Legal aspects of hospitality and tourism


Entrepreneurship involves the formation of new business ventures. One of the aspects of establishing whichever new business venture is bearing in mind the legal impacts on the anticipated project and ways in which the company can best be cosseted through the law. (Nickson D, 2007, p. 55)

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            There are several basic steps that new company should take to make certain its best forecast for future achievement. Some of the key areas where legal considerations may advantage a new business venture include the following: (Lucas R, 2004, p. 60)


Establishing the business

            Legal advice should be hunted on the paramount way to structure the trade for not only its present needs, but also its prospect growth plans and any initiator exit strategies. For example, small businesses such as the small motel and the coffee shop can be run through a corporate vehicle or through joint venture. However, the hazard of partnership is that the legal responsibility of the entity partners is boundless. Based on this foundation, a corporation is most often formed to embark on a new business. The legal responsibility of an investor in a company is restricted to the quantity that the shareholder has invested as share capital. Larger new ventures may also want to believe opting for a joint stock corporation, somewhat than the less complicated limited liability corporation. (Brymer A, 2004, p. 58)

            Agreements between the shareholders in a corporation or the partners -like in the case of the two full time supervisors and the sixteen additional part time employees- in a business should also be taken into consideration at the occasion of establishment. This is predominantly significant whereby the parties bring diverse charity to the business. For example, one party may donate technical skills and expertise and another monetary support. A shareholders’ or joint venture agreement can record how each party will donate to the business and what tasks, rewards and risks each will presume. (Lucas R, 2004, p. 62)

Contracting for success

            New businesses ought to have apparent, well drafted contracts to evade burdensome obligations and limit their disclosure to unwanted liabilities. It is universal for companies in the establish phase to contract to any new business they can and have the same opinion to whatsoever conditions a customer dictate. (Nickson D, 2007, p. 58)

            While there is an apparent advantages form, it follows that the risks are also high. Contracts that are too burdensome on a new business may erode any predictable profit from the agreement or leave the new business with unexpected claims that has no way of paying. (Lucas R, 2004, p. 68)

            A new business should cautiously evaluate proposed contracts and reflect on whether it can acknowledge the risk of things going wrong under the conditions on offer. If possible, the agreement should be amended to comprise conditions restraining the business’ legal responsibility plus closing off several of those otherwise open ended obligations. (Nickson D, 2007, p. 61)

            Once a business is more recognized, it may deem introducing standard customer contracts and possibly also supplier contracts. Such contracts can be used efficiently to diminish the risks posed by an errant supplier or a complicated customer. (Nickson D, 2007, p. 63)

Protecting the assets

            New business ventures also need to deem how best to guard their assets. Those businesses that hope to utilize a new invention be it in technology or some other area should deem formal legal protection of the development. Some new inventions can acquire patent protection. This has the outcome of giving the industry a monopoly right to use that invention for the period of the patent. For some new businesses, a patented discovery is its key benefit, against which it can secure a market edge and raise finance. (Brymer A, 2004, p. 67)

Employment Laws

            Employment law is one of those unique areas of a business that is not just regulated by the contract that the parties sign, but also by a raft of other laws intended to defend the financial security, health and safety of the workers. New business need to make certain that they have employment contracts and workplace practices that conform to those laws and ensure that they will not give rise to worker claims. (Lucas R, 2004, p. 70)

            Occasionally entrepreneurial businesses seek to reward staff performance by donating share options. These schemes need to be cautiously structured and documented to make certain that they remain pertinent to the staff and that they do not turn out to be unduly burdensome over time. (Brymer A, 2004, p. 72)


            Establishments of motels and coffee shops vary greatly in size and in the services they provide. Motels make up the majority of establishments and tend to offer more services than other lodging places. They consists of three fundamental types-commercial, resort, and residential. The majority of motels are commercial properties that provide mainly to business people, tourists, and other travelers who need accommodations for a brief stay. Profitable motels typically are located in cities like in our case, Pulaski in Tennessee, and function year round. Larger properties offer a diversity of services for their guests, like for instance in our case; coffee shop that caters for 65 guests, restaurants and cocktail lounges with live amusement. (Nickson D, 2007, p. 69)

            All businesses must meet the terms of licenses, permits and regulations. When creating a business, the entrepreneur must get in touch with the municipality concerned, together with the regional and at times Federal government. (Lucas R, 2004, p. 74)


