Feasibility Study for Holiday Inn6

Marketing Management for the Service Industry (MK301)
Information Systems 2 (IS301)
Managerial Accounting (AC301)

Lecturer: Mr. Evangelos Vantzos
Word Count: 3526
Date:16/05/2011
Group Members:
Denis Sulimkin (3B)
Francesca Pat-Ekeji (PG B)
Alina Raab (3B)
Rehan Mustafa (3B)

Executive Summary:
The aim of this feasibility study is to determine which improvements can be made to
reinforce the position of HolidayInn6 hotel in the market. In order to detect the enhancements
the was a critical analysis carried out for financial and marketing areas of hotel’s activities
along with the analysis of competitors and current market position. The analysis conducted
has shown the HolidayInn6 has a better overall performance in such aspects as market share,
occupancy, daily rate and condition of facilities.
In addition to it there was an evaluation of past financial data executed in order to define and
forecast the budgeting and timelines for application of additional facilities. The impact of
sound marketing strategy on the performance of the hotel can be seen in year 1, and the
management is expecting the same result in relation to the projected extensions of facilities.
The addition of a conference center together with an extension of 100 rooms is forecasted to
sustain high profitability of operations, while an upgrade of car parking and introduction of
business center will add value to services and positively affect hotel’s reputation. In addition,
numerous evaluations of the project have been executed and in accordance to them the
project was proven as feasible.

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Contents
1: Introduction:........................................................................................................................................ 6
2: Market Analysis: ................................................................................................................................. 7
2.1: Current Facilities’ Analysis: ........................................................................................................ 7
2.2: Analysis of Existing Clients and Existing Business: ................................................................... 7
3. Site, Area and Hotel Website Evaluation............................................................................................ 8
3.1 Location, Space and Area ............................................................................................................. 8
3.2 Hotel Website................................................................................................................................ 8
3.2.1Design Principles ........................................................................................................................ 8
3.2.2 Structure and Content ................................................................................................................ 9
3.2.3 Colour Scheme ........................................................................................................................... 9
4. Supply, Demand and Competitive Considerations ........................................................................... 10
4.1 Past Occupancy Trends ............................................................................................................... 10
4.2 Hotels Currently Serving the Local Market ................................................................................ 10
4.3 Competitive Information of the Key Competitors ...................................................................... 10
4.4 Supply and Demand Analysis ..................................................................................................... 10
5: Marketing Strategy ........................................................................................................................... 11
5.1: Desired Clients and Market Potential ........................................................................................ 11
5.2: Sales and Sales Actions ............................................................................................................. 11
5.3: Advertisement and Promotional Tactics .................................................................................... 12
6. Proposed Extension of Facilities and Services ................................................................................. 13
6.1 General Concept and Changes needed ........................................................................................ 13
6.2 Proposed Future Extension ......................................................................................................... 13
7. Financial Assessment, Projections & Viability................................................................................. 14
7.1 Trend Analysis ............................................................................................................................ 14
7.2 Ratio Analysis ............................................................................................................................. 14
7.3 Capital Investment Required & Financing.................................................................................. 15
7.4 Operations and Capital Budgeting .............................................................................................. 16
7.5 Cost - Benefit Analysis ............................................................................................................... 16
7.6 Evaluation of projections ............................................................................................................ 17
8 Sensitivity Analysis ........................................................................................................................... 18
9. Conclusion & Recommendations...................................................................................................... 19
10 References:....................................................................................................................................... 20
11 Appendices....................................................................................................................................... 21
11.1 Appendix: General Information of Holiday Inn6...................................................................... 21
11.1.1 Appendix: Nice –Space, Location and Area ..................................................................... 21

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11.1.2 Appendix Nice, Ambiance and Scenery ............................................................................ 22
11.1.3 Appendix: Hotel Location .................................................................................................. 23
11.1.4 Appendix Economical Background of the Hotel ............................................................... 24
11.1.5 Appendix: Hotel Facilities ................................................................................................. 25
11.1.6 Appendix: Current facilities’ condition ............................................................................. 26
11.1.7 Appendix: In Room Entertainment and Complimentary Items ......................................... 27
11.1.8 Appendix: Comments from Monthly Indicator Report Year 1 to Year 2 .......................... 28
11.1.9 Appendix: Guest Comments: Week 82 to week 149 ......................................................... 29
11.2 Website Layout ......................................................................................................................... 30
11.2.1 Appendix: Homepage ........................................................................................................ 30
11.2.2 Appendix: Reservation ....................................................................................................... 31
11.2.3 Appendix: Photo Gallery ................................................................................................... 32
11.2.4 Appendix: Rooms .............................................................................................................. 33
11.2.5 Appendix: Contact Us ........................................................................................................ 34
11.2.6 Appendix: Privacy Policy .................................................................................................. 35
11.3 Marketing Analysis ................................................................................................................... 36
11.3.1 Appendix: Advertising Media and their Effectiveness ...................................................... 36
11.3.2 Appendix: Management decisions Year-1 ......................................................................... 37
11.3.3 Appendix: Management decisions Year-2 ......................................................................... 39
11.3.4 Appendix: Management decisions Year-3 ......................................................................... 41
11.3.5 Appendix: Weekend VS. Weekday: Year 3 ....................................................................... 43
11.3.6 Appendix: Market Segments .............................................................................................. 45
11.3.7 Appendix: Average Room Rate vs. Room Occupancy for Year 3..................................... 46
11.3.8 Appendix Competitors ....................................................................................................... 47
11.3.9 Appendix: Competitor Status Report December Year 3 .................................................... 48
11.3.10 Appendix: Local Diary Events ......................................................................................... 49
11.4 Performance Indicator from Year1 to Year3 ............................................................................ 50
11.4.1 Appendix: HOTS Scorecard Year 1................................................................................... 50
11.4.2 Appendix: HOTS Scorecard Year 2................................................................................... 51
11.4.3 Appendix: HOTS Scorecard Year 3................................................................................... 52
11.4.4 Appendix: F&B Departmental Income Statement- Year 1 ................................................ 53
11.4.5 Appendix: F&B Departmental Income Statement- Year 2 ................................................ 54
11.4.6 Appendix: F&B Departmental Income Statement- Year 2 ................................................ 55
11.4.7 Appendix: Indicator Average Year 1 ................................................................................. 56
11.4.8 Appendix: Indicator Average Year 2 ................................................................................. 57
11.4.9 Appendix: Indicator Average Year 3 ................................................................................. 58

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11.5 Proposed Extension of Facilities & Service .............................................................................. 59
11.5.1 Proposed Alternatives A & B............................................................................................. 59
11.5.2 Appendix: Pre-Opening Expenses ..................................................................................... 60
11.6 Analysis of Past Financial Statements ...................................................................................... 62
11.6.1 Appendix: Comparative Horizontal Analysis – Income Statement Year 0 to Year 4 ........ 62
11.6.2 Appendix: Comparative Horizontal Trend Analysis – Income Statement Year 0 to Year 4
...................................................................................................................................................... 63
11.6.3 Appendix: Comparative Horizontal Analysis – Balance Sheet Year 0 to Year 4 .............. 64
11.6.4 Appendix: Comparative Horizontal Trend Analysis – Balance Sheet Year 0 to Year 4 ... 65
11.6.5 Appendix: Comparative Horizontal Analysis – Cash Flow Year 0 to Year 4 ................... 66
11.6.6 Appendix: Comparative Horizontal Analysis – Cash Flow Year 0 to Year 4 ................... 67
11.6.7 Appendix: Trend analysis – Total Revenue ....................................................................... 68
11.6.8 Appendix: Trend Analysis – Income after taxes ................................................................ 69
11.6.9 Appendix: Trend Analysis – Average daily rate ................................................................ 70
11.6.10 Appendix: Trend analysis – RevPAR .............................................................................. 71
11.6.11 Appendix: Trend analysis – Market index image ............................................................ 72
11.6.12 Appendix: Trend analysis – Cash at bank ........................................................................ 73
11.6.13 Appendix: Current Ratio .................................................................................................. 74
11.6.14 Appendix: Debt-Equity Ratio .......................................................................................... 75
11.6.15 Appendix: Profit Margin Ratio ........................................................................................ 76
11.6.16 Appendix: Gross Operating Profit ................................................................................... 77
11.6.17 Appendix: ROCE ............................................................................................................. 78
11.6.18 Appendix: Occupancy ...................................................................................................... 79
11.6.19 Appendix: Rooms Market Share ...................................................................................... 80
11.6.20 Appendix: Gearing Ratio ................................................................................................. 81
11.7 Capital Investments & Financing .................................................................................................. 82
11.7.1 Appendix: Capital Investment & Financing ...................................................................... 82
11.7.2 Appendix: Outstanding loan at the End of Year 3 ............................................................. 83
11.7.3Appendix: Loan Financing –Bank ...................................................................................... 84
11.7.4 Appendix: Loan Financing – Investors .............................................................................. 85
11.7.5 Appendix: Depreciation – Conference Center ................................................................... 86
11.7.6 Appendix: Depreciation – Business Center ....................................................................... 87
11.7.7 Appendix: Depreciation – Parking ..................................................................................... 88
11.8 Appendix Pro-Forma Statements .............................................................................................. 89
11.8.1 Appendices Financial Targets and estimations for Years 4-8. ........................................... 89
11.8.2 Appendix: Forecasted Revenues ........................................................................................ 90
11.8.3 Appendix: Pro-Forma Summary Income Statement .......................................................... 92

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11.8.4 Appendix: Forecasted Tendency Departmental Income Statement: Rooms ...................... 93
11.8.5 Appendix: Pro Forma Departmental Income Statement Rooms ........................................ 94
11.8.6. Appendix: Forecasted Tendency Departmental Income Statement: Food & Beverage .... 95
11.8.7. Appendix: Pro-Forma Income Statement F&B................................................................. 96
11.8.8 Appendix: Forecasted Tendency Departmental Income Statement Other ......................... 97
11.8.10. Appendix: Pro Forma Departmental Income Statement other ........................................ 98
11.8.11 Appendix: Forecasted Tendency Departmental Income Statement Central Administration
...................................................................................................................................................... 99
11.8.12 Appendix: Pro Forma Departmental Income Statement Central Administration .......... 100
11.8.13 Appendix: Staff and Training - Department Income Statement Conference Center ..... 101
11.8.14 Appendix: Pro Forma departmental Income Statement Conference Center .................. 102
11.8.15 Appendix: Pro Forma Summary Income Statement: Conference .................................. 103
11.8.15 Appendix Pro-Forma Cash Flow: New Facilities .......................................................... 104
11.9 Cost Beneficial Analysis ......................................................................................................... 105
11.9.1 Appendix: Payback Period ................................................................................................... 105
11.9.2 Appendix: Net Present Value ............................................................................................... 106
11.9.3 Appendix: Internal Rate of Return .................................................................................. 107
11.10 Sensitivity Analysis .............................................................................................................. 108
11. 10.1 Appendix: Sensitivity Analysis: Rooms Year 8............................................................ 108

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6 .1: Introduction: The aim and objective of the following feasibility assessment is to provide information of the Holiday Inn Hotel and its strategy in marketing and financial development. With the facilities mentioned in the following study Holiday Inn wishes to add further value to the hotel and thereby strengthening their stance in the corporate market segment. The overview of the Hotels current situation as well as the changes it has gone through in the past will ease the evaluation of its viability and justify the addition of extra facilities to Holiday Inn Hotel.

30% (Appendix 11. which can be seen by decisions taken in years1 to 3 (Appendices 11. The management tried to keep these facilities in the excellent level.3. Holiday Inn6 has a swimming pool and offers parking facility.2-11. families and singles (Appendix 11.3.2: Market Analysis: 2.2: Analysis of Existing Clients and Existing Business: HolidayInn6’s management decided to divide its market to effectively target all the segments so that the marketing plan would be implemented efficiently (Kotler et al. which can accommodate doubles.8).1. HolidayInn6 determined corporate clients as its major market segment and for the past three years has created an image of a mainly business hotel. Due to seasonality factor.3. All these facilities have been continuously renovated to upto date condition.1. 2010).9) along with high-quality amenities to guarantee that rooms produce admirable impression and fulfil diversified guests’ needs and expectations (Appendix 11. HolidayInn6 implements certain changes in the marketing strategy in the 2nd quarter of each year. It can be seen from rooms analysis that corporate sector was the major consumer of the rooms sold during weekdays with 72% occupancy (Appendix 11. it shows that management can successfully project sound tactics of adaptation to the leisure segment as well as responding to peaks and dips in seaonality.3). bar and 24 hours front desk services along with 250 guest rooms.3. This restrategizing does not affect the ability of the hotel to attract corporate clientele.6).5).1: Current Facilities’ Analysis: Holiday Inn6 is a full service hotel.5.3. when the majority of clients belong to leisure segment. was 70.3. by the end of year 3. with its services including restaurant. to attract more guests and widen the range of attractions at the hotel. it affects average occupancy which. and offer a wide range of complimentary items and in-room entertainment services (Appendix 11.4.3. which is capable of accommodating 120 cars (Appendix 11.7 & 11. 2.4). As HolidayInn6’s quality index is the highest among competitors in year 3 with an index of 42. In addition to these services and facilities..29 (Appendix 11.5).9).1) and leisure sector is dominating in rooms sold during weekend with 48% occupancy (Appendix 11.1. The rooms have airconditioning systems. 7 . private luxury bathrooms.

2011). The repetition has been implemented by keeping the same background and alignment of text and pictures as 8 . 3. a port city located in the South of France at the Côte d’Azure. At this time. It has a population of 145. repetition.2. organized and over viewable website (Bennett.4). The alignment of a website can be left. Site.1. 3. The key to a well-structured website is to choose one alignment and keep it throughout the all pages (Williams and Tollett. Gary et al.g. HolidayInn6 has designed the website’s layout and content.1. Area and Hotel Website Evaluation 3. 2006). due to the growing interest.ca. Nice has convenient transportation with its airport being one of the biggest air transportation hubs in Europe and a high-speed rail service operating to and from Paris. Three major areas will be looked at. the French part of the Mediterranean Sea (Appendix 11. With these four basic principles in mind.1Design Principles Following the statements of Williams and Tollett (2006) there are four principles that are the fundamental features of every piece of design: alignment. (nicefrance. the main coastal road which also leads directly to the closest airport. They make the difference between a website that will hurt or bore the eyes and one that looks fresh. Repetition refers to a visual piece or element being repeated on every page of the website. When the hotel was built in the 1950s.3 – 11. only 7 km away (Appendix 11.1). The proximity on a website denotes that two items or sections that are put close to each other are supposed to belong together.3.1).1 Location. in order to elucidate the purpose and meaning behind the design that was chosen for HolidayInn6. other hotels also entered the market (Appendix 11. Space and Area HolidayInn6 hotel is located in Nice. 2005).000 residents and with its sheltered location it is one of the warmest cities in France even during winter months.1. This creates a relation between each page and binds them together to form a whole.1. coastal trips as well as off-season breaks grew in attractiveness to leisure and business travelers. (2009) argues that the contrast is of importance for a website to catch the viewers’ attention by implementing a color choice and text styles that are clear and set themselves off from the background clearly. e. right or centered. contrast and proximity.2 Hotel Website The divisions below will provide a thorough clarification of the decisions involved in creating the hotel’s website. well-ordered and professional. The hotel’s location has a view on the “Promenade des Anglais”. the hotel logo or the color schemes.

