Bharat Hotel – Guidelines for working:

1. There are 3 revenue streams

a. Major – Room rent from owned properties – It is a function of number of rooms,
occupancy rate, room rent per day (assume there are 365 days)
i. Number of rooms in year zero is 2190 and the yearly increase in rooms are
added.
ii. E.g Year 1 – 90 added. Hence year 1 total room will be 2280; occupancy rate
is in year one is given as 60% and increases by 1 % (absolute); Year 1 – 61%
for year 2 etc.
iii. Room rent – (2280 x 0.60 x 2500 x 365)/(1000000) – In Million
b. F&B – Room rent from owned properties X 65%
c. MGMT fee as a % - 7% on room rent from managed properties

2. Costs are mentioned as % of revenue – E.g Material cost – 15% of Room rent + F&B
3. Depreciation – Given is yearly (incremental)
4. CAPEX – Given incremental
5. NCA/Working capital – Given is % of Sales – Need to compute Incremental (Refer –
Cryogenics)
6. WACC – Info given
7. Value of equity = Firm Value – Value of debt (In this case, cash is not given. Hence one need
not adjust Debt to net debt. But market value of debt and equity is given)