Question

Some major hotel brands follow a strategy of _____ by developing their large hotels, only to sell them after achieving a stabilized profit while continuing to operate them under a management agreement with the new owner.

a) Expansion
b) Contraction
c) Diversification
d) Stabilization

Answer 1

Major hotel brands use expansion strategies by developing and selling hotels, maintaining operational control through management agreements.

Step-by-step explanation:

Some major hotel brands follow a strategy of expansion by developing their large hotels, only to sell them after achieving a stabilized profit while continuing to operate them under a management agreement with the new owner. This form of business expansion allows the hotel brands to leverage their management expertise and brand recognition without the long-term capital commitment of owning the property. This can be compared to the franchise model, where a company extends its brand to multiple locations through licensing. In the context of John D. Rockefeller's empire-building strategies, this would be akin to a form of horizontal integration, where a company expands its hold in the industry without merging with other firms.