Methodological Aspects of Strategic Management of Financial Risks during Construction of Hotel Business Objects

By Dzhandzhugazova, Elena A.; Zaitseva, Natalia A. et al. | Asian Social Science, August 2015 | Go to article overview

Methodological Aspects of Strategic Management of Financial Risks during Construction of Hotel Business Objects


Dzhandzhugazova, Elena A., Zaitseva, Natalia A., Larionova, Anna A., Petrovskaya, Maria V., Chaplyuk, Vladimir Z., Asian Social Science


Abstract

The article substantiates the actuality of strategic management of financial risks during construction of hotel business objects. Two main strategies of hotel business development are described: strategy of geographical expansion, based on the active entering the new markets by means of starting the larger number of standard hotels, and focused geographical strategy which supposes lower growth rates, as the growth is achieved by means of increasing the number of hotels with unique and first-class service and unmatched atmosphere. Financial risks are viewed in the article as many-aspect notion, depending on multiple factors of external and internal environment of a hotel enterprise. It is substantiated that formation of financial and economic model of risks management should be based on a complex approach to the analysis of the environment of organization functioning. At that, a special attention in these models should be paid to the risks related to financing of investment projects and evaluation of their cost. The authors offer and describe the strategy of hotel business development with implementation of targeted function of management - cost increase. This model allows determining the directions of hotel business cost increase and finding the main vector of development. The showed results of research supplement the existing approaches to strategic management in hotel business and stipulate the formation of methodological instrumentarium which allows minimizing financial risks during construction of hotel business objects. Implementation of well-balanced model of the structure of sources for financing hotel business enterprises will allow determining risks at the stage of construction, evaluating their significance, and developing timely measures for their minimization and liquidation.

Keywords: hotel business, risks, well-balanced model, strategy, construction

(ProQuest: ... denotes formulae omitted.)

1. Introduction

One of the necessary conditions for constant growth of economy, achievement of competitiveness, and development of enterprises of construction industry in Russia is increasing the efficiency of investment activities. At that, the probability of losses from investments grows significantly with the increase of the level of expected income from investments (Kovalev, 2015).

Investment construction projects require significant financial investments, so the level of risk increases. While investing into the object of hotel sphere, it is necessary to take into account the dependence of acquiring income on ratio of demand and offer in the specific market and specific region, on the popularity of a brand, etc.

While studying investment construction projects in the hotel business, it should be noted that hotel business in Russia is one of the economy spheres which develop very quickly and successfully. Hotel market includes large companies which unite multiple brands, particular international and domestic hotel chains, and independent hotels. The Russian brands are moving up in the rankings rather slowly, but still the hotel marketing has a lot of perspectives - as more than 60% of the Russian hotels work with little-known brands (Egorov et al., 2010). Most of the hotel chains stick to the strategy of extensive growth. At the modern stage, it is possible to allocate two models of this strategy. The first one is aimed at the active and quick penetration into the new geographical markets, starting a large number of standard hotels, and formation of the branched network - this is the strategy of wide geographic expansion; it includes the hotel chains Hilton, Accor, and InterContinental (Zaitseva, 2013). The second model of the strategy of extensive growth is characterized by lower rates of growth, as the growth is achieved by means of increasing the number of hotels with unique and first-class service and unmatched atmosphere and focused geographical strategy - these include hotels of the chains Baglioni, Kempinski, and Rocco Forte Collection. …

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