Feasibilty Study For Holiday Inn

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 hotels 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 hotels reputation. In addition,
numerous evaluations of the project have been executed and in accordance to them the
project was proven as feasible.
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
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
11.3.5 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
11.4.4 Appendix: F&B Departmental Income Statement- Year 1 ................................................ 53
11.4.7 Appendix: Indicator Average Year 1 ................................................................................. 56
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
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
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. 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. 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.
2: Market Analysis:
2.1: Current Facilities Analysis:
Holiday Inn6 is a full service hotel, with its services including restaurant, bar and 24 hours
front desk services along with 250 guest rooms, which can accommodate doubles, families
and singles (Appendix 11.3.9). All these facilities have been continuously renovated to upto
date condition. The management tried to keep these facilities in the excellent level, which can
be seen by decisions taken in years1 to 3 (Appendices 11.3.2-11.3.4). The rooms have airconditioning systems, private luxury bathrooms, and offer a wide range of complimentary
items and in-room entertainment services (Appendix 11.1.7 & 11.3.9) along with high-quality
amenities to guarantee that rooms produce admirable impression and
fulfil diversified
guests needs and expectations (Appendix 11.1.8). In addition to these services and facilities,
to attract more guests and widen the range of attractions at the hotel, Holiday Inn6 has a
swimming pool and offers parking facility, which is capable of accommodating 120 cars
(Appendix 11.1.5).
2.2: Analysis of Existing Clients and Existing Business:

HolidayInn6s management decided to divide its market to effectively target all the segments
so that the marketing plan would be implemented efficiently (Kotler et al., 2010).
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, HolidayInn6
implements certain changes in the marketing strategy in the 2nd quarter of each year, when the
majority of clients belong to leisure segment. This restrategizing does not affect the ability of
the hotel to attract corporate clientele; 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. As HolidayInn6s quality index is the highest among competitors in year 3 with
an index of 42.29 (Appendix 11.4.3), it affects average occupancy which, by the end of year
3, was 70.30% (Appendix 11.3.6). It can be seen from rooms analysis that corporate sector
was the major consumer of the rooms sold during weekdays with 72% occupancy (Appendix
11.3.5.1) and leisure sector is dominating in rooms sold during weekend with 48% occupancy
(Appendix 11.3.5).
3. Site, Area and Hotel Website Evaluation

3.1 Location, Space and Area
HolidayInn6 hotel is located in Nice, a port city located in the South of France at the Cte
dAzure, the French part of the Mediterranean Sea (Appendix 11.1.1). It has a population of
145,000 residents and with its sheltered location it is one of the warmest cities in France even
during winter months. The hotels location has a view on the Promenade des Anglais, the
main coastal road which also leads directly to the closest airport, only 7 km away (Appendix
11.1.1). When the hotel was built in the 1950s, coastal trips as well as off-season breaks grew
in attractiveness to leisure and business travelers. At this time, due to the growing interest,
other hotels also entered the market (Appendix 11.1.3 11.1.4). 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. (nicefrance.ca, 2011).
3.2 Hotel Website

The divisions below will provide a thorough clarification of the decisions involved in
creating the hotels website. Three major areas will be looked at, in order to elucidate the
purpose and meaning behind the design that was chosen for HolidayInn6.
3.2.1Design Principles
Following the statements of Williams and Tollett (2006) there are four principles that are the
fundamental features of every piece of design: alignment, repetition, contrast and proximity.
They make the difference between a website that will hurt or bore the eyes and one that looks
fresh, well-ordered and professional. The alignment of a website can be left, right or centered.
The key to a well-structured website is to choose one alignment and keep it throughout the all
pages (Williams and Tollett, 2006). Repetition refers to a visual piece or element being
repeated on every page of the website, e.g. the hotel logo or the color schemes. This creates a
relation between each page and binds them together to form a whole, organized and over
viewable website (Bennett, 2005).
Gary et al. (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. The proximity on a website denotes that two items or sections
that are put close to each other are supposed to belong together. With these four basic
principles in mind, HolidayInn6 has designed the websites layout and content. The repetition
has been implemented by keeping the same background and alignment of text and pictures as
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well as the link bar on every page. 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. The alignment of information on the website is left sided and through the use of light and
dark colors, the pictures and text formats give a strong contrast to attract the viewers
attention.
3.2.2 Structure and Content

