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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
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