2. events and reservation along with extra features such as a photo gallery.2. in other words. The proximity has been kept by keeping the picture close to its relevant text and having the main information in a separate box right next to the link bar.2. consisting of the main links such as rooms. (ECM. friendliness and dependability.2 Structure and Content As Williams and Tollett (2006) wrote.6) The contact details and career link located at the bottom of the navigation bar gives the viewer the chance to get in touch with the staff of our hotel for any inquiries or to view available positions in our hotel as we strive to give rising hoteliers the chance to improve their experiences as part of our team. The color also radiates warmth and is neutral.6) The left side holds the main body with vivid colored pictures and/or text.2. it is important to consider the web audience. color is essential to having a good design as it can raise the mood. The choice of colors on our pages were dependent on the meaning and mood that is conveyed by them. The alignment of information on the website is left sided and through the use of light and dark colors. the targeted clients when planning and building a website. To gain the customers attention and make our hotel as attractive as it can be through online marketing.1 – 11. the pages have been made available in the three most commonly spoken languages of the EU: English. HolidayInn6 has created a website structure that is simultaneously elegant and modern as well as easy to use and organized. the background which was the same on every page. the navigation bar is easy to use and over viewable.3 Colour Scheme As Davis (2008) said. 3. which are feelings we would like our customers to connect with our hotel. 2010) (Appendix 11. For our main color.well as the link bar on every page.2.1 – 11.2. 3. 9 . French and German. we decided to use brown tones because the color represents simplicity. restaurant. gain quick attention or be used to recognize a product. the pictures and text formats give a strong contrast to attract the viewer’s attention. To the right of the main body. To ease understanding of the website.(Appendix 11.

at the end of Year3 (Appendix 11.3 Competitive Information of the Key Competitors Regarding the RevPAR (Revenue per Available Room) the two strongest competitors to HolidayInn6 are SolMelia closely followed by Radisson.4. Sol Melia.4. 4.3). with a minor downfall to second rank in Year2 (Appendix 11.99% in Year1 to 70. followed by SolMelia with 70% guest satisfaction and Radisson with a very close 79% in staff satisfaction (Appendix 11. Its strongest competitor.51 in Year1 to $ 101.4.4. Though in Year2 the hotel had a slight increase in its daily rate to $ 104.3).4.3). 4. Demand and Competitive Considerations 4.11. Nevertheless. The amenities accessible in the hotel are similar for all competitors yet the competition has not been able to present strongly on the market which can be seen in the ranking where HolidayInn6 remained on first place in years 1 and 3.3). It can be expected that the demand will increase further throughout the upcoming years as the hotel will gain more market presence and add extra facilities .42% of market share in Year3 compared to HolidayInn6 (Appendix 11.4. 4.75% to 59. has stayed behind with 1.3).8).4.1 – 11. 10 . SolMelia is laid only $ 4.26.3).1 Past Occupancy Trends By looking at the past occupancy trends of HolidayInn6.06 while team 2 is $ 8.74% (Appendix 11. the overall occupancy for the same year had an increase of 8.1 – 11.81 lower. HolidayInn6 also has the highest percentage when it comes to Staff and Guest satisfaction at the end of Year3.4. This growth can be related to the simultaneous increase in market share from 9.4. an increase in overall occupancy percentage can be seen as it rose from 50.1 – 11.3. HolidayInn6 is ranked highest on an overall review of performances after Year3.4 Supply and Demand Analysis The high demand by HolidayInn's target market is shown through the constant increase in overall occupancy from year 1 to 3 (Appendix 11.3).06% after Year3 as well as the decrease in the daily rate from $ 103.1 .2 Hotels Currently Serving the Local Market There are six hotels located in the same area and competing with HolidayInn6 (Appendix 11.4.30% in Year3 (Appendix 11. The hotel is leading with 80% staff and 75% guest satisfaction.4.15 lower from HolidayInn6s RevPAR of $71.73% after Year1 up to 13.07 in Year3. Supply.4.

8-11.6.3. Finally one type of menu and the best supplier were selected in Year2 to maintain services and give best services and quality with consistency.18).3. In addition to Rooms Department. Even though the hotel is ranked first in guest satisfaction survey. In respect to future marketing plans and to maximize Holiday Inn6’s profitability.4). it is clear that there will be an increase in corporate guests. according to projections.4).9% in Year1 to 43.3.4%) in Year3(Appendix 11.6). with the help of on-going refurbishments.5: Marketing Strategy 5.4). As described by Trehan & Trehan (2007). 2005).8). Likewise liquor prices were changed to Level2 and Level3.2-11.4. In upcoming years. restaurant and bar and implementation of extra facilities such as concierge.3. The best pricing level was level 2. The increase will provide a chance of huge financial growth. Other than business sector.9% Year3 in Food & Beverage Departmental Income Statements (Appendix 11.1: Desired Clients and Market Potential It can been seen in last three years that Holiday Inn6 has positioned itself as a corporate hotel because there is always a higher occupancy in weekday rooms (93.5%) than weekend rooms (39.4. along with receiving appraisals in Year2 and Year3 (Appendix 11.1. This increase in prices in food and beverages did not affect negatively the F&B sales.2-11. restaurant at property has gained popularity and became one of the most frequented dining venues (Appendix 11.4. Au contraire.4-11. in-room utilities and complementary items to maximize its profits by increasing sales. sales and sales actions are apprehensive with selection of best substitute among the diverse available substitutes.1.2: Sales and Sales Actions Throughout the three years. management will strategize to broaden its target market and will include leisure sector to sell its weekend rooms and raise its room occupancy during weekend (Pickton & Broderick.4. 5.50. Due to better quality of menu products different suppliers were tried out during the three years (Appendix 11. This is the reason why Holiday Inn6’s average occupancy is the highest among all competitors.9). Holiday Inn6 has determined to focus on pricing policy.211. its average room rate is not the highest compared to the rest of the competitors at the end of Year3 (Appendix 11. With all the enhancements done during the period the price of the menu was increased by only $6.1. so that is why during all the period liquor prices were kept at Level2 (Appendix 11. management will target weddings and social events during weekends to utilize conference rooms to get full benefits out of them. 11 . departmental contribution towards total net income increased from 39.

8% (Appendix 11. direct mail..3: Advertisement and Promotional Tactics It is crucial to make major decisions before implementing the actual advertising plan: set the objectives.3. The amount spent on advertising was calculated according to the situation. telemarketing and website have been applied to successfully attain corporate sector’s guests. The media of advertising were selected judging by efficiency and effectiveness to the targeted segment of the market (Appendix 11.4.3. 2003). and the adverting campaign’s evaluation (Kotler et al.2-11.10 & 11. The success of Holiday Inn6’s advertising and promotion can be seen from the enhancement in public awareness index from Year1 to Year3 which increased gradually from 36.7-11.3.9). 2010). 12 . the message to be delivered.1).4% to 46. Together with tactics previously mentioned. which was done through adapting marketing tactics and tolls.. budgets.4.3. Kotler et al.4.5. Throughout the three years Holiday Inn6’s management has reinforced its competitiveness as a business hotel to draw more attention of the targeted segments. period of the year and requirements (Appendix 11.

An extension of rooms is necessary for accommodating the increased flow of corporate clients for the future years. the management has agreed on the fact that HolidayInn6 has achieved its projected targets and has enough potential to progress and expand in the market.1 General Concept and Changes needed Analyzing the overall performance for the last 3 years. room sales along with adding value to HolidayInn6’s services. the project presumes an addition of a business centre and an upgrade of the car parking. Therefore there were two projects analyzed on the presence of such criteria as suitability. The augmenting need of corporate segment in conferencing facilities is the reason for construction of the conference centre. In the conditions of growing competition HolidayInn6 has faced a need in extending its facilities to conform to the targeted market segment.6.corporate clients. 13 .2 Proposed Future Extension The accepted project provides space for sustainable growth in overall activity and is considered to be the most effective and suitable area for investment. The project implies the construction of a conference centre and an extension of 100 rooms. Moreover. stability and sustainability. whereas business centre and parking area will add benefits to business customers. Proposed Extension of Facilities and Services 6. profitability. 6.

7. showing slight decreases in year 2 due to the capital expenditure (Appendices 11.6.14). The decrease in the profit margin ratio can be attributed to more refurbishments carried out during year 3. several ratios have been carried out (Appendices 11.) and they include: Liquidity: - Current Ratio Solvency: - Debt-Equity Ratio Profitability: - Profit Margin Ratio - Gross Operating Profit Ratio - ROCE Activity: - Occupancy Percentage - Rooms Market Share Gearing Ratio.20.6. Financial Assessment. the progression since the change of management is apparent (Appendices 11. 7. Both ratios show improvements in year 3 however.6. Projections & Viability 7.6.6.6.7. it can be seen that the performance of HolidayInn6 is on the incline with only the Current Ratio & Debt-Equity ratio. From the ration analysis. – 11.2 Ratio Analysis In order to more clearly illustrate the financial position of HolidayInn6.6.13 – 11. do not 14 . as well as an increases in total other direct costs.).6.6.1 Trend Analysis Looking at the trend analysis conducted on the financial statements of HolidayInn6.).6. Despite the decreases in year 2 that can be attributed to major capital expenditures. HolidayInn6 was able to regain a healthy cash figure in the following year.1. fixed costs and business tax(Appendices 11. These increases however.1 – 11. – 11.

) - Parking Area: - 100 Guest Rooms: $2. 7. 2010) 15 . which combines the additions of a conference room.7. a business centre and a parking area.25% for property being depreciated over a period longer than 6 years (Deloitte.17).7.6.1). It is for this reason that HolidayInn6 has decided to choose the proposed project A.7. HolidayInn6 will make the following capital payments: - Investors: - Bank: - Outstanding Loan: $ 22.75% higher than the current French bank rate of 1.000 (Appendix 11.750 (3.000 of which will be financed through a bank loan and $500.33%) / annually ( Appendix 11. Stemming from this.300.000 (3.7) $70.7.653.impact the financial stability of the hotel as they only account for a 1% decrease in the ROCE (Appendix .25% of Rooms Construction Cost) The rooms are depreciated using the French property depreciation rate of 2.4) $ 15.210.11.000 to be invested by shareholders.875 (2.06/ monthly ( Appendix 11. In order to carry out these infrastructural expansions.8%) / annually (Appendix 11.2) The annual depreciation charge for each of the new facilities has calculated as follows: - Conference Centre: $19.25% (Trade economics.7.5.25%) / annually (2.92/ monthly (Appendix 11.97/ monthly (Appendix 11. 2011) with a loan repayment period of 36 months.3) $ 8298. HolidayInn6 is prepared to offer shareholders an annual rate of 6%. the management requires an investment of $1. It is our belief that these additions will be invaluable to our target market and will translate into higher profit margins for our hotel. $800.7. extra rooms.3 Capital Investment Required & Financing The goal of the HolidayInn6’s management is to establish the hotel as the top hotel for weekday business travellers and it is in accordance with this goal that most strategic management decisions have been carried out over the past 3 years. which is 4.

00 (year 4) to $2.5 Cost .00 (Year 8) (Appendix 11.2.23% in year 8.23% in year 4 to 90.8.07 years is shorter than the forecast of 3 years(Appendix 11. 2001).2) - Internal Rate of Return ( Appendix 11.Benefit Analysis In order to appraise the viability of the proposed extension project. from a revenue of $904.9.1. which according to (Schmidgall 2006) is a better of the value of an investment project as they consider the time value of money and the cash flows to be generated by the project. both back up the result of the Payback Period i.3) The payback period of 2.1) - Net Present Value ( Appendix 11. In regards to the operational budget. methods of investment appraisal have been carried out: - Payback Period ( Appendix 11.800.) with the room occupancy projected to increase from 60. however it is important for the concept of prudence in accounting to allow for a safety level.8.4).7. A pertinent growth trend used in the forecasting is the occupancy percentage as it directly affects the revenues to be expected and the costs that will be incurred in the (estimated) revenue generation (Burton & Bragg.e. the F&B revenue projected to increase by 50% from year 4 to year 8(Appendix 11.2) and the average (weekday and weekend) conference centre utilization projected to increase over the 4 years.) 7. which is provided by the forecast of 3 years.4 Operations and Capital Budgeting The pro-forma financial statements were forecasted using the naïve method in conjunction with the growth trends experienced from year 0 to year 4 in order to apply a level of credibility to the calculations.320.9.2.9. Appendix 11. The NPV and the IRR.9.7. they support the decision to invest in the project.036. it can be seen that the estimates reflect a continuous growth pattern (Appendix 11. The NPV is greater than zero and the IRR greater than the interest rate given to investors. 16 .8.

the management believes that the project will contribute substantially to overall profitability of HolidayInn6.7. 17 . It is a vital step to be taken for hotel’s progression towards domination on the corporate market segment.6 Evaluation of projections According to the evaluations carried out.

8 Sensitivity Analysis As a safety measure.10. the purpose of which was to define how sensitive are the operations if the hotel fails to meet its occupancy objectives (Appendix 11. Taking Year 8 Rooms Departmental Income Statement (Appendix 11. 18 . HolidayInn6 has carried out an analysis. thus approving the business to be capable of withstanding drastic decreases in activity.1) the management has found out that decreases in occupancy do not affect negatively the net income.10).

(Hots Background Document.1 – 11.1.15). but who unlike HolidayInn6 have the added value of providing their customers with conference facilities and business services. p. the management therefore recommends to the shareholders to invest into the proposed expansion project. The Park Hotel & The Mariner who all operate on much the same scale as HolidayInn6 in terms of number of rooms. HolidayInn6 is a hotel that shows not only potential but has translated and can continue to translate this potential into increased earnings and an continuously progressive occupancy percentage.9. Accordingly. 19 .4) and expand further into its target market of corporate clientele it is essential for the hotel to be revitalised to match the facilities provided by the competitors such as The Palace Hotel.8.6. Conclusion & Recommendations In order for HolidayInn6 to capitalise on the popularity of conferences in the area of both in and out of season (Appendix 11.8) As can be seen from the past financial statements to the pro-forma statements and investment appraisal calculations (Appendix 11.