As Williams and Tollett (2006) wrote, it is important to consider the web audience, in other
words, 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, HolidayInn6
has created a website structure that is simultaneously elegant and modern as well as easy to
use and organized.
To ease understanding of the website, the pages have been made available in the three most
commonly spoken languages of the EU: English, French and German. (ECM, 2010)
(Appendix 11.2.1 11.2.6) The left side holds the main body with vivid colored pictures
and/or text. To the right of the main body, the navigation bar is easy to use and over
viewable, consisting of the main links such as rooms, restaurant, events and reservation along
with extra features such as a photo gallery.(Appendix 11.2.1 11.2.6)
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.
3.2.3 Colour Scheme

As Davis (2008) said, color is essential to having a good design as it can raise the mood, gain
quick attention or be used to recognize a product. The choice of colors on our pages were
dependent on the meaning and mood that is conveyed by them. For our main color, the
background which was the same on every page, we decided to use brown tones because the
color represents simplicity, friendliness and dependability, which are feelings we would like
our customers to connect with our hotel. The color also radiates warmth and is neutral.
4. Supply, Demand and Competitive Considerations

4.1 Past Occupancy Trends
By looking at the past occupancy trends of HolidayInn6, an increase in overall occupancy
percentage can be seen as it rose from 50.99% in Year1 to 70.30% in Year3 (Appendix 11.4.1
11.4.3). This growth can be related to the simultaneous increase in market share from
9.73% after Year1 up to 13.06% after Year3 as well as the decrease in the daily rate from $
103.51 in Year1 to $ 101.07 in Year3. Though in Year2 the hotel had a slight increase in its
daily rate to $ 104.26, the overall occupancy for the same year had an increase of 8.75% to
59.74% (Appendix 11.4.1 11.4.3).
4.2 Hotels Currently Serving the Local Market

There are six hotels located in the same area and competing with HolidayInn6 (Appendix
11.3.8). Nevertheless, HolidayInn6 is ranked highest on an overall review of performances
after Year3. Its strongest competitor, Sol Melia, has stayed behind with 1.42% of market
share in Year3 compared to HolidayInn6 (Appendix 11.4.3). 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, with a minor downfall to second rank in Year2 (Appendix 11.4.1 11.4.3).
4.3 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. SolMelia is laid only $ 4.15 lower
from HolidayInn6s RevPAR of $71.06 while team 2 is $ 8.81 lower, at the end of Year3
(Appendix 11.4.3). HolidayInn6 also has the highest percentage when it comes to Staff and
Guest satisfaction at the end of Year3. The hotel is leading with 80% staff and 75% guest
satisfaction, followed by SolMelia with 70% guest satisfaction and Radisson with a very
close 79% in staff satisfaction (Appendix 11.4.3).
4.4 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 11.4.1 - 11.4.3). 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 .
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5: Marketing Strategy
5.1: 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%) in Year3(Appendix 11.6.18). In respect to future marketing plans and to maximize
Holiday Inn6s profitability, 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, 2005). In upcoming years, according to projections, it is clear that
there will be an increase in corporate guests. The increase will provide a chance of huge
financial growth. Other than business sector, management will target weddings and social
events during weekends to utilize conference rooms to get full benefits out of them. In
addition to Rooms Department, restaurant at property has gained popularity and became one
of the most frequented dining venues (Appendix 11.1.8).
5.2: Sales and Sales Actions

Throughout the three years, with the help of on-going refurbishments, Holiday Inn6 has
determined to focus on pricing policy, restaurant and bar and implementation of extra
facilities such as concierge, in-room utilities and complementary items to maximize its profits
by increasing sales. Even though the hotel is ranked first in guest satisfaction survey, its
average room rate is not the highest compared to the rest of the competitors at the end of
Year3 (Appendix 11.4.2-11.4.4). This is the reason why Holiday Inn6s average occupancy
is the highest among all competitors.
As described by Trehan & Trehan (2007), sales and sales actions are apprehensive with
selection of best substitute among the diverse available substitutes. Due to better quality of
menu products different suppliers were tried out during the three years (Appendix 11.3.211.3.4). Finally one type of menu and the best supplier were selected in Year2 to maintain
services and give best services and quality with consistency. With all the enhancements done
during the period the price of the menu was increased by only $6.50. Likewise liquor prices
were changed to Level2 and Level3. The best pricing level was level 2, so that is why during
all the period liquor prices were kept at Level2 (Appendix 11.3.2-11.3.4). This increase in
prices in food and beverages did not affect negatively the F&B sales. Au contraire,
departmental contribution towards total net income increased from 39.9% in Year1 to 43.9%
Year3 in Food & Beverage Departmental Income Statements (Appendix 11.4.4-11.4.6), along
with receiving appraisals in Year2 and Year3 (Appendix 11.1.8-11.1.9).
11
5.3: Advertisement and Promotional Tactics

