Question

Management companies prefer large hotels over small ones because:

a) Large hotels are easier to manage
b) Small hotels are more profitable
c) Large hotels provide greater visibility and prestige
d) Small hotels require less staff

Answer 1

Large hotels are preferred by management companies because they provide greater visibility and prestige, associated with economies of scale. They have an easier time attracting financial capital, top talent, and offering a variety of services, aligning with the structures seen in cities where economic activities are concentrated.

Step-by-step explanation:

Management companies typically prefer large hotels over small ones because large hotels provide greater visibility and prestige. This notion is associated with economies of scale, where grouping economic activity (like in cities or large hotels) is more productive than spreading it out. Large hotels can attract financial capital more easily, are slightly larger in size, which makes it easier to attract top talent to their organization. Since it's easier to raise financial capital in larger operations, professionals are more readily available to join the business, enhancing its operations and service offerings.

In contrast, smaller entities like small hotels may be easy to start and manage, with no special taxes to contend with, but they might not garner the same level of financial capital attraction or prestige as their larger counterparts. Large hotels, akin to cities, can offer a wider variety of services and amenities, which are attractive features to both customers and potential employees.