T.. International Tax and Business Guide: France. 2nd Ed. New Delhi: V.   Burton. 2006. & Trehan. M..  Kotler. T. (2005). Bown. J.  Deloitte.. J. 5th Ed. 2009.. C. 20 . New Jersey: Pearson Prentice Hall. & Bragg. J. Berkley: Peachpit Press. J. Deloitte.[online] Available at: <http://ec. A. EU Languages and Language Policies.europa.  Williams. J. Florida: Thomson Cengage Learning.tradingeconomics. and Tollett.com/france/interest-rate> [Accessed 2 May 2011] Trehan. S. (2010). C. John Wiley & Sons Inc. (2003).. M. Integrated marketing communications. England: Prentice Hall. San Francisco: Chronicle Books. 2nd ed. (2006). 2008. R. R. USA: Cengage Learning.. The Designer's Toolkit . and Makens. et al. (2001) Accounting and Fincancefor your SmallBusiness. 3rd Ed.eu/education/languages/languages-ofeurope/index_en.10 References:  Bennett. E. 2005. Michigan: American Hotel & Lodging Educational Institute   Trading Economics (2011) TRADING ECONOMICS: FRANCE INTEREST RATE [online]..  Pickton. Bowen. K Enterprises.. G. (2010). P.  European Commission Multilingualism. Hospitality Industry Managerial Accounting. J. and Broderick. New Jersey: Pearson Prentice Hall. Design Fundamentals for New Media. Marketing for Hospitality and Tourism. R.  Gary.htm> [Accessed 05 March 2011]  Kolter. Advertising and Sales Management. (2010).Web Designs: Introductory Concepts and Techniques. Davis G.1000 Colors: Thousands of Color Combinations.6th ed. The Non-Designer’s Web Book. Available at: <http://www.  Schmidgall. and Makens. (2007). 3rd Ed. P. D. B.. S. J. Marketing for Hospitality and Tourism.

France [Online] Available through: <http://maps.ch> [Accessed on: 20 April 2011] Source: Google Maps (2011) Holiday Inn. Location and Area Source: Google Maps (2011) Nice.1 Appendix: General Information of Holiday Inn6 11. nice.ch> [Accessed on: 20 April 2011] 21 .1 Appendix: Nice –Space.11 Appendices 11. France [Online] Available through: < http://maps.1.google.google.

Source: Self Captured. Nice. France$ Source: Deviant Art (2011) Available at: http://browse. Source: Self Captured (July. France.com/?q=nice.2 Appendix Nice. 22 .11.1. beach france&order=9&offset=24#/d1dt541 [Accessed on: 20 April 2011] 3rd Picture: View of the Beach from Holiday Inn Resort.deviantart. 2010) 2nd Picture: A beautiful view of beach on a sunny day in Nice. Ambiance and Scenery 1st Picture: Panoramic view of Coastal line and the city of Nice. France.

11. Spring 2011 pp.1.3 Appendix: Hotel Location Source: HOTS Background Information.4 23 .

The combination of regional tourist events and commercial growth prompted one of the established hotels to build an excellent conference centre. and short on tax funds to maintain its infrastructure. No longer a boomtown. 1990's – Decline Unexpectedly. This influx encouraged the establishment of annual tourism and recreational events. in turn attracted increased levels of tourism. a seafront location. there has not been a great deal of interest from the major hotel companies. They have been to purchase older hotel properties at a cheap price.1.11. they have insisted on one condition . which generated a small market for commercial room nights. demolish them.000 residents and in the 1980's the city economy began to diversify into service and soft industry. Source: HOTS Background Information. only 50% of the previous levels of tourism remained and this was largely due to the annual tourist events which had become very well established. many companies were looking to relocate to areas that offered lower commercial costs. With a diversified economy. while the town council has been keen to support redevelopment. lower taxes. the town was also losing its appeal for small industry relocation as well. and good hotel facilities. Spring 2011 pp. but many smaller hotel developer/operators have been attracted to the town looking for low cost property. This plan has been very successful and many companies have relocated or have committed to relocate. and replace them with modern facilities. Many hotels entered the market during this period offering traditional facilities in well-constructed buildings and conveniently situated for both the sea and the town. the city seemed to be in a strong position. not replaced. The council has planned to use tax income from these commercial developments to re-establish the seafront facilities to meet the highest expectations of modern tourists. 1980's – Small Industry Growth The town grew to a city of 200. By 1995. in the late 1980's the tourism market in the city began to soften as tourists looked for new venues and new types of tourist experiences. which had not kept up with the times. The local authority decided to offer an exceptionally favorable economic relocation package to small and medium size firms.the old hotels must be refurbished. 2000's – Revitalisation Plan In the late 1990's. which.4 Appendix Economical Background of the Hotel Hotel Economic Background 1970's – Tourism Growth In the 1970's. Up to this point. However. and a higher quality of life.5 24 . There was also public criticism of the city's hotel facilities. increased affluence and the desire for regional and national travel produced a boom for this seaside town as it developed into a popular destination for coastal vacations and off-season breaks.

7 25 .11.5 Appendix: Hotel Facilities Source: HOTS Background Information. Spring 2011 pp.1.

Excellent) Facility Rating (%) Rooms 65.00% Rooms Bar Resturant Front Desk CURRENT CONDITION OF FACILITIES: (rated on a scale of 1. very poor.00% 0.11.9 Source: HOTS Market Research: Business Advice by 3rd Year December.00% 20.00% 60.00% 40.4 Restaurant 80.5 Front Desk 79.5 Bar 98.6 Appendix: Current facilities’ condition Facility Rating 120.00% 100. 26 . to 100%.1.00% 80.

7 Appendix: In Room Entertainment and Complimentary Items Source: HOTS User Guide pp.11.25 27 .1.

a home from home I will always go back Excellent food .well done There is always a friendly face There are always plenty of staff around to serve you The hotel has a good image I have been occasionally Source: Monthly Indicator Report December Year2 Most Recent Customer Comments You never see the same member of staff twice I never see my manager Everywhere is clean and in a good state of repair They provide value for money Not many people go there There is always a friendly face There are always plenty of staff around to serve you You often hear folk talk of it I hear it is the most successful hotel in the area The best restaurant in town Source: Monthly Indicator Report June Year 3 Most Recent Customer Comments You never see the same member of staff twice No one seems to be in charge A very comfortable hotel .1.11.well done There is always a friendly face The service is excellent You often hear folk talk of it I prefer to go somewhere else Source: Monthly Indicator Report December Year 3 28 .8 Appendix: Comments from Monthly Indicator Report Year 1 to Year 2 Most Recent Customer Comments You never see the same member of staff twice No one seems to be in charge Everywhere is clean and in a good state of repair I will always go back Excellent food .

11.9 Appendix: Guest Comments: Week 82 to week 149 Week 149 Comments The hotel has a great reputation 144 It's good value all year round 137 It's so quiet there.nobody wants to know 94 Everywhere is clean and in a good state of repair 92 89 hear it is the most successful hotel in the area It's so quiet there. it’s embarrassing 82 You often hear folk talk of it Source: HOTS Simulation 29 . it’s embarrassing 120 Not many people go there 113 They provide value for money 105 The hotel has been refurbished to a high standard 101 I am proud to be a member of this team 96 There is no ownership .1.

11.2 Website Layout 11.1 Appendix: Homepage 30 .2.

2 Appendix: Reservation 31 .2.11.

3 Appendix: Photo Gallery 32 .2.11.

11.4 Appendix: Rooms 33 .2.

11.2.5 Appendix: Contact Us 34 .

2.11.6 Appendix: Privacy Policy 35 .

00 20.00 15.00 5.00 10.00 45.00 20.00 25.00 Local Radio 35.00 25.00 5.00 10.00 20.00 30.00 PR Agency Source: Self created Weekend Room 10.00 30.00 Posters.00 15.00 40. 40.00 Direct Sales Force 40.00 25.00 30.00 30.00 35.00 25.00 Local Visitor Guide 55.00 10.00 50.00 55.00 55.00 35.3 Marketing Analysis 11.00 10.11.1 Appendix: Advertising Media and their Effectiveness Weekday Room 10.3.00 10.00 40.00 Weddings Etc.00 40.00 30.00 40.00 10.00 50.00 15.00 20.00 20.00 35.00 15.00 10.00 Local Newspaper 20. and Point of Sale 30.00 50.00 Sunday Newspaper 50.00 50.00 5.00 10.00 20.00 35.00 Telemarketing & Web 20.00 35.00 Business Press 10.00 50.00 5.00 36 Beverage Conference Tours .00 5.00 20.00 Direct Mail 20.00 15.00 Meal 50.00 35.00 40.00 5.00 40.00 30.00 40.

2 Appendix: Management decisions Year-1 January General Decisions: Advertising: Price Training:8$-10$ Restaurant= Level 2 20 Bedrooms= Level 2 Supplier= Choice 2 Menu= Type 2 Meals= 24. quote price 95% normal March Price General Decisions: Front desk= Level 2 10 rooms= Level 2 Training= 10$-14$ Staff Changing: Hotel Services decreased by4 to 18 Front Office increased by2 to 12 Advertising: April No Change General Decisions: Pay level of Hotel Services. F&B.00$ Tours=70$ Price May Corp Wd=111.00$ Leis Wd=97.00$ Leis We= 100.11.3. and Front Desk increased to level 2 Training= 10$-15$ Advertising: Meals=1000$ Liquor= Level 3 Meals=25.50 $ Liquor Price= Level 2 Weekend= 2500$ Weekday=3000$ February Price General Decisions: Bar = Level 2 In Room Entertainment= Level 3 Room Service Training: 8$-10$ Corp Wd=120$ Corp We=110$ Leis Wd=100$ Leis We= 95$ Advertising: Tours=2000$ Weekday=8000$ Weekend=3000$ Local visitor Guide=200$ If occupancy would be $less than 60% occupancy.50$ Corp We=97.50$ Meals=27$ .50$ Liquor= Level 2 Price General Decisions: No change No change Advertising: June Meals=1500$ General Decisions: Concierge Hotel services Staff increased by 3 to 21 Advertising: No Change Price 37 Leis Wd=116.

50$ Tours= 80$ No Change Price No Change Meals= 5000$ Hotel Marketing Consortium / Website October Price General Decisions: Training= 15$-19$ 10 Rooms= Level 2 Advertising: November No Change General Decisions: Training 13$-18$ Staff Changing: F&B decreased by 5 to 20 Front Office decreased by 2 to 10 Hotel Services decreased by 3 to 22 Advertising: December No Change General Decisions: Training decreased to 0$ Advertising: Weekday =14.50$ Leis Wd= 116.800$ Corp Wd=97.800$ Weekend=14.July Price General Decisions: Complimentary Items=Level 3 Advertising: Weekday=19.50$ Tours=70$ Price Corp Wd= 111.50$ Leis Wd= 115.50$ Corp We=97.800$ Weekend=14.50$ Leis We= 97$ Tours= 70$ Price Source: Self Created 38 No Change .50$ Leis We= 110.750$ Liquor= 2000$ August Price General Decisions: Training: 11$-15$ Staff Changing: Department Head increased by 1 to 7 F&B staff increased by 8 to 25 Hotel Services staff increased by 4 to 25 Advertising: September No Change General Decisions: 25 rooms= Level 2 Training= 12$-16$ Supplier= Choice 3 Menu= Type 3 Advertising: Corp Wd= 100.

00$ Advertising: Meals=900$ Price No Change Price June 39 .00$ Corp We= 105.00$ Leis Wd= 100.3.3 Appendix: Management decisions Year-2 January General Decisions: Advertising: Price Supplier= Choice 2 Menu= Type 2 No Change No Change February Price General Decisions: Front Office Staff increased by 2 to 12 Advertising: Weekday=3300$ Weekend=2000$ Liquor=1500$ March If occupancy would be less than 45 % .price 90% If occupancy would be less than 50% .price 100% Price General Decisions: No Change Corp Wd= 110.price 100% If occupancy would be less than 50 % .11.price 95% Price General Decisions: No Change No Change Advertising: April Meal=1500$ General Decisions: No Change Advertising: May No Change General Decisions: No change Corp Wd=118$ Advertising: Weekday=9900$ Weekend=4500$ Meals=3300$ If occupancy would be less than 45 % .

600$ August No Change Price General Decisions: 40 Rooms = Level 2 Staff Changing: Hotel Services decreased by 2 to 20 Department heads decreased by 1 to 6 Advertising: September No Change General Decisions: 40 Rooms= level 3 Staff Pay= Level 3 Advertising: October Liquor=1600$ General Decisions: 40 Rooms= Level 3 Restaurant= Level 3 Front Desk= Level 3 Advertising No Change No Change Price No Change Price November General Decisions: 40 Rooms = Level 2 Training 18$-20$ Advertising: December Meals= 1600$ General Decisions: 40 Rooms= Level 3 Bar= Level 3 Training= 28$ .30$ Changing in Staff: Department Head increased by 1 to 7 Advertising: No Change If occupancy would be below 55% .Price 105 % Price No Change Price Source: Self Created 40 No Change .900$ Weekend=9.July Price General Decisions: 40 Rooms= Level 3 Training= 10 $ Guest Comfort= Level 4 Advertising: Weekday=9.Price 97 % If occupancy would be above 70% .Price 95 % If occupancy would be below 60% .900$ Liquor=1.

3.11.50$ Tours= 65$ Price Tours=70$ Price General Decisions: Training=10$-20$ Advertising: June No Change General Decisions: Restaurant=Level 3 Front Desk= Level 3 Advertising: Liquor=1600$ No Change Price 41 No Change .4 Appendix: Management decisions Year-3 January Price General Decisions: Training=18$ to 20$ Advertising: February No Change General Decisions: No Change Advertising: March No Change General Decisions: 40 Rooms= Level 2 Training= 8$-10$ Advertising: No Change No Change Price No Change Price April General Decisions: 20 Rooms= Level 2 Advertising: Tour=1600$ Local Visitor’s Guide=250$ May Corp Wd=102.00$ Leis Wd=115.0$ Leis We= 112.50$ Corp We=99.

