Decisions
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The Team File which you have a private login link to. In this file you will find four tabs:
- tab preparation where you start, introduce your hotel, strategy etc.
- tab decisions where you, after the preparation make your decisions and give explanations each year.
- tab dashboard where you can find an overview of the most important financial results
- tab results where your find an operating review and other details on results and costs after each year
After a year has passed,the new dashboard and the results will only be visible after releasing by your coach.
There is a Demo team you can check, with a filled out Team File.
Working on your decisions
Christina Bergman has decided that she only wants to be informed of the main outlines of your choices. Therefore the number of items you can make decisions on is limited. These decisions need to be filled out on the tab Decisions, each year. The history of the year before you take over, so Christina's last year, are available. She did not spend any money on some of the expenditure groups, like marketing expenses. So you will see the indication N/A not available or 0.
Rules on the decisions and further information on their limitations.
- Please take into account that your hotel has 364 days and nights per year (52 weeks * 7 nights)
- The basic occupancy rate of your hotel used to be 50%
- The number of rooms in your hotel is 100
- The weekend days are 43% of the total number of nights (rounded-up)
- The weekdays are 57% of the total number of nights (rounded-up)
- The average number of guest in a room is in the weekend days is 1,7
- The average number of guest in a room during the weekdays is 1,0
- We completely refrain from (adding) VAT and or other taxes on profit for now
- You can not change the number of rooms of your hotel
- You can not sell the property
- You can not 'spend' or use profit (or cash flow) or do other or bigger investments then indicated
- The effects of all of your decisions only last for one year!
List of the decisions
Underneath you will find the list of ten financial decisions you will have to make each year in your Team File: there might be some small differences in your competition. Adapt the decisions to your new plans and strategy each year.
The explanations on your decisions are very important and account for the biggest part of your occupancy and so results. And they contribute heavily to your mark. Also make calculations in your explanations, to justify your choices.
- Ranges
In all decisions made there are a few ranges built-in to make it possible for you to make your decisions appropriately and to prevent you from going bankrupt. Running this hotel consists of more than just filling out numbers in a spreadsheet, therefore you have to explain things in the Team File and we encourage you to behave like an entrepreneur throughout the entire game.
- Price systems, rates
You can use psychological pricing, flex prices, dynamic pricing, revenue management or whatever system you want to use in your decisions. The better your explanations in your Team File (and especially your calculations) are, the better your company's results will be, the higher your entrepreneurship mark, and so the more customers you get by a higher occupancy rate. In hospitality, we see the concept 'rates' more frequently then prices.
- Euros
Only make your decisions in euros, don't use cents or other currency. In filling out the amounts do not mix up comma (,) just use the numbers also do no use decimals!
Five Team decisions on prices
As you can see in the example: if you mouse over the description of the decision (like cell xxx in this example) you will get more information what the decision is all about. You are allowed to fill out the pink cells according to the instruction.
You will have to decide what prices you will charge (per room per night) for hotel's weekdays or weekend days which serve the markets. In the pages on room you can read a bit more on the history as well as in the page on prices. Depending on your performance as a team and your choices made, you will get a certain occupancy rate and so a number of guests. These guests prices will bring your revenues in each of the five revenue categories, depending on the prices decided upon. You can not influence how many people will stay in the room.
→ Limitations
Strongly recommended: never change any of the five price more than + or -20% per year to protect your hotel from high impact of too extreme changes.
- 1. Weekend last-minute room-price (rate) per night
In the past, the average price was € 80. The last-minute price is the minimum price you will accept to fill up the empty rooms, the gaps in your occupancy.
- 2. Weekend rack rate room-price (rate) per night
In the past the average price was € 100. The rack rate price is the highest price you will get.
- 3. Weekdays last-minute room-price (rate) per night
In the past the average price was € 100. The last-minute price is the minimum price you will accept.
- 4. Weekdays rack rate room-price (rate) per night
In the past the average price was € 140. The rack rate price is the highest price you will get.
- 5. Banqueting and other activities price (rate) per person per day
In the past the average price was € 25 - € 30. You can not skip this activity totally, so price 0 is not allowed. The occupancy rate of the rooms also has impact on the numbers of booked banqueting arrangements and other activities.
Five Team decisions on expenses
Other things you will have to make decisions upon decisions 6 till 10. On mouse over in the file you'll get more info on these choices. All these decisions bring extra costs compared to the past, as Christina did not spend money on these elements in the history. Try to explain, at each and every form of expenses what you expect that it will bring you. So, how will you earn back these costs and what will it bring additionally?
In case you think you have an idea like this, please also explain this to your coach at the end of your Team File.
- 6. Marketing expenses
No expenses made on this in the past: 0 or N/A means not available.
This is the total spending for all paid marketing actions in the past: maybe this is on the shy-side? There was very little going on at the Emerald Forest Hotel, especially nothing on social media or affiliates and also not in bartering. So this part is also aiming at distribution and partners. You could also include expenses related to clear air, to green energy, to social responsibility, ecological footprint etc. So, probably this is a decision you can not afford to leave out.
