is the main aim of the owner and the operator. They have shared goals and objectives. But there are various cases in which the long term relationship with the operators can end due to certain disputes resulting in the decline of the market share and reduction of the value of the organization. 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