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Essay / Research Paper Abstract
This 5 page paper looks at the way in which hotel chains such as Starwood and Marriott may assess the risk they face with operations in Venezuela. The paper starts by looking at the general concept of political risk assessment, and then discusses the specific political risks faced in Venezuela, focusing on the risk of nationalization. The level of risk is assessed, and a recommendation is given regarding continuing of operations in the country. The bibliography cites 4 sources.
Page Count:
5 pages (~225 words per page)
File: TS14_TEPRvenez.doc
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Unformatted sample text from the term paper:
rewards. One important type of risk is political risk. Simply defined political risk may be seen as the direct and indirect losses that may be incurred as a result of
political influences. The hospitality industry has already seen political risk result in looses. In Venezuela the Chavez government has already taken control of two Hilton brand hotels; the Caracas Hilton
Hotel in 2007 and in 2009 the Hilton hotel on the island of Margarita (BBC News, 2009). There was an additional factor in the latter take over; the joint owners
were having some problems wit the financial regulators. The places firms such as Starwood and Marriott, who own hotels in a difficult position; should they divest and leave the country
as a result of their potential losses or should they remain. There are different approaches to assessing political risk, and much of the assessment will rest with the subjective
interpretation of the risk and divergent views on the way political policies will emerge, be implemented or be changed. The most difficult assessment is to identify potential changes in policy.
Risks such as changes in government and changes in policy may be difficult to detect and quantify. The negative aspect about the Venezuelan situation is that the risk is already
known and it is not a matter of assessing changes in policy, but how existing policies will be implemented. The current government policy is a socialist approach to land redistribution
in order to rectify social inequalities (Romero and Ellick, 2007). Prior to the land reform 80% of the land in the country was owned by only 5% of the
population. By 2007, a total of 3.4 million acres had been redistributed (Romero and Ellick, 2007). This indicates the scale of the commitment. The issue is not only the policy,
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