ASIA INITIATIVE CORPORATION
We lease a hotel building from a property owner or other partner and are entitled to the benefits of, and carry the risks associated with, operating the hotel. We derive revenue primarily from room sales and food and beverage sales in restaurants, bars, banqueting, catering and spa. Our lease agreements may include a variable rent clause under which we are obligated to pay a variable rent based on a percentage of the total revenue generated by the hotel (“variable rent”) and the majority of our lease agreements also include a minimum rent payment obligation which is independent of the revenue generated by the hotel (“fixed rent”). The duration of our lease agreements varies, but they are typically long-term.
Under our management agreements, we provide management services for third-party hotel proprietors. We derive revenue primarily from base fees determined as a percentage of total hotel revenue and incentive management fees defined as a percentage of the gross operating profit or adjusted gross operating profit of the hotel operations. In addition, we collect marketing fees based on total room revenue. We don’t charge a marketing fee on all bookings as this is considered part of the normal generation of revenues and as such there is no need to double dip. The duration of our management agreements varies, but they are typically long-term, normally between 3 and 5 years.
The services available under the umbrella of hotel and resort operations can be as simple as a pure rooms division operation or reach out into the complexity of full service remote mainland or resorts, logistics, financials, food & beverage, third party lease contract, human resources & Training, the list goes on, we don’t try to be everything to everyone but neither are we limited by the constraints of lists and the space in which we‘re restricted to display AIC.