One must enlighten their municipality of their wish to open a cafe and ensure that its locality is zoned for such a business. Since rules vary from one metropolis to another, it is imperative to find out about, amongst other things, the amendment or constructions permit. However, because the business is located near an interstate, it follows that it will affect interstate commerce in a broad aspect. (Brymer A, 2004, p. 78)


This is necessary to activate a food establishment. The price of the permit depends on the kind of food process in an establishment and may consequently fluctuate according to the number of categories scheduled on the permit. (Nickson D, 2007, p. 75)


            There are presently many rules relating to hygiene and cleanliness standard in motels and coffee shops: locations and facilities, temperatures, operations, and dairy products. In Tennessee, the Food inspection Support Branch is accountable for inspecting food prepared and sold in establishments and the sanitation of their premises. (Lucas R, 2004, p. 80)


            Employment in the motel industry is intense in densely populated cities and resort areas. For instance; in our case, the small motel and the coffee shop off 1-65 is located near Pulaski, Tennessee. Compared to the establishments in other industries, motels tend to be small. Statistics show that over 90 percent appoint fewer than 50 people. In our case, the business has only 18 people (sixteen additional part time employees and the two full time supervisors). As a result, lodging establishments present opportunities for those who are fascinated in owning and organizing their own business. (Brymer A, 2004, p. 86)


            Earnings in motels and other lodging places usually are much lower than the standard for all industries. For instance; the annual revenues that the sixteen additional part time employees and the two full time supervisors get is $ 300,000. Some states have laws which ascertain a higher minimum pay. Federal laws on the other hand, permit employers to pay beneath the minimum wage when a member of staff is anticipated to receive tips. For instance; in our case, since the business involves tourists who check-in motels and at times frequently visits the coffee shop, it follows that the sixteen additional employees receive tips to boost their wage. (Lucas R, 2004, p. 86)

Training and advancement

            Even though the skills and experience required by employees in this industry depend on the precise occupation, most admission level jobs necessitate little or no preceding training. Fundamental tasks can be educated in a squat time. In our case; the sixteen part time employees in the motel industry and the coffee shop undergo on the job training which usually is provided under the supervision of the two full time supervisors. (Nickson D, 2007, p. 94)



            Employment in motels, hotels and other lodging places is anticipated to augment 18 percent over the 1998-2008 periods quicker than the 15 percent growth anticipated for all industries combined. However, this is not the case in our business since the business is still starting out and it lacks some of the requirements such as; banquet rooms, exhibit halls, and spacious ballrooms to accommodate conventions, business meetings, and other social gatherings, which are a major source of revenue in tourism and hospitality industry. (Brymer A, 2004, p. 98)


            Insurance requirements for businesses vary significantly. One thing that all businesses share is that no matter how competently they run, there is always a likelihood of injury, loss or damage which can compel them out of business. To offer proper insurance coverage, there is a broad choice of options, policies and deductibles. However, in our case, the business is just starting and with the capital of $3,000,000 whereby the employees are paid $ 300,000 annually, it follows then that choosing an insurance agent or broker that is conversant with one’s size of business and more so an agent well-known with one’s type of operation is very complex. This is based on the fact that there are some expenses one has to cater for when the business is in progress of being incorporated. (Nickson D, 2007, p. 97)

Legal Compliance

            Whether or not the projected business is acceptable under law and what regulatory oversight applies to the business, this may make or break a new business idea. Some areas of business are subject to serious regulation. For instance; in our case, the business is operating in the area of tourism and involves hospitality, thus requires financial services approval from the Capital Market Authority (CMA) and may have to show certain technological competencies before that endorsement is granted. (Brymer A, 2004, p. 102)


            Starting a business can be worthwhile undertaking but it comes with its challenges. I would recommend therefore, before starting a business, it be wise to do a research. One should also make sure that they are well-matched to entrepreneurship, and comprehend that momentous effort may be required. With this, it follows that, one should meticulously enjoy the field they are getting into, and believe in their product or service as it may devour much of their time; this is particularly during the establish phase.


Brymer. A (2004) Hospitality & Tourism, Kendall Hunt Pub Co Publisher. ISBN: 0787298433.

Lucas. R (2004) Employment Relations in the Hospitality and Tourism Industries, Routledge

            Publishers. ISBN: 0415297117.

Nickson. D (2007) Human Resources Management for the Hospitality and Tourism Industries,

            Butterworth-Heinemann Publishers. ISBN: 0750665726.



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