1. Chapter 1 Introduction

2. Objectives The Role of Finance in the Hospitality Organization
Perspectives on Decision Making
Performance-Based Managerial Compensation Packages
Boards of Directors
Threat of Takeover
The Goal of Hospitality Financial Management
An Overview of the Determinants of Owners’ Value
The Minimum Value of Vo[DIV]t
The Maximum Value of Vo[DIV]t
The Most Likely Value of Vo[DIV]t

3. The Role of Finance in the Hospitality Organization
The finance function involves two general areas: the raising of funds, sometimes called the financing decision, and the allocation of funds, sometimes called the investment decision.

4. Performance-Based Managerial Compensation Packages
One way to ensure that managers act in the owners’ best interests is to tie managerial compensation to performance measures related to the value of the firm. The higher the level of the performance measure attained, the greater the manager’s compensation.
Stock Options
Boards of Directors
Threat of Takeover

5. The General Goal of Hospitality Financial Management
Advocating or representing the interests and expectations of the suppliers of financial capital

6. Two Categories of Financial Capital
Debt - legally protected prior claim to the income and assets of the hospitality firm
Equity - the residual claimants

7. The Specific Goal of Hospitality Financial Management
The goal of hospitality financial management much more clearly and concisely:
To make decisions that maximize the present firm-related value or wealth of the hospitality firm’s owners.

8. Determinants of Owner’s Value
W0 = DIV0 + V0[DIVt]
The Minimum Value of V0[DIVt] = 0
The Maximum Value of V0[DIVt] = DIV1 + DIV DIVn
The Most Likely Value of V0[DIVt] = n
V0[DIVt] < ∑ DIVt
T=1

9. Major Factors that Determine Owner’s Value
The timing of the future dividends
The magnitude of the future dividends
The riskiness of the future dividends

10. Summary
This chapter has identified the goal of hospitality financial management as maximizing the current firm-related value or wealth (as represented by share price in the case of a corporation) of a firm’s owners.
The owners’ value will be determined by the timing, magnitude, and riskiness of the future cash distributions (dividends in the case of a corporation) to which the owners have a claim.