TUTORIAL 4

Sejaya Group Malaysia, a public listed company owns a chain of resort hotels throughout
Malaysia. The company has appointed you to value one of its hotels in Pulau Pangkor for the
purpose of restructuring, which requires the approval of the Securities Commission.

The tenure is freehold, and hotel is built on a 2.5 hectares site. The building is of high-quality
construction and finishes, with stylish designed rooms and luxurious suites. Facilities provided
include swimming pool, fitness centre, tennis courts and spa.

The Hotel Management has furnished you the following information:

Room Type No. of rooms Room rate

Superior 150 RM 200
Deluxe 100 RM 280
Suite 40 RM 800

Average occupancy for the past three years is as follows:

Weekends: 90%
Weekdays: 60%

An analysis of trading operations for the past three years revealed the following:

Other income (Net)

Restaurant & Bar 50% from room revenue per annum
Telephone and fax RM 60,000 per annum
Banquet hall RM 380,000 per annum

Income from rental (Net)

Souvenir shop RM 4,500 per month
Spa & Massage RM 8,500 per month
Mini market RM 6,500 per month

Annual Purchase
Pillow and mattress RM 70,000 per annum
 Furniture & Electrical RM 500,000 per annum
Bed sheets RM 90,000 per annum

Average Expenditure
Salary, EPF and Socso RM 2,700,000 per annum
Electricity and water RM 900,000 per annum
Laundry RM 300,000 per annum
Stationery RM 70,000 per annum
Telephone RM 180,000 per annum
Promotion and advertisement RM 500,000 per annum
Landscaping & Decoration RM 220,000 per annum
Transportation RM 240,000 per annum
General expenses RM 160,000 per annum

The yield from comparable market evidence is 10%. Assuming the operator share is 45%,
determine the market value of the hotel for submission to Security Commission. You may use
assumption only where necessary.