B Financial plan upgrading hotel rooms
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Assignments
Name of assignment
Financial plan upgrading hotel rooms. Upgrading, or renovating the hotel rooms, especially the ones which haven't been done at all, is a necessity. Apart from the looks and feel, it is important to the Bergman family to have a strong financial plan.
Situation
The hotel currently has two types of rooms, the renovated rooms and the non-refurbished rooms. The Bergman family has been very reluctant to invest. A nice profit reserve has been built up in recent years; liquidity is not a problem either. Now, with a new strategy, the time has come to do so.
Goal
The new decorated rooms should contribute to the new image and the new strategy. The customer should have a good feeling and appreciate the changes. In the end the freshly renovated rooms should contribute to higher customer satisfaction, more guests retentions and overall a higher occupancy rate at an attractive price. The owner Christina Bergman in willing to invest three times the net profit from the year you took over (€ 431,301). So, what the Christina Bergman wants to see is not a plan of the new looks, but a plan on the investment, to assess if the investment is feasible, doable and profitable.
Task, deliverable
Make a plan in what to invest: give the number of rooms, cost price per room (rough outlines on what to do in these rooms) and the timeline.
Make a depreciation plan according to this: choose a suitable method and timeline and an overview of the costs. Make all calculation.
Make the connection to the cost price and sales price of the rooms, and-or the occupancy rate. Maybe have a look at the RevPAR? How is the hotel, in the long run, going to profit from the investment (operating review)? Make all calculations. Focus on the operating review, not on tax (deductions) e.g.
Be sure all is well argued.
Assessed elements
- Are the costs and timeline realistic?
- Is the chosen depreciation system and period matching the type of investment?
- Are the costs per room and the relation to the sales price (or revenues of the rooms) clear?
- Is it clear if the investment will be profitable to the hotel and from which point on?
- Are all the sources accounted for?
Additional information
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