000 $ of the loan Advertising No Change November Price General Decisions: No Changes No Change Advertising: December No Changes General Decisions: 20 Rooms= Level 2 Bar= Level 3 Price Paid off 120.905 $ of the loan Advertising: Meals=2.800$ Weekend=8.000$ Source: Self Created 42 No Change .800$ September Meals=27.July Price General Decisions: 25 Room= Level 2 Advertising: No Change August No Change Price General Decisions: 20 Rooms = Level 2 Training=8$-10$ Advertising: Weekday=8.50$ Price General Decisions: 20 Rooms= level 2 Advertising: October No Change General Decisions: 20 Rooms= Level 2 No Change Price No Change Paid off 100.

3.11.5. Weekday: Year 3 11.5 Appendix: Weekend VS.1 Appendix: Weekday Rooms analysis Weekday 7% Corporate 21% Leisure 72% Tours Weekday Rooms Analysis Year 3 Total Weekday Corporate Leisure Tours Corporate Leisure Tours Average Dec 2966 1854 844 268 Nov 5053 4628 317 108 Oct 4077 2923 856 298 Sep 4006 1680 1714 612 Aug 5133 1716 2542 875 Jul 4183 2230 1416 537 Jun 4107 3040 776 291 May 5128 4206 663 259 Apr Mar 3994 3758 2870 3162 830 446 294 150 Feb 4973 4898 55 20 Jan 2744 2565 134 45 63% 28% 9% 92% 6% 2% 72% 21% 7% 42% 43% 15% 33% 50% 17% 53% 34% 13% 74% 19% 7% 82% 13% 5% 72% 21% 7% 98% 1% 0% 93% 5% 2% 72% Corporate Source: self Created 21% Leisure 43 7% Tours 84% 12% 4% .3.

5.3.11.2 Appendix: Weekend Rooms Analysis Weekend 20% 32% Corporate 48% Leisure Tours Weekend Rooms Analysis Total weekend Corporate Leisure Tours 1218 188 743 900 495 288 1414 313 780 2441 165 1620 3365 159 2269 2144 232 1337 1324 312 700 1312 441 596 1324 282 728 856 330 367 558 486 52 413 239 127 287 117 321 656 937 575 312 275 314 159 20 47 Corporate Leisure Tours 15% 61% 24% 55% 32% 13% 22% 55% 23% 7% 66% 27% 5% 67% 28% 11% 62% 27% 24% 53% 24% 34% 45% 21% 21% 55% 24% 39% 43% 19% 87% 9% 4% 58% 31% 11% Average 32% Corporate 48% Leisure Source: Self created 44 20% Tours .

6 Appendix: Market Segments Market Segments 10% Corporate 28% Leisure 62% Tours Market Segments Year3 Dec Nov Oct Sep 6447 1845 Aug 8498 1875 Jul Jun Apr Mar Feb Jan 6327 2462 May 5431 6440 3352 4647 5318 3152 4614 3492 5531 5384 3157 2804 Total Guests Corporate 4184 5953 2042 5123 5491 3236 Leisure Tours 1587 605 1636 3334 4811 2753 1476 1259 1558 813 107 261 555 225 619 1268 1812 1112 603 534 608 309 40 92 Corporate 49% 86% 59% 29% 22% 39% 62% 72% 59% 76% 97% 89% Leisure Tours 38% 13% 10% 4% 30% 11% 52% 20% 57% 21% 44% 18% 27% 11% 20% 8% 29% 11% 18% 7% 2% 1% 8% 3% Average 62% Corporate 28% Leisure Source: Self created 45 10% Tours .11.3.

00 Room Occupancy 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Source: Self Created.00 $20.00 $0. Room Occupancy for Year 3 Average Room Rate $140.00 $100. HOTS Monthly Indicator Jan-Dec Year 3 46 .00 $40.00 $80.00 $60.11.00 $120.3.7 Appendix: Average Room Rate vs.

11. The Mainer 47 . Möve n Pick 7 3. Westin 10 6. The Park Hotel 8.3. Radisson 8 4. Holiday Inn 6 2.8 Appendix Competitors 1. Sol Melia 9 5. Palace Hotel 7.

11.9 Appendix: Competitor Status Report December Year 3 COMPETITOR STATUS REPORT Information for the last week of December Year 3 Teams Refurbishment Rooms Bar Restaurant Front Desk 1 2 3 4 5 Good Excellent Excellent Excellent Excellent Excellent Excellent Excellent Good Excellent Excellent Excellent Average Excellent Good Excellent Poor Excellent Excellent Excellent Extra Services & Facility Status Concierge Room/Lounge Service In-Room Entertainment Complimentary Items Room Mini-Bar Internet Access Quick Check In/Out Business Services Extra Car Parking Hotel Shop Health Club Conference Facility Second Bar Room Extension Restaurant Extension Teams           Level 4 Level 4 Level 4 Level 4 Level 4 Level 4 Level 4 Level 4 Level 3 Level 3                                                        1 2 3 Source: HOTS Competitor status Report December Year 3 48 4 5 .3.

3.11.10 Appendix: Local Diary Events Source: HOTS Background Information pp.10 49 .

3 7.527 1.027.101 3.431.992 Source: HOTS Scorecard Year1 50 .305 332.744 46.375 Working Capital ($) 1.663 97.2 90.31 1 2 30.65 29.500.354 Owners' Equity ($) 7.96 23.845 1.28 27.36 46.734 24.876 903.15 1 0.615 8.002 78.79 3 5.012 -77.5 90.354 OPERATIONS: Average Daily rate ($) Occupancy % Public Awareness Market Image Index Hotel Quality Index Annual Staff Turnover (%) Rooms Available Number of Rooms Sold 103.466. taxes & depn)($) Profit before Taxes ($) 1.000 7.22 5 5 Rooms Market Share % 9.340.57 23.9 90.041 2.96 4 4 34.2 90.957 30 158.646 493.403.709 EBITDA (earnings before interest. IBFC ($) 2.760.60 15.722 4.804 4.58 22.03 2 8.000 7.93 14.375 29.301 -493.376.959 95.83 68.170.1 Appendix: HOTS Scorecard Year 1 HOTS SCORECARD COMPARISON OF TEAM RESULTS End of Year 1 KEY INDICATORS TEAM1 TEAM2 TEAM3 TEAM4 TEAM5 Average Rank Average Rank Average Rank Average Rank Average Rank REVPAR $ Gross Operating Profit (IBFC %) 52.882 30 1.76 21.942 28.30 14.789.174 Income Before Fixed Costs.92 14.500.01 19.075 7.602 597.375 22.466.84 23.92 2 1 26.46 69.94 4 9.753.552 640.127 -54.04 61.650.51 50.60 3 3 46.500.41 5 15.02 31.04 36.000 Income Tax Rate (%) Income after Taxes ($) 30 938.652 4.497.527.527 41.047.001 30 54.75 77.884 33.500.432 2.163.0 7.4.555 1.73 1 5.225.81 3 15.500.54 25.143.17 98.Pretax profit/Capital Employed GUEST: Guest Satisfaction Survey (%) STAFF: Staff Satisfaction survey (%) OVERALL RANKING PERFORMANCE AT A GLANCE TEAM1 TEAM2 TEAM3 TEAM4 TEAM5 FINANCES: Total Revenue ($) 8.000 7.11.346.66 5 60 1 49 4 53 3 58 2 47 5 59 2 1 58 3 4 55 4 3 66 1 2 46 5 5 OPERATIONS: OWNER: ROCE % .050.969 30 -493.46 12.375 20.729.466.78 26.252.000 7.63 19.39 34.2 7.697 Income Before Fixed Costs (IBFC %) Fixed Property & Equipment ($) 26.79 8.99 4 2.974 1.4 Performance Indicator from Year1 to Year3 11.13 1 -6.99 36.45 25.272 94.583 493.510 226.461 Room Revenue ($) 4.6 90.223.070 101.466.9 7.24 31.133 4.6 7.848 2.596 1.

26 59.500.92 21.233 84.976 Room Revenue ($) 5.629 2.5 90.4.402 41.195.244.43 20.46 102.895.986 55.544 4.37 4 12.463 3.591 823.657 356.591.640 Profit before Taxes ($) 2.080.15 30.2 Appendix: HOTS Scorecard Year 2 HOTS SCORECARD COMPARISON OF TEAM RESULTS End of Year 2 KEY INDICATORS TEAM1 TEAM2 TEAM3 TEAM4 TEAM5 Average Rank Average Rank Average Rank Average Rank Average Rank 62.576 41.134 Income Before Fixed Costs (IBFC %) 36.60 4 3 66.405 1.029.845 1.62 5 66 1 62 3 63 3 66 2 58 5 72 2 69 3 68 4 72 1 45 5 OPERATIONS: REVPAR $ Gross Operating Profit (IBFC %) Rooms Market Share % OWNER: ROCE % .41 1 1 34.575 622.101.83 2 8.93 28.500.22 41.42 3 28.914 107.61 3 11.39 57.959 104.27 37.000 7.89 1 4.208 1.702 1.29 36.340 703.224.287 7.269 6.000 37.165.74 45.095.982 7.29 23.83 46.5 91.Pretax profit/Capital Employed GUEST: Guest Satisfaction Survey (%) STAFF: Staff Satisfaction survey (%) 2 OVERALL RANKING 4 3 1 5 PERFORMANCE AT A GLANCE TEAM1 TEAM2 TEAM3 TEAM4 TEAM5 Total Revenue ($) 9.45 29.72 59.822 3.972 1.847 7.8 28.206.91 1 8.213 8.957 4.00 59.606 1.479.500 Working Capital ($) -1.374 5.788 97.145 EBITDA (earnings before interest.959 Owners' Equity ($) 7.952.77 29.475.267 10.133.000 7.10 46.612.000 7.78 61.536.100 4.05 2 8.876.038 492.54 4 10.227.256. taxes & depn)($) 3.71 2 2 46.640 3.632.6 39.901 52.500.339 1.516 100.660 356.85 41.500.23 5 24.019.61 20.2 89.38 40.069. IBFC ($) 3.04 16.38 40.4 20.500 Income Before Fixed Costs.211.466 1.851.802 5.644.6 90.500.21 57.512.10 32.81 40.911 748.000 7.000 Income Tax Rate (%) 30 30 30 30 30 Income after Taxes ($) 1.29 24.15 39.086.3 87.630.8 Fixed Property & Equipment ($) 11.11.213.84 5 4 11.82 42.119.866 7.621.7 20.84 3 4 44.131.901 3.135 FINANCES: OPERATIONS: Average Daily rate ($) Occupancy % Public Awareness Market Image Index Hotel Quality Index Annual Staff Turnover (%) Rooms Available Number of Rooms Sold Source: HOTS Scorecard Year2 51 .

006 2.500.153 Owners' Equity ($) 7.3 42.779.481 -528.500.521.85 103.826 431.000 7.610 Profit before Taxes ($) 2.834 Room Revenue ($) 6.11.043.153 101.701 52.15 37.342.35 61.716 974.341.8 10.4 89. taxes & depn)($) 3.Pretax profit/Capital Employed GUEST: Guest Satisfaction Survey(%) STAFF: Staff Satisfaction survey (%) 1 OVERALL RANKING 3 4 2 5 PERFORMANCE AT A GLANCE TEAM1 TEAM2 TEAM3 TEAM4 TEAM5 Total Revenue ($) 11.55 42.22 5 75 1 68 3 65 4 70 2 60 5 80 1 70 3 79 2 65 4 45 5 OPERATIONS: OWNER: ROCE % .28 4 42.522 10.281 83.71 1 0.81 2 11.466.81 5 Gross Operating Profit (IBFC %) 34.913 4.30 46.687 4.969 5.76 42.83 3 27.5 89.881 -900.46 18.83 28.452.000 7.015 2.85 49.845 EBITDA (earnings before interest. IBFC ($) 3.25 3 52.29 41.501 105.0 11.500.36 4 66.313 3.000 Income Tax Rate (%) 30 30 30 30 30 Income after Taxes ($) 1.093 6.600 55.099 3.043.733.147.785 35.991.58 4 27.185 2.560.0 34.997 -900.64 3 7.06 1 9.026.602.3 Appendix: HOTS Scorecard Year 3 HOTS SCORECARD COMPARISON OF TEAM RESULTS End of Year 3 KEY INDICATORS TEAM1 TEAM2 TEAM3 TEAM4 TEAM5 Average Rank Average Rank Average Rank Average Rank Average Rank REVPAR $ 71.91 2 29.569 3.94 47.23 40.411 8.936.474.961.267 -105.34 62.31 62.6 -2.446 9.98 5 Rooms Market Share % 13.12 52.70 58.509 36.312.22 2 -13.418.62 58.857 50.995.295 10.246 5.558 2.07 70.104 10.50 5 23.339 Income Before Fixed Costs.383 56.82 2 10.253.8 90.7 90.782.99 40.527 5.500.62 33.165 108.824 Income Before Fixed Costs (IBFC %) 34.58 4 11.998 26.64 1 -1.01 3 34.32 26.000 7.698.568.809 8.060 527.2 88.680.473 4.4.84 59.84 43.335 73.800 -391.61 46.021 3.06 1 62.29 51.468 FINANCES: Fixed Property & Equipment ($) Working Capital ($) OPERATIONS: Average Daily rate ($) Occupancy % Public Awareness Market Image Index Hotel Quality Index Annual Staff Turnover (%) Rooms Available Number of Rooms Sold Source: HOTS Scorecard Year3 52 .612 854.327 63.143.570.424.000 7.500.

9% 42.7% 0.0% 23.1% 1.9% 1.1% 0.2% 938.11.Year 1 DEPARTMENTAL INCOME STATEMENT .214.995 0 15.6% Food & Beverages Conference & Banqueting 485.4.0% Total Beverage Revenue 938.846.5% 0.485 37.258.867 12.416 402.8% 39.4% 1.660 95.996 0 348.9% 0.310.4 Appendix: F&B Departmental Income Statement.843 1.903 59.094 60.9% 36.1% 57.8% 2.0% 0.995 100% 798.2% 3.200.901 39.0% Total Payroll and Related Expenses 485.Page 2 $ Team .406 0 100.9% Total Food Revenue Beverage Revenue Bar Mini-bars Cost of Sales Food Beverage Total Cost of Sales Gross Profit Food Beverages Total Gross Profit Payroll and Related Expenses Other Direct Costs China & Glassware Laundry Training Total Direct Costs Departmental Contribution Source: HOTS F&B Departmental Income Statement Year 1 53 .729 4.108.0% 16.HolidayInn6 Year 1 FOOD & BEVERAGE DEPARTMENT Food Revenue Restaurant Conferences Tours Wedding/Social Room Service 1.173 535.370 1.921 62.690 0 500.046.995 15.589 69.4% 145.8% Total Food & Beverage Revenue 3.406 30.