→ Limitations
You can use any amount between € 0 and € 200,000 per year, to protect your hotel from high impact of too extreme changes.
- 7. Staff development
No expenses made on this in the past: 0 or N/A means not available.
Apart from the salaries, extra costs can be made for this. This can be spend on necessary skills and resources to support the staff member's career goals and the organization's business needs. This will be things like training, developing skills or for instance courses on hospitality.
→ Limitations
You can use any amount between € 0 and € 100,000 per year, to protect your hotel from high impact of too extreme changes.
- 8. Extra depreciation of new investments
No expenses made on this in the past: 0 or N/A means not available.
These are the depreciation costs related to your NEWLY planned investments And, as you can see on the footage available, the hotel is in need for some additional investments in the rooms, facilities etc.
Check the specific investments page on this. You can only explain expenses, not investments which you probably will make.
→ Limitations
You can do any investment with a maximum of € 900,000 each year. So over four years you can invest a maximum of 4 x € 900,000 = € 3,600,000. The costs of this will be the depreciation, automatically calculated and always linear over four years (a simplification, but still). The maximum is built in to protect your hotel from too extreme changes and costs.
- 9. Market research expenses
No expenses made on this in the past: 0 or N/A means not available.
These are the cost for buying information from Top Research which will be analysing the past year and it will be visible, if bought, on your results tab after any year. It will give you a benchmark on the prices asked in the market (small package) as well as the costs made in the market (large package).
→ Limitations
You can use chose the amount from the choice box so € 0 buys you no information, € 25,000 buys you for the small package and € 50,000 gets you the large package. Elements not paid for will show up in your operating review as 'Not bought'. Make sure you explain very clearly in your explanations why you think buying this will benefit your company. The company Top Research will carry out the research and report to you.
- 10. Other expenses
No expenses made on this in the past: 0 or N/A means not available.
This could be anything apart from the groups mentioned above. So things like supporting the distributions chain, cooperation with partners, maybe costs or legal issues. Maybe contribution to tourist information offices activities.
Make additional calculations explaining the profit it might bring. If you explain pro's and con's and the costs and the results and the expected additional profit of a specific action,your coach might reward this with a bonus. A bonus is net, it is directly added up to your profit in a year.
→ Limitations
You can use any amount between € 0 and € 100,000 per year, to protect your hotel from high impact of too extreme changes.
No decisions or no explanations
If any team fails in delivering the decisions or explanations before the deadline this is a serious problem. This will end in a low entrepreneurship mark and as this is an essential part of the algorithm bringing you clients, also jeopardizing your occupancy rate. If there are no decisions filled out, the decisions from last year will be filled out.
Costs and results
If a year has passed, you will see the results, only after the time communicated. With the costs mentioned above and the revenues made in the past, the results of Emerald Forest Hotel were realized. You can find this in the dashboard and at the tab Results in your Team Finances and more explanations here in the file results. So, if you change the costs (increase the expenses), understand that you have to earn these extra costs back (or your profit will go down rapidly)!
Compensating for the extra expenses or benefiting from them can only be done in a few ways:
- Make costs that -by making them- bring down other costs (for instance, in using ICT, less staff is needed);
- More revenues by choosing higher prices, so a higher profit per sold product;
- More revenues by achieving a higher occupancy-rate, so more sales.
So fill out the decisions and explain clearly what you are aiming for in doing so. Do stick to the deadlines!
All the costs which you have made extra through your decisions will be brought directly to the results of the year you are playing and will be immediately visible there. This will be at the end of each playing year.
Spending the maximum on all possible costs looks like a bad idea! You have to earn back all these expenses, so you will have to make clear choices and keep the profit in mind!
So the numbers mentioned are not a gift, nor a budget: it just gives you an indication of the (maximum) possibilities without getting in serious financial trouble. So, if you would decide to spend to the maximum on all options you could have in extra costs (per year):
- Decisions 1-5 are no expenses but bring revenues
- Decisions 6 maximum € 200,000
- Decisions 7 maximum € 100,000
- Decisions 8 maximum € 225,000 year 1 up to € 900,000 in year 4 as depreciations. Depending on your new investments.
- Decisions 9 maximum € 50,000
- Decisions 10 maximum € 100,000
The maximum grand total on expenses in the first year is a maximum of € 675,000. Keep in mind that the profit as you take over was € 486,307! The total costs was € 2,430,595. Creating all expenses will raise the costs by more than 29%! You probably will make a loss now as the additional costs exceed the profit you made in the past. So think of all the expenses well over and elaborate in the Team File on how your decisions will keep the company healthy. Hopefully the additional costs you make will also bring higher prices or a higher occupancy rate: but still be careful to go too far up with the costs without compensation in a higher price for instance.
Once again, these are the maximum and any euro spend you have to earn yourself.
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