Forms of Tourism and Hospitality Business Ownership and Franchising

Tourism is one of the world’s fastest-growing industries that include accommodations,

transportation, entertainment, recreation and food and beverage services as well.
Tourism is also vital for the success of many economies around the world. There are
many benefits of tourism such as boosting the revenue of the economy, create jobs for
the locals, develops the infrastructures of a country, cultural exchanges and improves
relationships between nations although it suffers a huge setbacks because of the
pandemic, the affected industry will rise again stronger than before. Tourism can
generate revenues for local economies directly when tourist spend money on hotel,
restaurant and entertainment.

Forms of business(ownership)
1. Sole proprietorship
2. Partnership
3. Corporation
4. Franchising

Factors in choosing the right form of ownership

1. Tax consideration
2. Liability
3. Capital requirements
4. Control
5. Managerial ability
6. Business goal
7. Management succession plan

.A. Sole Proprietorship

- is a business owned and operated by one person only.
- it is the simplest to operate from a tax and accounting perspective.
- the business is considered an extension of the owner and responsible for any debts or
liabilities incurred by the business.

Advantages and disadvantages of sole proprietorship[

Advantages
Simplest to set-up
Least costly form to begin with
Total decision-making authority
No special legal restrictions
Dis advantages
Demanding on owner’s time
Growth is limeted by the owner’s financial
means
Unlimited personal liability
Limited capabilities and skills

B. Partnership
-partnership is a union or association of two or more persons to manage a business to
earn profit.
- each partners willingly agrees to provide some amount of work, capital and sharing of
profits.

Kinds of partnership
1. General partnership - a kind of partnership where general partners are liable for the
contracts and obligations of the partnership prop-rata with their individual private or
personal property after exhaustion of partnership assets..
- every partners assets can use to repay the liabilities of the partnership. This
also means that each partner is responsible for every other partner’s actions.
2. Limited partnership - a kind of partnership that is composed of one or more general
partners and one or more limited partners.

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 - the limited partnership is only liable to the extent of the capital contributed by
him for the contracts and obligations of the partnership.
- its partnership name must contain the word “limited” or “Ltd.”
- as a limited partnership, thay are not involved in management decisions and do
not have any control over the company.
3. Partnership at will
- a partnership whose term of existence is indefinite. It may dissolved at will by
any partner at any times he/she pleases and at a moment notice.
4. General Professional Partnership
- a general professional partnership is a partnership formed for the exercise of a
profession.

C. Corporation
- A corporation is a legal entity that is separated and distinct from its owner. The
ownership of corporation is divided into shares of stock. A corporation issues the stock
to individual or other businesses, who then become the owner or stockholder or the
corporation.

D. FRANCHISING
- Franchising is another form of business that exist in the tourism and hospitality
industry sector. Franchising enables a business grow quickly into several
geographic market at once with a proven and tested strategy.
Franchisor ( entrepreneur/developer) - the owner of the business that provides
the product or service.
Franchisee (business person) - the one who receives the right to use the
franchisor’s business name.

E. BUSINESS ACQUISITION IN TOURISM AND HOSPITALITY INDUSTRY

CREATING BUSINESS PLAN

Planning - is very important to the success of any business and serve as a guide
through uncertainty.
- is a function of management that involves making objectives or goals for the
business and determining a course of action for the realization of those objectives.
- requires that management realized the environmental conditions facing their
organization and forecast future conditions.

Business Plan - is a written documents that gives the details of the proposed business
venture.
- it describes a clear picture of what the venture is, where it is projected to do and
introduces the strategy and operations of the proposed venture.
- it covers marketing, research and development, manufacturing, management
critical risks financing and time-table.
- is a written narrative that summarizes an entrepreneur’s proposal for new
business venture with operational procedures and financial data that gives the details of
the business ventures.

2 essential functions of business plan

1. It provides an operational guide - the plan provides tools for the business such
as mission statement, goals, objectives, target market, strategies and financial forecast.
2. Attract potential investors and lenders to finance the business venture.

ELEMENTS OF A BUSINESS PLAN

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 The elements of a business plan may be standard but the products or services
must be unique and appealing to the market.

Section I: EXECUTIVE SUMMARY

* it should be clear, informative and compelling so that people will be interested
in the business
* it is a synopsis of the entire plan in a capsulized form which explains the basic
business model, and briefly describes owner, key employees, target market and
financial data
* a brief persuasive well- developed summary that includes a financial proposal.
It should not exceed 2 pages
* this is the most important section of the business plan.