4% 2.896 515.099 67.0% 12.549 0 15.549 15.198.0% 23.0% 41.920 1.203 683.313 32.11.5% Total Food Revenue Beverage Revenue Bar Mini-bars Cost of Sales Food Beverage Total Cost of Sales Gross Profit Food Beverages Total Gross Profit Payroll and Related Expenses Food & Beverages Conference & Banqueting Total Payroll and Related Expenses Other Direct Costs China & Glassware Laundry Training Total Direct Costs Departmental Contribution Source: HOTS F&B Departmental Income Statement Year 2 54 .4% 149.4.0% Total Beverage Revenue 1.7% 43.0% 37.0% 0.609.313 0 100.198.065 0 310.4% Total Food & Beverage Revenue 3.269 60.412 100% 944.0% 555.702.0% 1.458 97.HolidayInn6 Year 2 FOOD & BEVERAGE DEPARTMENT Food Revenue Restaurant Conferences Tours Wedding/Social Room Service 1.4% 1.6% 555.242.6% 1.460.542 4.066 62.178 1.800 13.559.4% 0.3% 0.0% 2.6% 0.5 Appendix: F&B Departmental Income Statement.537.247 37.0% 2.504.105 0 584.Year 2 DEPARTMENTAL INCOME STATEMENT .Page 2 $ Team .929 64.3% 57.0% 0.143 39.

1% 57.0% 0.9% 0.884.033 683.3% 0.725 13.966.0% 12.0% Total Beverage Revenue 1.545 33.551 110.0% 2.258 906.11.3% 166.5% 43.0% 1.HolidayInn6 Year 3 FOOD & BEVERAGE DEPARTMENT Food Revenue Restaurant Conferences Tours Wedding/Social Room Service 2.9% 0.4% Total Food & Beverage Revenue 4.836 100% 1.036 2.088.0% 618.291 66.167.510 39.9% Total Food Revenue Beverage Revenue Bar Mini-bars Cost of Sales Food Beverage Total Cost of Sales Gross Profit Food Beverages Total Gross Profit Payroll and Related Expenses Food & Beverages Conference & Banqueting Total Payroll and Related Expenses Other Direct Costs China & Glassware Laundry Training Total Direct Costs Departmental Contribution Source: HOTS F&B Departmental Income Statement Year 3 55 .589.4% 618.201.781 64.Page 2 $ Team .760 0.071 3.068 62.9% 43.0% 41.6% 1.326 60.219 0 13.756.6% 1.872.2% 3.0% 22.Year 2 DEPARTMENTAL INCOME STATEMENT .219 13.589.388 0 407.4.122 0 703.477 37.6 Appendix: F&B Departmental Income Statement.545 0 100.0% 0.056.9% 2.

4 24.0 68.9 Monthly Revenue ($000's) Monthly Net Income ($000's) Weekday Room Occupancy (%) 685.2 Weekend Guest Occupancy (%) 26.6 11.3 Weekday Guest Occupancy (%) 43.7 25.1 Monthly Food & Beverage Revenue ($000's) 253.8 36.9 399.2 Rooms Market Share (%) Market Image Index Public Awareness Index External Meal Sales (%) External Liquor Sales (%) Monthly Rooms Revenue ($000's) 9.5 111.11.0 103.4.3 Weekend Room Occupancy (%) 29.8 20.7 Appendix: Indicator Average Year 1 INDICATOR AVERAGES Team .7 67.4 Refurbishment (total for period shown) 65@2 1@2 1@2 1@2 Rooms Bar Restaurant Front Desk Source: HOTS Indicator Average Year 1 56 .51 36.HolidayInn6 Year 1 Indicators (Averages for period shown) Room Occupancy (%) Average Room Rate $ Guest Occupancy (%) Annual Staff Turnover (%) Average weekly training spend per staff member($) 51.

0 42.0 Rooms Market Share (%) Market Image Index Public Awareness Index External Meal Sales (%) External Liquor Sales (%) 11.7 49.4.8 35.9 Refurbishment (total for period shown) 40@2.8 30.26 42.0 57. 210@3 Rooms 2@3 1@3 1@3 Bar Restaurant Front Desk Source: HOTS Indicator Average Year 2 57 .8 45.0 Monthly Rooms Revenue ($000's) Monthly Food & Beverage Revenue ($000's) 456.6 31.11.HolidayInn6 Year 2 Indicators (Averages for period shown) Room Occupancy (%) Average Room Rate $ Guest Occupancy (%) Annual Staff Turnover (%) Average weekly training spend per staff member($) 59.5 Monthly Revenue ($000's) Monthly Net Income ($000's) Weekday Room Occupancy (%) Weekend Room Occupancy (%) Weekday Guest Occupancy (%) Weekend Guest Occupancy (%) 802.3 308.7 220.8 Appendix: Indicator Average Year 2 INDICATOR AVERAGES Team .7 104.3 13.1 60.4 77.

6 46.3 Average Room Rate $ Guest Occupancy (%) 101.1 59.HolidayInn6 Year 3 Indicators (Averages for period shown) Room Occupancy (%) 70.4 Weekday Guest Occupancy (%) Weekend Guest Occupancy (%) 58.4 Monthly Revenue ($000's) Monthly Net Income ($000's) 977.8 34.7 Refurbishment (total for period shown) 170@2 1@3 Rooms Bar 1@3 1@3 Restaurant Front Desk Source: HOTS Indicator Average Year 3 58 .5 39.7 Rooms Market Share (%) Market Image Index Public Awareness Index External Meal Sales (%) 13.7 External Liquor Sales (%) Monthly Rooms Revenue ($000's) 67.5 Annual Staff Turnover (%) Average weekly training spend per staff member($) 51.11.07 48.9 Monthly Food & Beverage Revenue ($000's) 396.8 246.8 12.9 Appendix: Indicator Average Year 3 INDICATOR AVERAGES Team .4.8 27.8 Weekday Room Occupancy (%) Weekend Room Occupancy (%) 93.8 534.

73 $242176.73 $325522.40 $97480.5 Proposed Extension of Facilities & Service 11.00 $82500.00 Capital Cost: Conference & Function Rooms Capital Cost: Spa & Health Club Capital Cost: Parking Area Interest on construction expenses Pre-opening expenses Initial working capital (10%) $1.00 $3150000. Spa & Health Club and Parking Area Capital Investment Required $500000.00 $57750.5.351.935. Business Services and Parking Area Capital Investment Required $500000.00 $825000.00 $82500.401.80 $97480.255.00 $188098.13 Source: Self Created 59 .00 $188098.00 $4. 100 Guest Room Extension.11.53 Capital Cost: Conference & Function Rooms Capital Cost: 100 Guest Rooms Capital Cost: Business Services Capital Cost: Parking Area Interest on construction expenses Pre-opening expenses Initial working capital (10%) PROPOSED PROJECT B Conference & Function Rooms.1 Proposed Alternatives A & B PROPOSED PROJECT A Conference & Function Rooms.

2 Appendix: Pre-Opening Expenses PRE-OPENING EXPENSES FOR PROPOSED PROJECT A Salary (Payroll 3) Recruitment Cost (10%) Total Staffing Costs Training 3 23660 2366 78078 447.2 1341.2 3 1 0 23660 23660 0 2366 2366 0 78078 26026 0 1 1 23660 43900 2366 4390 26026 48290 Add.2 447.2 0 10000 5000 5000 10000 5000 5000 99419.8 10000 10000 132756.2 5000 0 0 0 31473.6 10000 10000 99419.2 325522.11.2 1788.2 447.80 PRE-OPENING EXPENSES FOR PROPOSED PROJECT B Direct Impacts Conference & Function Rooms Spa & Health Club Parking Area Add.6 447.6 10000 10000 99419.2 10000 447.6 447. Staff Salary (Payroll 3) Recruitment Cost(10%) Total Staffing Costs Training Total Training Marketing Grand Opening Overall Total 3 23660 2366 78078 447.2 0 1341.2 48737.40 Source: Self Created 60 .6 36473.6 4 25220 2522 110968 447.2 447.2 447.5.8 0 0 0 0 0 0 5000 5000 10000 242176. Staff Direct Impacts Conference & Function Rooms 100 Guest Rooms Business Services Parking Area Indirect Impacts Restaurant Department Heads Total Training Marketing Grand Opening Overall Total 1341.

94 Total Weekly Payment Contraction Period Construction Expense Working Capital = Current Assets – Current Liabilities Working Capital = $3.$2.625.80 Source: Self Created 61 22 weeks $ 188.74 $ 8.73 .Equity Financing $ 15.653.549.INTEREST ON CONSTRUCTION EXPENSE Monthly Payment Weekly Payment Interest .97 $ 3.434.Bank Loan $ 22.600.210.800*10% Initial Working Capital = $974.115.421 Working Capital = $974800 Initial Working Capital = $974.06 $ 5.221 .21 Interest .098.

214 $609.995 $1.529 $2.126 $2.254. Year 2.200.956.439 $492.851 $32.185 Other Income Income Before Taxes - $649.713 $1.107 $57.313 $3.046 $1.093 $485.205 $1.002 $2.372 $998.536.146 $5.720 $46.991.702.901 $75.062.545 $2. Year 3.620.647 $1.823 $555.124.961 Central Admin Payroll Total Other Direct Costs Income Before Fixed Charges $ 429.6.276.652 $5.890 $914. HOTS Summery Income Statements Year 0.006 Sales Room Food & Beverage Other Cost of Sales Room Food & Beverage Other Payroll & Related Room Food & Beverage Other Gross Profit Less Wages Room Food Other Year 3 Source: Self Created.340 $2.302 $1.950 $4.950 $1.510 $106.1 Appendix: Comparative Horizontal Analysis – Income Statement Year 0 to Year 4 Comparative Horizontal Analysis – Income Statement Year 0 to Year 4 Year 0 Year 1 Year 2 $1.001 $793.784 $17.143 $87.029.612.961.040 $850.810 $823.001 $938.6 Analysis of Past Financial Statements 11.046.584 $11.996 $6.340.882 $618.11.038 $1.878 $411.163.412 $134.460.796.644.876 $526.810 $402.340.869.733.002 $892.991.790 $256. Year 1.099 $40.547.632.466 $551.603.443 $4.957.162 $1.139 $3.564 $1. Year 4 62 .243.836 $164.151 $2.812.582.549 $1.518 $8.160.179 $1.220 $2.336.099 Total Fixed Costs Trading Profit $906.914 $2.253 $3.991.185 Business Tax Income After Business Tax - $649.360 $2.047 $5.295.995 $116.686.522 $ 385.813.805 $5.249 $649.866 $6.012 $117.756.644.810 $1.460 $831.529 $3.348 $1.851.549 $3.797 $50.360.340 $1.430 $1.617.614 $1.634 $8.212.101 $1.219 $1.341.102 $4.482.201 $9.540.088 $926.225.961.874 $1.713 $418.884.

50% 587.49% 119.80% - 100% 100% 100% 311.28% 419.59% 627.76% - 341.09% 100% 100% 100% 100% 363.45% 305.21% 406.13% 1913.21% 98.99% 404.42% 266.17% - TREND 0-3 290.44% 406.77% 1432.36% - - - - 100% 107.2 Appendix: Comparative Horizontal Trend Analysis – Income Statement Year 0 to Year 4 Comparative Horizontal Trend Analysis – Income Statement Year 0 to Year 4 % Sales Room Food & Beverage Other Cost of Sales Room Food & Beverage Other Payroll & Related Room Food & Beverage Other YEAR 0 TREND 0-1 100% 100% 100% 100% - TREND 0-2 254.6.34% 284.58% 416.20% 111.20% Central Admin Payroll Total Other Direct Costs Income Before Fixed Charges 100% 100% 100% 114.99% 519.86% 403.6. Appendix 11.70% Gross Profit Less Wages Room Food Other Other Income Income Before Taxes Business Tax Income After Business Tax - - - - 100% 206.08% 231.47% 1556.12% 120.23% 231.35% Total Fixed Costs Trading Profit 100% 100% 90.23% 433.76% 484.10% 1154.40% 326.84% 843.41% 135.70% 0% 100% 100.11.62% 1379.07% 128.93% 475.25% 130.76% 326.94% 113.78% 100% 100% 102.91% 206.03% 206.94% 455.99% 326.14% 333.74% 231.19% 118.31% 509.68% 488.1 63 .48% 325.35% 197.08% 150.81% 396.37% 278.00% 144.65% 455.05% 266.00% 378.58% 369.82% 122.37% Source: Self Created.72% 266.72% 501.

333.195 $15. HOTS Balance Sheets Year 0.005.600.693 $60.810 $7.814 $793.876.388.302 $1.360 $1.179 TOTAL CURRENT LIABILITIES $163.177 $360.195 $15.020 $360.6.185.381 $12.828.328.500.000 $-714. Year 1.846.879 $10.908 $3.000 $2.254.381 $12.916 OWNERS' EQUITY Share Capital Retained Earnings $7.388.710.452. Year 3 64 .11.739.052.221 PROPERTY & EQUIPMENT Net Property & Equipment $7.300 TOTAL CURRENT ASSETS $-591.387 $56.375 $11.466.000 $938.500.145 $1.039 $12.179 TOTAL LIABILITIES & OWNERS' EQUITY $7.039 $7.500.228 $354.673 $83.747 $11.620.950 $2.879 $10.263 $95.359 $402.001 $7.544 $405.287 $11.145 0 $931.176.421 LONG-TERM LIABILITIES Long Term Debt $306.493 $299.190 $8.438.006 $511.254.344 $3.625.829 $7.176.001 $10.785.295 TOTAL ASSETS $7.000 $4.976 $2.242 $1.001 $945. Year 2.052.289.3 Appendix: Comparative Horizontal Analysis – Balance Sheet Year 0 to Year 4 Comparative Horizontal Analysis – Balance Sheet Year 0 to Year 4 YEAR 0 YEAR 1 YEAR 2 YEAR 3 CURRENT ASSETS Cash at Bank Accounts Receivable Inventories $-687.250 $46.516 Source: Self Created.516 CURRENT LIABILITIES Accounts Payable Business Tax Owed $163.500.179 TOTAL OWNERS' EQUITY $6.040 $98.789.364.116 $2.

