H Group Holding, Inc. and Subsidiaries - Page 26

                                        - 12 -                                         

          service companies are principally involved in marketing, sales,              
          reservations, and computer support.  In most instances, these                
          support services were provided by staff at the local hotel level;            
          however, the Hyatt International group also provided support                 
          services through separate entities; the most prominent of these              
          was Hyatt Chain Services, Ltd. (HCS).                                        
               On January 19, 1971, HCS was incorporated in Hong Kong as a             
          wholly owned subsidiary of HHK.  Essentially a marketing                     
          cooperative, HCS provided marketing, sales, and reservation                  
          services to the hotels under contract to the Hyatt International             
          group.  HCS also provided guidance to the hotels regarding the               
          development of their own individual marketing programs.  The                 
          services provided by HCS are commonly called “chain services” in             
          the hotel industry.  It is understood that chain services also               
          promote a particular hotel chain.  In keeping with industry                  
          practice and pursuant to contractual agreements with hotel                   
          owners, HCS provided its services at cost.  The costs for HCS                
          were totaled annually and shared pro rata by each hotel based on             
          its room revenue and total number of rooms, subject to                       
          limitations based on a certain percentage of revenue.  Such                  
          amounts were not considered as income or expense to HCS.  HCS’               
          total annual costs were as follows:9                                         

               9  Beginning with 1984, the totals are derived from                     

Page:  Previous  2  3  4  5  6  7  8  9  10  11  12  13  14  15  16  17  18  19  20  21  Next

Last modified: May 25, 2011