Section II. COMPANY DESCRIPTION

- the main body of the business plan.
A. Company description - the entrepreneur knows how to translate an idea into a
business and describe the company itself. The purpose and reason for the business
venture should also be discussed.
B. Company History - it describes how the company was formed and what will it be in
the future.
C. Mission Statement - it is the entrepreneur vision of what the company is and what he
wants to accomplished with the business in the future.
D. Products and services - this part describes all the products and services offered by
the company.
E. Legal Status and ownership - this part describes the business type and who owns the
idea.

Section III: INDUSTRY ANALYSIS

- this section familiarizes the investors in the industry in which the business will
compete. It will also describe the industry in terms of its market size, growth rate and
sales projection .
A. Industry size, growth rate and sales projection
B. Industry structure
C. Nature of participants
D. Key success factors
E. Industry trends
F. Long- term prospects.

Section IV. MARKET ANALYSIS

A. Target Market
B. Advertising
C. Market size and trends
D. Location
E. Pricing
F. Distribution
G. Competitor Analysis

Section IV-B. MARKETING PLAN

- focuses on how the business will market and sell the product or services.
A. Overall Marketing strategy
B. Product, Price, Promotion and Distribution

Section V. MANAGEMENT TEAM AND COMPANY STRUCTURES

A. indicate who is on your team, their qualifications and their responsibilities.
B. Work descriptions
C. Organizational Chart

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Section VI. OPERATIOPNAL PLAN
A. The general approach to operation - how your business will run and how your
product and services will be produced.
B. Business location - illustrate how the business runs from the front stage (seen by the
customer) to the backstage (unseen by the customer)
C. Facilities and equipment

Section VII. PRODUCT DESIGN AND DEVELOPMENT PLAN

- if developing a completely new products or service, you need to include the
factors tha focuses on:
A. Development status and tasks
B. Challenges and risks

Section VIII. Financial Projections

- the final section of the business plan.
- The most important section of the business plan is an outline of the proposed
company’s financial statement.

The entrepreneurial plan must pass the three test with the potential investors and
lenders:

1. Reality test - the reality test’s external components revolve around proving that the
market for the product and service exists. The entrepreneur must prove that there is a
strong demand for their business venture’s product and services.
External components includes:
A. Attractive industry
B. Market niche
C. Potential customers
D. Market size

- internal component of the reality test focuses on the features of the product or
service itself.

2. Competitive test - the external components assesses the business relative position to
its key competitor.
- the internal component focus on the management ability to
create a company that will gain an edge over the competitor.

3. Value test - the entrepreneurs must convince the investors and lenders that they can
pay off the loans and give an attractive return on investments. The business plan must
explain that the business is a good investment and that it will give appealing profitability
to them.

Difference between Strategic Management, Feasibility Study and Business Plan

Feasibility study - is a detailed investigation and analysis of a proposed business
venture to determine its viability. It is the investigative tool to answer the questions,
“Should we proceed with this business or not.” . the study serves as a filter or screening
of ideas for building a successful business. A feasibility study is done before an
entrepreneur commits the necessary resources to build a business plan.
Elements:
A. Market and industry
B. Product/ service
C. Financial data

Business Plan - it is the planning tool for transforming an idea into reality. It is a
written document that describes in details how a business will achieve its goal from

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start-up to financial components. It is a document that thoroughly explains a business
idea and how it will carried out.

Strategic management - it is the formulation and implementation of the

goals,initiatives and decisions that enable an organization achieve its objectives. The
main purpose of strategic management is to identify the company’s competitive
advantage over its competitors.
Elements;
A. Environmental scanning
B. Review of mission and vision statement
C. Strategy formulation and implementation
D. Strategy evaluation

MARKETING PLAN - is a document that outlines and records the marketing activities
based on the corporate objective of a firm. It serves as a basis to define the budget
required to implement the marketing objectives and enable a process to monitor the
expected output as compared to the actual.

A. Market research - it provides information needs by companies to provide quality

service based on customer’s expectation and perception of service.
B. Industry analysis - it is essential to also understand the nature and situation of the
industry to be able to anticipate possible issues and concerns that will be dealt with
when the business has started. SWOT analysis
C. Identification of target market - customer analysis can be the first step to take which
includes an assessment of the overall market. Afterward, an in-depth study of customer
needs, characteristics and behavior.
D. Marketing mix. The traditional understanding of marketing mix is that, it is composed
of four Ps; product, place, promotion and price.
E. Development of advertising and promotion plan - it is the promotion that is constantly
visible to the radar of people but just one of the elements of marketing mix.
Marketing communication- is a holistic and general term that includes
activities and interactions using marketing mix elements.
Promotional mix - is the combination of promotional elements under the
marketing communication which includes advertising, sales promotions, public
relations, personal selling, word of mouth, direct marketing and internet
marketing.