26% LONG-TERM LIABILITIES Long Term Debt 100% 132.29% 1065.00% 390.03% 100% 817.22% 100.74% 197.81% 86.36% 151.53% 503.64% 181.00% 131.06% 96.48% CURRENT LIABILITIES Accounts Payable Business Tax Owed 100% 570.48% 608.30% 13.15% 159.6.88% 100.18% 100.48% TOTAL CURRENT LIABILITIES Source: Self Created.45% TOTAL OWNERS' EQUITY 100% 124.43% TOTAL ASSETS 100% 140.69% TOTAL LIABILITIES & OWNERS' EQUITY 100% 140% 170.00% 579.45% 32.3 65 .4 Appendix: Comparative Horizontal Trend Analysis – Balance Sheet Year 0 to Year 4 Comparative Horizontal Analysis – Balance Sheet Year 0 to Year 4 YEAR 0 TREND YEAR 0-1 TREND YEAR 0-2 TREND YEAR 0-3 CURRENT ASSETS Cash at Bank Accounts Receivable Inventories 100% 100% 100% 343.51% TOTAL CURRENT ASSETS 100% 457.16% 403.12% 117.34% 616.33% 386.76% 207.99% 1609.84% 357.11.47% 463.19% 423.20% PROPERTY & EQUIPMENT Net Property & Equipment 100% 95.00% 675. Appendix 11.76% 207.33% 470.84% 430.6.27% 170.27% OWNERS' EQUITY Share Capital Retained Earnings 100% 100% 100.

Beginning of Period $-487.456 450.177 $3.728 $5.084.402. Year 1.039 $1. Year 3 66 .221.440 $3. Year 2.572 $2.11.6.781 $2.316 $2.770 0 $262.941.431 $2.980 $405.956 $804.683.749 $580.333 $6.864 $2.043. End of Period $-687.827.345.455 $-2.839.038 $1. Beverage & Other Inventories Operating Expenses Total Operating Disbursements Cash from Operations Fixed Charges Interest Other Fixed Costs Total Fixed Charges Other Receipts Proceeds from Outside Borrowing Other Cash Receipts Source: Self Created.332 Cash Sales $843.571.454 $508.544.854 0 Increase in Cash Cash Balance.980 $361.001.086.000 0 $253.223 $6.898 $1.729 $11.387 $-36.493 $95.673 $-200.281 0 0 0 0 0 0 0 0 Other Disbursements Capital Expenditure Debt Service (Principal) Tax and other payments 0 $253.364.916 Total Operating Receipts Operating Disbursements Payroll and Related Expenses Food.604 $346.182.577.300 $7926402 $9.544 $405.000 0 $44.040 $98.456 0 0 $44.061.187 $21.980 0 $4.582.673 $2.323.038 $182.732.397 Collection of Accounts Receivable YEAR 3 $8.193 $2. HOTS Cash Flow Year 0.980 $402.888.364.974 $620.236 $3.5 Appendix: Comparative Horizontal Analysis – Cash Flow Year 0 to Year 4 Comparative Horizontal Trend Analysis – Balance Sheet Year 0 to Year 4 YEAR 0 YEAR 1 YEAR 2 Operating Receipts $2.000 $2.856.001 $111.367 $29.733.543 $1.453 $834.854 Loan at End of Period $306.269.180.871 $2.840.086 $485.020 $360.228 Loan at Start of Period Proceeds from Outside Borrowing Debt Service (Principal) $560.435 $95.791.422 $647.300.159 Cash Balance.913 $262.466 $26.283 $1.928.687.020 0 $44.785 $3.532 $1.396 $4.254 $2.212.540 $2.330.064 $4.858.864.161 $1.185.493 $3.067 $386.570 $44.962 $5.179 $2.

33% 64.71% Loan at End of Period 100% 132.60% 100% 17.75% 100.75% 103.34% 1282.75% 111.30% 103.37% 127.84% 563.49% 231.19% Loan at Start of Period Proceeds from Outside Borrowing Debt Service (Principal) 100% 80.05% 263.32% 100% 270.03% Cash from Operations 100% 884.92% Cash Balance.73% 100% 143.6 Appendix: Comparative Horizontal Analysis – Cash Flow Year 0 to Year 4 Comparative Horizontal Analysis – Cash Flow Year 0 to Year 4 YEAR 0 TREND YEAR 0-1 TREND YEAR 0-2 TREND YEAR 03 100% 100% 280.12% 394.07% 303.44% 191.21% 1063.07% 323.6.68% 326.14% 247.75% - 100.84% 113.6.61% 403.19% 100% 100% 31.04% 232.98% 131.27% Operating Receipts Cash Sales Collection of Accounts Receivable Total Operating Receipts Operating Disbursements Payroll and Related Expenses Food. Beginning of Period 100% 100% 347. Beverage & Other Inventories Operating Expenses Fixed Charges Interest Other Fixed Costs Total Fixed Charges Other Receipts Proceeds from Outside Borrowing Other Cash Receipts Source: Self Created.50% 165. End of Period 100% 443.78% 22.74% 28.73% Total Operating Disbursements 100% 188.12% 117.31% 121.68% 100% 100% 110.41% 228.30% 328.25% 560.76% - - - - - - - - Other Disbursements Capital Expenditure Debt Service (Principal) Tax and other payments 100% - 17.11.75% 17.02% 100% 472.71% - Increase in Cash Cash Balance.00% 2.87% 400.23% -465. Appendix 11.85% 595.00% 17.5 67 .91% 399.84% 1427.56% 81.45% 32.36% 72.24% 666.64% 272.

Due to a consistent strategy of development the total revenue grew by 397% in Year 3 compared to Year 0.7 Appendix: Trend analysis – Total Revenue Total Revenue 450% 400% 350% 300% 250% 200% Total Revenue 150% 100% 50% 0% YEAR 0 YEAR 1 YEAR 2 YEAR 3 TREND ANALYSIS YEAR 0 TOTAL REVENUE Trend 2.00 326% YEAR 3 11.957.11. Y1. Source: HOTS Monthly Indicators Y0.866.00 100% YEAR 1 8.225.522. Y2 and Y3 68 .047.632.652.6.00 397% The results of the trend analysis show an increase in total revenue for the past 3 years.00 278% YEAR 2 9.733.

Y2.038. it affected the net income.341.00 144% YEAR 2 1. Y1.6. bar and front desk were refurbished to Level 3.8 Appendix: Trend Analysis – Income after taxes Income After Taxes 300% 250% 200% 150% Income After Tax 100% 50% 0% YEAR 0 YEAR 1 YEAR 2 YEAR 3 TREND ANALYSIS YEAR 0 INCOME AFTER TAX Trend -649.00 285% YEAR 3 1. This resulted in $ 953. As refurbishment is considered to be revenue expenditure.810.11.851.00 100% YEAR 1 938.006.700 total refurbishment expenses for Year 3. and Y3 69 . as there was a massive refurbishment campaign launched in the hotel: 165 rooms refurbished to Level 2.001. restaurant. Source: HOTS Summary Income Statement Y0.00 206% In Year 3 the Net Income decreased by 79%.

Source: HOTS Monthly Indicators Y0.26 101.6.9 Appendix: Trend Analysis – Average daily rate Average Daily Rate 106% 105% 104% 103% 102% Average Daily Rate 101% 100% 99% 98% 97% YEAR 0 YEAR 1 YEAR 2 YEAR 3 TREND ANALYSIS AVERAGE DAILY RATE Trend YEAR 0 YEAR 1 YEAR 2 YEAR 3 99.11. Y2 and Y3 70 102% . The highest peak was achieved in Year 2. HolidayInn6 has decided to return to previous policy. when the management was implementing a new pricing policy.07 100% 104% 105% During the period of 4 years the average daily rate did not undergo any drastic changes.51 104. Y1. Due to insignificant results of this change and increased promotion expenditures.15 103. which was more successful.

10 Appendix: Trend analysis – RevPAR RevPAR 350% 300% 250% 200% RevPar 150% 100% 50% 0% YEAR 0 YEAR 1 YEAR 2 YEAR 3 TREND ANALYSIS RevPAR Trend YEAR 0 YEAR 1 YEAR 2 YEAR 3 21. The value was added to rooms through increased levels of guest comfort.78 62.6. Y1. Source: HOTS Monthly Indicators Y0. Y2 and Y3 71 326% .06 100% 242% 286% A gradual growth of RevPAR was achieved by a number of actions undertaken by HolidayInn6’s management.29 71.11. refurbishment and auxiliary services implemented in the hotel.79 52.

72 in Year 0 to 59. According to guest comments the hotel has strengthened its position in the market and became a popular place for both local clients and tourists. Source: HOTS Monthly Indicators Y0.77 59.76 42.55 in Year 3. Y2 and Y3 72 .55 100% 546% 906% 1262% Due to immense advertising efforts the Market Image Index has increased significantly from 4.72 25.11 Appendix: Trend analysis – Market index image Market Image Index 1400% 1200% 1000% 800% Market Image Index 600% 400% 200% 0% YEAR 0 YEAR 1 YEAR 2 YEAR 3 TREND ANALYSIS MARKET IMAGE INDEX Trend YEAR 0 YEAR 1 YEAR 2 YEAR 3 4.11.6. Y1.

00 463% In Year 2 HolidayInn6 had 160 rooms. restaurant and front desk refurbished to Level 3. but these were revenue expenditures and had no influence on cash balance.11.673.628.6.364.493. There were Level 2 refurbishments carried out in Year 2. bar. Source: HOTS Cash Flow Y0.00 14% YEAR 3 3. Y1.177.00 344% YEAR 2 95.075 of capital expenditure.12 Appendix: Trend analysis – Cash at bank Cash at Bank 500% 450% 400% 350% 300% 250% Cash at Bank 200% 150% 100% 50% 0% YEAR 0 YEAR 1 YEAR 2 YEAR 3 TREND ANALYSIS YEAR 0 CASH AT BANK Trend -687.00 100% YEAR 1 2. as the total cost of Level 3 refurbishment resulted in $ 3. The cash balance was affected. Y2 and Y3 73 .228.185.

00 YEAR 2 $511.00 $163. Y1. which influenced negatively Cash at Bank and consequently the current assets.006.63 2.600.116. Such a decrease in CR was caused by extensive Level 3 refurbishment of the hotel. Y2 and Y3.00 YEAR 3 $3.333.29 1.00 $2.625. Source: HOTS Balance Sheet Y0.360.11.13 Appendix: Current Ratio Current Ratio 3 2 1 0 YEAR 0 YEAR 1 YEAR 2 YEAR 3 Current Ratio -1 -2 -3 -4 CURRENT RATIO Current Assets Current Liabilities Current Ratio YEAR 0 -$591.710.29 of Current Assets.960.00 -3.221.6.00 $1.908.37 In Year 2 for each $ 1 of Current Liabilities HolidayInn6 had only $ 0.03 0.421. 74 .739.00 YEAR 1 $2.145.00 $1.

738. Y2 and Y3 75 .328.190. and hence influenced directly both total liabilities and owners’ equity.00 $10.21 YEAR 2 $2.14 Appendix: Debt-Equity Ratio Debt-Equity Ratio 25% 20% 15% Debt-Equity Ratio 10% 5% 0% YEAR 0 YEAR 1 YEAR 2 YEAR 3 DEBT-EQUITY RATIO Total Liabilities Total Owner's Equity Debt-Equity Ratio YEAR 0 $469.724.00 0. which increased total assets.00 $6.20 and 0. These fluctuations were caused by refurbishment in Year 2.00 0.179.6. In the last 3 years the Debt-Equity Ratio was fluctuating between 0. Y1.438. Source: HOTS Balance Sheet Y0.20 YEAR 3 $2.07 YEAR 1 $1.00 0.00 0.289.001.337.22.22 Debt-Equity Ratios for all the years show that HolidayInn6 was not financing its activities aggressively through debt.785.689.11.00 $8.156.380.039.00 $12.099.

041.43% In Year 3 the profit margin has declined by 7.79% compared to Year 2.00 $8.038.522. Y1.957. 76 .00 YEAR 1 $938.047.00 $9.00% -30.97% 11.851.001.784 or 141% had its reason in refurbishment expenditures.11.00% -20.652.00 $2.00 $11.225.00 YEAR 3 $1.006.00% 20.22% 11.733. which influenced the net income negatively in Year 3.341.00 YEAR 2 $1. This happened because of an increase in total other direct costs: from $ 2'540'529 in Year 2 to $ 3'582'313 in Year 3. Source: HOTS Summary Income Statement Y0.6.40% 19.00% 0. Y2 and Y3.00% 10.866.15 Appendix: Profit Margin Ratio Profit Margin Ratio 30.632.00% Profit Margin Ratio YEAR 0 YEAR 1 YEAR 2 YEAR 3 -10. The increase of $ 1.00% PROFIT MARGIN RATIO Net Income Total Revenue Profit Margin Ratio YEAR 0 -$649.00 -21.810.

which was discussed previously.00 34.00% 0.00 8.00 $2.466.00% YEAR 0 YEAR 1 YEAR 2 YEAR 3 GROSS OPERATING PROFIT Gross Operating Profit Total Revenue Gross Operating Profit Ratio YEAR 0 $256.31% YEAR 2 $3.733. Y2 and Y3 77 .439.652. The GOP ratio was also decreased due to an increase in total other direct costs.00 26.00 36.00 $11.632.991.00% Gross Operating Profit Ratio 10. without decreasing the costs per room.163.7% in GOP ratio in Year 3 corresponds to a decrease in prices for rooms from $ 104.00 $8.16 Appendix: Gross Operating Profit Gross Operating Profit Ratio 40.00% 30.876.11.01% A slight decrease of 2.26 in Year 2 to $ 101.71% YEAR 3 $3.00% 20.047.00 $9.6.67% YEAR 1 $2.866. Y1.225.957.099. Source: HOTS Summary Income Statement Y0.536.07 in Year3.522.

83% in Year 2.00% -20.) Source: HOTS Summary Income Statement Y0. the hotel shows good trends of financial growth and stability.11.00% YEAR 0 YEAR 1 YEAR 2 YEAR 3 -10.00% 20.20% 15. the highest ROCE achieved was 24. Y2 and Y3 78 .6.00% YEAR 0 ROCE YEAR 1 -9.83% YEAR 3 23.17 Appendix: ROCE ROCE 30.00% 10.(change-sounds stupid)(Some say that an acceptable ROCE has to be slightly higher than the rank loan rate.00% ROCE 0.83% Through the last 3 years HolidayInn6’s ROCE has been growing gradually. In general. Ours is many times higher. Y1.15% YEAR 2 24. and it decreased by 1% in Year 3.