It is crucial to make major decisions before implementing the actual advertising plan: set the
objectives, the message to be delivered, budgets, and the adverting campaigns evaluation
(Kotler et al., 2003). Throughout the three years Holiday Inn6s management has reinforced
its competitiveness as a business hotel to draw more attention of the targeted segments, which
was done through adapting marketing tactics and tolls. The amount spent on advertising was
calculated according to the situation, period of the year and requirements (Appendix 11.3.10
& 11.3.2-11.3.4, Kotler et al., 2010). The media of advertising were selected judging by
efficiency and effectiveness to the targeted segment of the market (Appendix 11.3.1).
Together with tactics previously mentioned, direct mail, telemarketing and website have been
applied to successfully attain corporate sectors guests. The success of Holiday Inn6s
advertising and promotion can be seen from the enhancement in public awareness index from
Year1 to Year3 which increased gradually from 36.4% to 46.8% (Appendix 11.4.7-11.4.9).
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6. Proposed Extension of Facilities and Services

6.1 General Concept and Changes needed
Analyzing the overall performance for the last 3 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. In the conditions of growing competition HolidayInn6 has faced a
need in extending its facilities to conform to the targeted market segment- corporate clients.
Therefore there were two projects analyzed on the presence of such criteria as suitability,
profitability, stability and sustainability.
6.2 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, the project
presumes an addition of a business centre and an upgrade of the car parking. The augmenting
need of corporate segment in conferencing facilities is the reason for construction of the
conference centre. An extension of rooms is necessary for accommodating the increased flow
of corporate clients for the future years, whereas business centre and parking area will add
benefits to business customers, room sales along with adding value to HolidayInn6s services.
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7. Financial Assessment, Projections & Viability

7.1 Trend Analysis
Looking at the trend analysis conducted on the financial statements of HolidayInn6, the
progression since the change of management is apparent (Appendices 11.6.1. 11.6.6.).
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.
7.2 Ratio Analysis

In order to more clearly illustrate the financial position of HolidayInn6, several ratios have
been carried out (Appendices 11.6.7. 11.6.20.) 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.
From the ration analysis, it can be seen that the performance of HolidayInn6 is on the incline
with only the Current Ratio & Debt-Equity ratio, showing slight decreases in year 2 due to
the capital expenditure (Appendices 11.6.13 11.6.14). Both ratios show improvements in
year 3 however. The decrease in the profit margin ratio can be attributed to more
refurbishments carried out during year 3, as well as an increases in total other direct costs,
fixed costs and business tax(Appendices 11.6.1 11.6.6.). These increases however, do not
14
impact the financial stability of the hotel as they only account for a 1% decrease in the ROCE
(Appendix .11.6.17).
7.3 Capital Investment Required & Financing

The goal of the HolidayInn6s 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.
It is for this reason that HolidayInn6 has decided to choose the proposed project A, which
combines the additions of a conference room, extra rooms, a business centre and a parking
area. It is our belief that these additions will be invaluable to our target market and will
translate into higher profit margins for our hotel.
In order to carry out these infrastructural expansions, the management requires an investment
of $1,300,000 (Appendix 11.7.1), $800,000 of which will be financed through a bank loan
and $500,000 to be invested by shareholders. HolidayInn6 is prepared to offer shareholders
an annual rate of 6%, which is 4.75% higher than the current French bank rate of 1.25%
(Trade economics, 2011) with a loan repayment period of 36 months. Stemming from this,
HolidayInn6 will make the following capital payments:
-
Investors:
Bank:
Outstanding Loan:
$ 22,653.06/ monthly ( Appendix 11.7.4)

$ 15,210.97/ monthly (Appendix 11.7.3)
$ 8298.92/ monthly (Appendix 11.7.2)
The annual depreciation charge for each of the new facilities has calculated as follows:
-
Conference Centre: $19,000 (3.8%) / annually (Appendix 11.7.5.)
Parking Area:
100 Guest Rooms:
$2,750 (3.33%) / annually ( Appendix 11.7.7)

$70,875 (2.25%) / annually (2.25% of Rooms Construction
Cost)
The rooms are depreciated using the French property depreciation rate of 2.25% for property
being depreciated over a period longer than 6 years (Deloitte, 2010)
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7.4 Operations and Capital Budgeting

The pro-forma financial statements were forecasted using the nave 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. 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, 2001).
In regards to the operational budget, it can be seen that the estimates reflect a continuous
growth pattern (Appendix 11.8.2.) with the room occupancy projected to increase from
60.23% in year 4 to 90.23% in year 8; the F&B revenue projected to increase by 50% from
year 4 to year 8(Appendix 11.8.2) and the average (weekday and weekend) conference
centre utilization projected to increase over the 4 years, from a revenue of $904,800.00 (year
4) to $2,036,320.00 (Year 8) (Appendix 11.8.2.)
7.5 Cost - Benefit Analysis

