Introduction to Tourism & Hospitality – Key Exam Concepts

Flashcards cover ownership structures, franchising pros & cons, and core economic concepts (opportunity cost, leakage, multiplier effect) emphasized in the lecture notes.

What does 'franchising' describe in the hospitality industry?

The business relationship between a franchisor (brand owner) and a franchisee (individual or company operating the outlet).

What is independent ownership of a hotel?

A hotel opened and managed by an individual or company that assumes complete responsibility for its success or failure, retaining full control over every business decision and leveraging local knowledge, may make use of their firsthand knowledge of the community to attract guests, obtain investors.

How does chain ownership differ from independent ownership in terms of branding?

Independent hotels operate under their own unique brand, whereas chain properties share a common brand name across multiple locations.

How does chain ownership differ from independent ownership in decision-making?

Independent owners have full control over decisions, while chain properties follow centralized, standardized policies set by the corporate office or franchisor.

Name 4 benefits a franchisee receives from joining a hotel franchise.

1) A complete set of plans and specifications for property development. 2) Access to a centralized reservation system that can generate 17–26 % of bookings. 3) Participation in volume discounts when purchasing furnishings, fixtures, and equipment. 4) Lower credit-card fee percentages negotiated by the franchisor.

State 4 major disadvantages faced by franchisees.

1) Payment of high initial and ongoing franchise fees. 2) Obligation to conform to all operational standards set by the franchisor. 3) Franchisees must conform to the franchisor’s agreement, 4) Franchisees must maintain all standards set by the franchisor

Define opportunity cost in tourism and give an example.

The value of the next best alternative that must be given up when a choice is made. Example: Spending RM500 on a beach trip instead of a mountain hike means sacrificing the enjoyment of the mountain hike.

What is ‘leakage’ in a tourism economy?

Money that exits the local economy—for example, payments for imported goods or foreign-owned hotels—rather than being spent within the destination. Minimizing leakage involves strategies like using local suppliers, hiring local workers, and promoting locally owned businesses.

What is the multiplier effect in tourism?

The process by which initial tourist spending circulates through the local economy, creating additional income and employment as businesses and workers re-spend that money. When a tourist spends money (eg. at a hotel) the hotel uses that income to pa=y staff salaries, buy food from local, maintain the premises. The employees then spend their salaries on goods/ services and those businesses also benefit and re-spend. This cycle multiplies the original tourist dollar’s impact.

Illustrate the multiplier effect

Tourist pays hotel → hotel pays staff salaries & local suppliers → employees spend wages at local shops → shops pay local farmers & services, causing the original tourist dollar to multiply its impact within the community.