6. Monthly indicator Y0. HOTS Scorecard Y1.5 39.00% YEAR 2 77. thus achieving a final number targeted for the end of Year 3. HOTS Indicator Averages Y1. Y2 and Y3.3 51. Source: HOTS Background Information.30%.7 59.8 35.00% YEAR 1 67.11.30% .3 29. 79 YEAR 3 93.18 Appendix: Occupancy Occupancy Percentage 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Year 0 Year 1 Weekday Rooms Year 2 Weekend Rooms Year 3 Occupancy OCCUPANCY Weekday Room Occupancy Weekend Room Occupancy Occupancy YEAR 0 N/A N/A 22. Y2 and Y3.4 70.70% In Year 3 HolidayInn6 has achieved an Occupancy Percentage of 70.

00% 2.11.01% over Year 2 due to an increase of the occupancy percentage of weekday rooms by 15. Y2 and Y3. Thus HolidaInn6 had 93.06% . which constituted 234 rooms.00% 4.00% 0.7%.05% In Year 3 room market share has augmented by 2.00% 12.5% weekday room occupancy.00% 10.00% Rooms Market Share 6.00% YEAR 0 Rooms Market Share YEAR 1 YEAR 2 YEAR 0 4. Source: HOTS Monthly Indicator Reports Y0.19 Appendix: Rooms Market Share Rooms Market Share 14. 80 YEAR 3 13. Y1.72% YEAR 3 YEAR 1 9.6.00% 8.73% YEAR 2 11.

190.289. Source: HOTS Balance Sheet Y0.00 $8. Y1.179.438.916.80% In Year 3 HolidayInn6 has managed to pay its long-term liabilities back to creditors.52% 4.80% 3.001. Y2 and Y3. which means that HolidayInn6 is not vulnerable to sales downturns that may happen.00 YEAR 2 $360.11.00 YEAR 3 $98.6.50% 0.020.00 4.00% 4.00% 3.328.00% Gearing Ratio 2.00% 5.80%.040.00% 0. Thus the gearing ratio in Year 3 has reached 0.20 Appendix: Gearing Ratio Gearing Ratio 6.00 YEAR 1 $405.00% 1. 81 .544.785.00 $10.039.00% YEAR 0 Long-Term Liabilities Shared Capital + Reserves + Long-Term Liabilities Gearing Ratio YEAR 1 YEAR 2 YEAR 3 YEAR 0 $306.00 $6.00 $12.

500.098.000.00 $800.750. 100 Guest Room Extension.11.53 70.80 $97.000.750.00 $4.73 $325.351.00 $3.73 $1.7 Capital Investments & Financing 11.000.36% $800.480.150.00 18.53 100% $325.1 Appendix: Capital Investment & Financing PROPOSED PROJECT A Conference & Function Rooms.000.000.7.00 $57. HOTS User Guide 82 $500. Business Services and Parking Area Capital Investment Own Capital Equity Investors Debt-Bank Required Capital Cost: Conference & Function Rooms Capital Cost: 100 Guest Rooms Capital Cost: Business Services Capital Cost: Parking Area Interest on construction expenses Pre-opening expenses Initial working capital (10%) $500.46% Source: Self Created.101.000.00 $500.18% .401.000.480.522.000.850.098.522.00 $57.00 $82.00 11.00 $188.80 $97.00 $500.00 $3.00 $82.500.351.00 $188.

40 $68.109.94 November Year 4 12 1.365.298.92 $8.92 $8.66 $8.247.22 $57.7.302.50 $85.52 $8.365.88 $17.92 $8.92 $8.221.64 $8.04 $8.25% $90.13 $49.42 $8.238.25% $16.298.74 April Year 4 5 1.92 $8.70 March Year 4 4 1.41 September Year 4 Year 4 10 1.290.94 $8.95 $77.98 $16.298.25% $41.720.24 $33.12 $82.92 $8. HOTS Balance Sheet Year 3 83 Payment Interest Capital $8.48 July Year 4 8 1.204.081.13 June Year 4 7 1.26 $51.41 $24.92 $8.22 May Year 4 6 1.26 $8.720.96 $8.11.109.844.230.264.612.66 $8.298.081.92 Month Interest rate Capital outstanding begin Year 4 1 1.298.298.70 $74.571.83 $60.302.298.24 $8.916.25% $8.25% $24.00 12 0.298.255.04 $94.298.212.25% $82.74 $66.28 $0.12 February Year 4 3 1.92 $8.290.298.515.844.0125 $8.298.09 $34.92 $8.48 $41.25% $33.195.851.83 $8.43 $8.25% $57.92 $103.92 $8.92 $8.00 January Year 4 2 1.916.28 December Year 4 Source: Self Created.25% $49.851.98 October 11 1.273.49 $25.298.2 Appendix: Outstanding loan at the End of Year 3 Loan amount Term Rate Payment Date $98.25% $74.298.612.00 .25% $98.88 $8.571.515.290.68 $43.25% $66.24 August 9 1.281.08 $8.28 Capital outstanding end $90.

64 $270.30 $403.75 $624.817.424.99 $21.25% 84 Payment $22.61 $690.910.14 $70.96 $314.06 $22.025.377.653.57 $22.472.094.79 $135.45 $359.42 $602.06 $22.06 $22.94 $22.27 $756.512.94 $381.06 $22.582.728.657.06 $22.83 $22.53 $22.05 $22.06 $22.071.64 $47.653.418.19 $580.92 $604.94 $381.302.96 $536.00 $778.06 $22.02 $327.956.82 $668.46 $21.12 $247.558.25% 1.00 $512.278.25% 1.71 $448.180.865.653.92 $22.515.82 $443.06 $22.27 $22.802.584.25% 1.44 $22.804.60 $712.78 $67.259.06 $22.84 $627.584.25% 1.43 $22.21 $646.25% 1.535.06 $22.441.27 $756.91 $514.255.25% 1.488.653.11.802.653.42 $22.82 $668.33 $810.33 $22.804.95 $234.61 $21.04 $22.005.06 $22.25% $ 22.28 $719.06 $22.673.06 $22.25% 1.377.7.79 $336.000.17 $22.25% 1.25% 1.86 $492.06 Interest $833.337.653.22 $90.06 $22.563.783.91 $514.353.22 $112.97 $489.653.005.80 $470.653.02 $536.12 $23.25 $22.49 outstanding end $778.472.06 $22.653.85 $45.19 $202.27 $187.Bank $ 800.06 $22.25% 1.79 $21.325.653.25% 1.819.515.653.25% 1.25% 1.60 $712.605.06 $22.232.653.465.653.424.728.00 $22.75 $624.96 $314.163.26 $257.653.957.25% 1.629.980.633.06 $22.90 $466.238.06 $22.653.25% 1.05 $22.23 $351.117.42 $602.819.180.678.337.57 Capital Capital $21.747.81 $734.747.06 $22.817.653.740.653.653.25% 1.06 $22.209.78 $67.06 $22.36 $22.05 $558.842.653.25% 1.673.31 $225.653.16 $22.00 .60 $673.259.25% 1.98 $582.73 $21.21 $21.912.653.653.22 $112.86 $492.06 $22. 100 Guest Room Extension.60 $787.235.376.235.21 $646.653.71 $420.81 $734.19 $202.653.143.06 $22.395.49 $0.06 $22.25% 1.25% 1.10 $22.912.79 $304.79 $135.933.30 $403.85 $45.783.46 $21.678.49 $141.25% 1.980.912.563.25% 1.11 $22.54 $281.140.71 $448.25% 1.92 $292.002.657.653.186.25% 1.238.96 $157.048.25% 1.653.653.31 $225.653.43 $22.06 $22.62 $94.19 $580.85 $765.06 $22.65 $22.64 $270.653.01 $559.000.73 $650.306.25% 1.353.25% 1.45 $359.979.25% 1.22 $90.92 $292.89 $164.00 36 1.06 $22.14 $22.45 $696.633.96 $536.653.25% 1.629.06 Loan amount Term Rate Payment Date Year 4 January Year 4 February Year 4 March Year 4 April Year 4 May Year 4 June Year 4 July Year 4 August Year 4 September Year 4 October Year 4 November Year 4 December Year 5 January Year 5 February Year 5 March Year 5 April Year 5 May Year 5 June Year 5 July Year 5 August Year 5 September Year 5 October Year 5 November Year 5 December Year 6 January Year 6 February Year 6 March Year 6 April Year 6 May Year 6 June Year 6 July Year 6 August Year 6 September Year 6 October Year 6 November Year 6 December Source: Self Created Month 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 Interest Capital rate Outstanding begin $800.777.446.25% 1.06 $22.06 $22.446.143.05 $558.25% 1.06 $22.653.06 $22.79 $22.12 $247.62 $211.49 1.57 $397.54 $425.06 $22.371.740.79 $336.09 $22.653.23 $22.653.653.96 $157.61 $690.777.957.348.25% 1.25% 1.306.81 $22.06 $22.06 $22.54 $425.376.49 $22.887.41 $374.912.629. Business Services and Parking Area Amortization Table .25% 1.08 $742.819.80 $470.75 $180.653.45 $22.25% 1.653.653.07 $117.75 $180.3Appendix: Loan Financing –Bank PROPOSED PROJECT A Conference & Function Rooms.06 $22.

79 $89.210.10 $316.11 $448.048.97 $2.97 $15.97 $15.07 $15.97 Interest Capital Capital outstanding begin Payment $15.185.79 $89.774.145.306.92 $14.98 $12.00% $500.00% 6.96 $883.689.097.83 $205.43 $13.97 $15.096.210.135.515.42 $14.135.210.214.94 $13.985.97 $15.52 $435.97 $15.97 $15.203.543.974.375.16 $261.050.00% 6.676.427.29 $14.025.145.81 $383.00% 6.39 $396.20 $60.07 $1.470.289.512.436.849.00 36 6.11.00% 6.210.12 $219.87 $2.766.28 $15.10 $316.45 $225.214.991. 100 Guest Room Extension.735.774.16 $261.210.00% 6.716.51 $461.57 $2.97 $12.97 $75.210.11 $448.03 $2.210.49 $409.15 $1.10 $13.41 $369.677.7.59 $12.4 Appendix: Loan Financing – Investors PROPOSED PROJECT A Conference & Function Rooms.514.630.81 $13.54 $233.210.93 $14.05 $329.24 $13.562.57 $1.994.210.195.97 $15.67 $302.228.42 $422.39 $13.166.294.97 $15.31 $190.97 $15.774.773.210.29 $15.52 $14.97 $15.135.00% 6.335.179.72 $74.008.210.97 $15.210.35 $30.33 $14.515.97 $15.286.806.648.210.162.806.90 $150.89 $448.514.29 85 Capital outstanding end .00% 6.180.00% 6.982.92 $148.87 $2.54 $1.210.43 $288.817.210.00% 6.210.68 $812.00% 6.00% 6.52 $435.88 $13.38 $2.290.73 $1.904.97 $15.308.203.01 $14.00% 6.243.97 $15.87 $45.01 $13.92 $148.835.52 $12.698.000.97 $521.762.97 $15.02 $1.290.97 $15.00% $15.927.88 $356.210.00% 6.69 $594.39 $13.97 $15.708.210.176.97 $15.00% 6.97 $15.210.773.00% 6.783.00% 6.05 $329.044.04 $275.43 $1.180.45 $2.45 $374.21 $162.87 $45.99 $133.991.256.708.51 $14.03 $474.00 $487.538. Business Services and Parking Area Amortization Table – Invester Loan amount Term Rate Payment Month Interest Rate Date January February March April May June July August September October November December January February March April May June July August September October November December January February March April May June July August September October November Year 4 Year 4 Year 4 Year 4 Year 4 Year 4 Year 4 Year 4 Year 4 Year 4 Year 4 Year 4 Year 5 Year 5 Year 5 Year 5 Year 5 Year 5 Year 5 Year 5 Year 5 Year 5 Year 5 Year 5 Year 6 Year 6 Year 6 Year 6 Year 6 Year 6 Year 6 Year 6 Year 6 Year 6 Year 6 Year 6 Source: Self Created December $ 500.97 $15.335.176.236.689.991.20 $60.54 $233.689.41 $369.97 $15.113.44 $247.00% 6.008.967.97 $15.378.49 $409.114.97 $15.40 $12.04 $667.07 $14.29 $0.00% 6.00% 6.817.68 $15.00% 6.44 $247.372.97 $15.514.58 $13.97 $15.210.031.21 $162.210.12 $219.00% 6.195.88 $356.050.210.96 $1.710.81 $383.99 $487.398.00% 6.210.407.09 $1.97 $15.00% 6.00% 6.00% 6.72 $74.000.210.22 $176.289.902.538.97 $15.00 $2.676.00% 6.210.994.927.00 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 6.97 $15.10 $13.28 $14.407.68 $1.79 $104.43 $288.00% 6.45 $1.836.97 $15.916.55 $1.210.39 $1.361.99 $14.210.51 $461.42 $422.99 $133.00% 6.378.64 $300.210.309.00% 6.00% 6.97 $15.09 $14.22 $176.210.615.494.51 $14.735.286.35 $30.00% 6.444.97 $15.059.29 $14.04 $275.991.327.00% 6.28 36 6.910.309.04 $740.25 $1.210.514.31 $190.07 $118.54 $13.83 $205.210.97 $15.72 $13.58 $1.210.39 $396.090.03 $474.79 $104.090.07 $118.87 $343.87 $343.580.630.90 $13.95 $13.677.210.00% $15210.500.210.88 $954.00% 6.97 $15.630.838.00% 6.210.67 $302.210.97 $15.

000 $310.000 $19.000 $19.000 $310.000 $19.000 $177.000 $19.000 $266.000 $17.000 $139.000 $348.000 $57.000 $76.000 $19.11.000 $19.000 $209.000 $329.000 $114.000 $481.000 $418.000 $424.100 $190.000 $253.000 $443.000 $405.000 $101.000 $215.7.000 $437.000 $101.000 $342.000 $19.000 $133.000 $38.000 $462.000 $247.000 $215.000 $228.000 $462.000 $196.000 $386.000 $158.000 $63.000 $177.000 $291.000 $19.000 $82.000 $95.000 $158.000 $443.000 $63.000 $323.000 $329.000 $44.000 $361.000 86 .000 $120.000 $481.000 $405.000 $367.000 $291.000 $272.000 $19.000 $19.000 $19.000 $19.000 $19.000 $$19000 $19.000 $234.000 $120.000 $19.000 $386.000 $139.000 $19.000 $19.000 $25.000 $285.000 $152.000 $19.000 $19.000 $424.000 $19.000 $253.000 $44.000 $399.000 $475.000 $348.000 $19.000 $19.5 Appendix: Depreciation – Conference Center Depreciation Straight-Line Conference Centre Salvage Value: Useful Life: 25 Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Source: Self Created 25000 Book value at beginning of year Depreciation Expense Accumulated Depreciation Book value at end of year $500.000 $196.000 $234.000 $19.000 $456.000 $19.000 $82.000 $367.000 $304.000 $272.000 $380.000 $19.

