Question

A management contract allows a hotel company to manage a property for a specific amount of time in exchange for a management fee that is often based on a percentage of:

A) Property revenue and operational costs
B) Property value and guest satisfaction
C) Property profits and staff salaries
D) Property occupancy rates and renovation expenses

Answer 1

The management fee in a hotel management contract is usually based on a percentage of the hotel's property revenue and operational costs, not the property value, guest satisfaction, staff salaries, occupancy rates, or renovation expenses.

Step-by-step explanation:

A management contract in the context of hotel operations typically involves the hotel company managing the property for an owner for a set period in exchange for a fee. This management fee is often based on a percentage of certain financial aspects of the hotel's operation. Specifically, the management fee is commonly calculated based on a percentage of:

• Property revenue - which includes all income generated by the hotel.
• Operational costs - which encompasses all expenses associated with running the hotel.

Therefore, the correct answer to the student's question is A) Property revenue and operational costs. Hotel management companies are generally not directly compensated based on property value, guest satisfaction, staff salaries, occupancy rates, or renovation expenses unless specifically stipulated in the contract terms.