325 $23.200 $40.550 5.775 $5.325 $11.425 $46.975 $57.750 $51.650 $28.425 $34.650 $40.100 $28.775 $11.775 $5.775 $5.7.775 $5.875 $34.875 $23.11.550 $17.975 $46.975 $46.775 $5.775 Depreciation Expense $5.875 $23.775 $0 .775 87 Accumulated Depreciation $5.650 $28.200 $51.750 Book value at end of year $51.550 $5.425 $34.6 Appendix: Depreciation – Business Center Depreciation Straight-Line Business Services Salvage Value: Useful Life: 10 Year 1 2 3 4 5 6 7 8 9 10 Source: Self Created Book value at beginning of year $57.325 $11.775 $5.200 $40.100 $17.775 $5.775 $5.100 $17.775 $5.

750 $22.250 $16.750 $2.500 $57.750 $2.250 $77.750 $2.250 $27.11.750 $2.750 $2.250 $22.750 $38.000 $63.250 $71.250 $44.750 $16.000 $41.750 $22.750 $27.500 $41.250 $66.250 $55.500 $2.000 $46.500 $35.750 $49.000 $13.500 $63.250 $60.750 $44.750 $66.750 $2.750 $55.500 $46.750 $2.250 $71.250 $27.750 $2.750 $55.750 $0 .500 $19.500 Book value at end of year $79.750 $5.750 $71.750 $33.750 $82.750 88 Accumulated Depreciation $2.000 $52.250 $49.750 $77.750 $2.250 $49.000 $24.500 $68.000 $57.000 $41.500 $52.500 $35.500 $68.000 $8.750 $11.000 $35.750 $2.750 Depreciation Expense $2.750 $2.000 $30.000 $30.750 $2.750 $2.750 $44.250 $11.000 $8.750 $77.250 $33.750 $33.750 $2.750 $2.750 $2.250 $5.7 Appendix: Depreciation – Parking Depreciation Straight-Line Parking Area Salvage Value: Useful Life: 30 Year Book value at beginning of year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Source: Self Created $82.750 $2.500 $24.7.000 $74.750 $2.750 $2.750 $2.750 $2.750 $11.750 $2.750 $2.250 $16.250 $38.500 $57.750 $60.500 $24.500 $79.500 $2.750 $66.750 $2.000 $63.000 $19.750 $2.500 $74.250 $60.750 $2.000 $19.000 $52.500 $13.250 $38.750 $2.000 $74.500 $13.750 $2.750 $2.500 $30.500 $8.000 $68.250 $5.500 $46.000 $79.

8. 33% (French Tax Office 2011) The Rooms supply will increase from 250 to 350.23% respectively. 89 . - Other revenue is projected to increase accordingly. - Based on the tendency. F&B sales are forecasted to increase as follows. General Information:    Business Tax is 33.8 Appendix Pro-Forma Statements 11. - To be able to balance the increase in expenses.11. The occupancy will decrease from 70. The construction period is 22 weeks. HolidayInn6 will augment the prices by $3 every year. Forecasts - Due to the construction period the opening of the conference center does not match the high corporate season.30% to 50. Hence the management expects the increase in occupancy to be the following.1 Appendices Financial Targets and estimations for Years 4-8.

2 Appendix: Forecasted Revenues 90 .11.8.

Source: Self Created. Assumed that average occupancy increases by a projected percentage respectively of the year. Revenue increases by a projected percentage each year.5 each year. 3. HOTS Background Year 0. Assumed that weekday and weekend yearly conference room’s occupancy will increase by 5% and 3% respectively. Revenue increases by a projected.30% in Year 3 down to 50.     Assumed that with an increase by 100 rooms the average occupancy will decrease from 70. The management assumes that the prices will increase by $ 2.8. 1. Appendix 11. Assumed that average occupancy increases by a projected percentage respectively of the year. 2.2 91 .23%.

worldwide-tax. HOTS Summary income statement Year 3. Appendix all departments' pro-forma. 92 .11.8.3% of total Income. Source: Self-Created.com [Accessed on: 12th May 2011].3 Appendix: Pro-Forma Summary Income Statement  In year 4 business tax in France is applied which is 33. http://www.

8.2 93 . Year 3.4 Appendix: Forecasted Tendency Departmental Income Statement: Rooms      Weekday's Percentage of Total Room Revenue decrease as Conference Revenue Increases Weekend's Percentage of Total Room Revenue decrease as Wedding/ Social Increases Tours are going to continuously contribute 2% to total rooms revenue Guest Comfort is evaluated to minimize to 10% Laundry is evaluated to maximize at 3% Source: Self Created. & Appendix 11.11.8. Year 2. Year 1. HOTS Summary Income Statement Year 0.

5 Appendix: Pro Forma Departmental Income Statement Rooms Year 4: 1 Front office / Uniformed Staff was hired 3rd year payroll of Front office + (1*weekly salary of Front Office*number of weeks in a year) 2 Housekeeping staff was hired 3rd year payroll of housekeeping + (2*weekly salary of hotel Service*number of weeks in a year) Year 7: 1 Front office / Uniformed Staff was hired 6th year payroll of Front office + (1*weekly salary of Front Office*number of weeks in a year) 1 Housekeeping staff was hired 6th year payroll of housekeeping + (1*weekly salary of hotel Service*number of weeks in a year) Source: Self-Created. Hots Departmental Income Statement Y3.8.5. 94 .8. Appendix 11.11.

8.6.11. Appendix: Forecasted Tendency Departmental Income Statement: Food & Beverage      Food cost of sales in Year 4 onwards is average of food cost of sales of Year 0 to Year 3 Beverage cost of sales in Year 4 onwards is average of beverage cost of sales of Year 0 to Year 3 China and Glassware cost has been increased to 1% total F&B revenue Laundry cost has been increased to 3% total F&B revenue Training cost has been increased to $20.000 from year 4 to year 8 95 .

6 96 .7. Appendix: Pro-Forma Income Statement F&B Year 4: 1 staff of Food & Beverage was hired 3rd year payroll of Food and Beverage + (1*weekly salary of Food & Beverage*number of weeks in a year).8.8. Year 7: 1 staff of Food & Beverage was hired 3rd year payroll of Food and Beverage + (1*weekly salary of Food & Beverage*number of weeks in a year).11. See Appendix 11. HOTS Departmental Income Statement Food and Beverage Y3. Source: Self-Created.

11.8 Appendix: Forecasted Tendency Departmental Income Statement Other   In year 4 other revenue has been increased to 2. HOTS Departmental Income Statement: Other Y0. Appendix 11. In year 4 costs of sales has been increased to 65% of total telephone revenue.50% of total room revenue.8. Y1.2 97 . Y2.8. and Y3. Source: Self-created.

8.8.10.9 98 . hotel will not be generating revenues out of business but the payroll of business room attended would be an expense to Other Department.11. Payroll of Business Room Attendant would be calculated: o Number of Staff*weekly pay of other *Number of Weeks in a Year Source: Self-created. Appendix 11. HOTS Departmental Income Statement Other Y3. Appendix: Pro Forma Departmental Income Statement other   As Holiday Inn6 is not charging its guests for provided business room facilities.

6. total F&B revenue.2 99 .8. Stationary. HOTS Departmental Income Statement Central Administration Year 0 to Year 3. From Year 5 Miscellaneous expenses will start decreasing. printing materials.11. Appendix 11.11 Appendix: Forecasted Tendency Departmental Income Statement Central Administration     Total Revenues are calculated by adding total rooms revenue. Source: Self Created. see Appendix 11.10. Marketing expenses will form 12% of total revenue from Year 4 onwards.8 & 11. 11.8. and total other revenue. Miscellaneous expenses are supposed to increase in year 4 with the opening of new projected facilities.8.8. menus etc. Because of purchase of uniforms.8.

Source: Self-created. Appendix 11.532. 6 respectively.11 100 . $ 6101.25%. 5.11.25% is French straight line depreciation if more than 6 years (Intl tax and business guide: France). and will increase $98.35.24 for year 4. Rooms' depreciation is calculated: Cost of new rooms * 2. $ 21247. Insurance is in respect to all property and as Holiday Inn6 has extended its facilities.400 of new facilities. It is presumed that property tax will increase by 50% because of new facilities.000 from Year 4 to year 8 because Holiday Inn6 will have more facilities.75. insurance will increase by 50%. 2.200. and interest is $ 34229. Bank charges in year 3 are $ 21. Old Building’s depreciation is $585.8. HOTS Departmental Income Statement Central Administration Y3.12 Appendix: Pro Forma Departmental Income Statement Central Administration        Refurbishment investment is increased to $1.8.596 per year.

8.5 & 11.7 101 .13 Appendix: Staff and Training . Appendix 11.11.8.Department Income Statement Conference Center Source: Self-Created.8.

11.8.14 Appendix: Pro Forma departmental Income Statement Conference Center

Payroll and related expenses were calculated basing on staff needed (see pre-opening
expenses).
Laundry cost consists of 3% of total Conference revenue.
Training Costs are calculated through the usage of percentage of total staff.
Source: Self-created, Appendix 11.8.13 & 11.8.2

102

11.8.15 Appendix: Pro Forma Summary Income Statement: Conference

50% increase in property tax has occurred through conference center.
50% increase in insurance has occurred through conference center.
Depreciation is for the conference center only.
Bank Charges are assumed to be 50% of total bank charges.
Business tax is 33.33% of total conference revenue.
Source: Self created, Appendix 11.8.14.

103

11.8.15 Appendix Pro-Forma Cash Flow: New Facilities

Total net income consists of net income of new rooms (100 units) and conferences net
income.
The net new rooms income is calculated through multiplication of total rooms revenue by
0.2850 (100/350=28.5% contribution of rooms added to total revenue).
Source: Self created, Appendix 11.8.14.

104

15 105 4 3797419.9 Cost Beneficial Analysis 11.07 4401351.07 years Source: Self Created.9.1 Appendix: Payback Period PAYBACK PERIOD Years Cash Flow Proposed project cost Outstanding balance 1 1748141.85 191743. Schmidgall (2006).67 2653209.52 . Appendix 11.53 The payback period is 2.65 0.02 5 4310434.8.11.68 2 2461466.20 3 2886250.

53 $1.72 $3.250.26 $2.351.886.466.007.0000 0.11.20 $2.649.190.805.68 $2.401.351. Appendix 11.221.911.42 Net Present Value $8.52 1.2 Appendix: Net Present Value NET PRESENT VALUE Years Cash Flow Present Value Factor (6%) Present value of Cash Flow 0 1 2 3 4 5 $-4.423.434.141.7473 $-4.9.16 $2.310.8396 0.7921 0.461.090.67 $3. Schmidgall (2006).419.53 $1.748.54 $3.15 106 .02 $4.8.8900 0.401.797.9434 0.696.351.190.007.57 Source: Self Created.

75% and 50.188.52 Years 0 1 2 3 4 5 Cash Flow Present Value Factor (2) $-4.351.50% Present value of Cash Flow (2) $-4.401.1295 50.52 1.797.20 $2.434.351.250.50%.73 $859.748.11.461.310.41 $1.4415 0.52 1.02 $4.82 $558.748.141.097.6678 0.310.435 NPV= $8.401.6645 0.351.53 Annual Cash Flow Year 4 $1.805.08 $572.690.0000 0.23 $740.53 $1.925.75% Present value of Cash Flow (1) $-4.53 $1.1949 0.728.419.886.8.67 $3. Source: Self Created.2934 0.20 $2.090.167.93 $1.40% IRR Years 0 1 2 3 4 5 Cash Flow Present Value Factor (1) $-4.650.2978 0.797.640.461.4459 0.60 $755.06 $-4.67 $3.9.1989 0.310.251 Year 7 $3.22 $50.0000 0.68 $2.434.466.161.466.02 $4.250.262.797.461.401.15.555.68 Year 5 $2.62 $-7.53 $1.57 IRR= 50. 107 .419 Year 8 $4.53 $1.05 $846.88 The IRR therefore lies somewhere between 49.141.886.748.141.129.3 Appendix: Internal Rate of Return k= cost= 0. Schmidgall (2006) Appendix11.351.419.401.1328 49.383.475.351.373.68 $2.086.466 Year 6 $2.401.886.

99 $240.00 $689.10 Sensitivity Analysis 11.00 $689.326.86 $155.522.809.537.83 $4.741.222.160.045.01 $418.413.56 $6.527.23% 108 95.118.010.787.000.919.00 $1.09 $10.151.743.22 $375.00 $689.00 $1.638.000.280.208.61 $1.548.663.60 $35.111.00 $1.00 $1.776.464.180.824.92 $9.58 $1.093.205.602.832.205.77 $8.11.595.73 $13.828.069.671.118.809.958.612.87 $35.00 $1.86 $35.086.326.91 $1.517.226.394.182.401.254.10 $5.376.252.00 $1.07 $1.99 $413.00 $428.240.239.000.21 $1.41 $1.00 Other Direct Costs Guest Comfort Laundry Training Total Direct Costs $777.794.00 $1.23% Revenues Weekday Weekend Conferences Tours Wedding/ Social Other Total Rooms Revenue $4.837.982.413.24 $233.335.000.118.739.24 $200.74 $600.00 $1.00 $428.75 $1.74 $700.38 $11.22 $7.00 $689.00 $689.29 $1.045.102.130.413.63 $1.526.42 $2.86 $336.222.182.222.00 $1.497.118.703.82 $721.948.902.88 $786.064.354.933.61 $1.433.66 $1.413.118.809.709.00 $428.00 $1.93 $10.23% .37 $35.534.76 $466.236.90 $35.07 $35.35 $3.348.23% 85.222.824.236.764.311.972.848.790.00 $428.00 $689.000.347.419.00 $1.79 $879.627.118.560.883.809.156.413.00 $1.990.08 $275.809.86 Payroll and Related Expenses Front Office/ Uniformed Staff Housekeeping Total Payroll and Related Expenses $428.222.22 $13.72 $1.712.067.679.485.830.222.363.491.301.03 $466. 10.742.022.413.366.19 $10.972.23% Year 8 90.84 $5.27 $7.74 $6.082.60 $3.491.767.857.30 $1.376.260.67 $933.120.37 $219.200.58 Department Contribution $5.28 65.809.64 $12.228.00 $428.88 $393.00 $1.052.847.65 $262.202.02 $826.49 $2.120.1 Appendix: Sensitivity Analysis: Rooms Year 8 80.21 $13.746.11 $659.311.000.23% 70.602.

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