In order to appraise the viability of the proposed extension project, methods of investment
appraisal have been carried out:
-
Payback Period ( Appendix 11.9.1)
Net Present Value ( Appendix 11.9.2)
Internal Rate of Return ( Appendix 11.9.3)
The payback period of 2.07 years is shorter than the forecast of 3 years(Appendix 11.9.1,
Appendix 11.7.4); however it is important for the concept of prudence in accounting to
allow for a safety level, which is provided by the forecast of 3 years. The NPV and the IRR,
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.e. they support the decision to invest in the
project. The NPV is greater than zero and the IRR greater than the interest rate given to
investors.
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7.6 Evaluation of projections

According to the evaluations carried out, the management believes that the project will
contribute substantially to overall profitability of HolidayInn6. It is a vital step to be taken for
hotels progression towards domination on the corporate market segment.
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8 Sensitivity Analysis
As a safety measure, HolidayInn6 has carried out an analysis, the purpose of which was to
define how sensitive are the operations if the hotel fails to meet its occupancy objectives
(Appendix 11.10). Taking Year 8 Rooms Departmental Income Statement (Appendix
11.10.1) the management has found out that decreases in occupancy do not affect negatively
the net income, thus approving the business to be capable of withstanding drastic decreases in
activity.
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9. Conclusion & Recommendations

In order for HolidayInn6 to capitalise on the popularity of conferences in the area of both in
and out of season (Appendix 11.1.4) 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, The Park Hotel & The Mariner who all operate on
much the same scale as HolidayInn6 in terms of number of rooms, but who unlike
HolidayInn6 have the added value of providing their customers with conference facilities and
business services. (Hots Background Document, p.8)
As can be seen from the past financial statements to the pro-forma statements and investment
appraisal calculations (Appendix 11.6.1 11.8.15), 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.
Accordingly, the management therefore recommends to the shareholders to invest into the
proposed expansion project.
19
10 References:
Bennett, J. G. 2005. Design Fundamentals for New Media. Florida: Thomson

Cengage Learning.
Burton, J. E. & Bragg, M. S. (2001) Accounting and Fincancefor your

SmallBusiness. 2nd ed. John Wiley & Sons Inc.
Davis G., 2008. The Designer's Toolkit - 1000 Colors: Thousands of Color
Combinations. San Francisco: Chronicle Books.
Deloitte. (2010). International Tax and Business Guide: France. Deloitte.
European Commission Multilingualism. (2010). EU Languages and Language

Policies.[online] Available at: <http://ec.europa.eu/education/languages/languages-ofeurope/index_en.htm> [Accessed 05 March 2011]
Kolter, P; Bown, J.T; and Makens, J. C. (2003), Marketing for Hospitality and
Tourism, 3rd Ed., New Jersey: Pearson Prentice Hall.
Gary, B. et al., 2009.Web Designs: Introductory Concepts and Techniques. USA:

Cengage Learning.
Kotler, P; Bowen, J. T; and Makens, J. C. (2010), Marketing for Hospitality and

Tourism, 5th Ed., New Jersey: Pearson Prentice Hall.
Pickton, D. and Broderick, A., (2005), Integrated marketing communications, 2nd Ed.,
England: Prentice Hall.
Schmidgall, R. S., (2006), Hospitality Industry Managerial Accounting,6th ed.

Michigan: American Hotel & Lodging Educational Institute
Trading Economics (2011) TRADING ECONOMICS: FRANCE INTEREST RATE

[online]. Available at: <http://www.tradingeconomics.com/france/interest-rate>
[Accessed 2 May 2011]
Trehan, M., & Trehan, R. (2007). Advertising and Sales Management. New Delhi: V.
K Enterprises.
Williams, R; and Tollett, J. 2006. The Non-Designers Web Book, 3rd Ed., Berkley:
Peachpit Press.
20
11 Appendices
11.1 Appendix: General Information of Holiday Inn6
11.1.1 Appendix: Nice Space, Location and Area
Source: Google Maps (2011) Nice, France [Online] Available through: <
http://maps.google.ch> [Accessed on: 20 April 2011]
Source: Google Maps (2011) Holiday Inn, nice, France [Online] Available through:
<http://maps.google.ch> [Accessed on: 20 April 2011]
21
11.1.2 Appendix Nice, Ambiance and Scenery
1st Picture: Panoramic

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

Resort, Nice, France.
Source: Self Captured.
22
11.1.3 Appendix: Hotel Location
Source: HOTS Background Information, Spring 2011 pp.4
23
11.1.4 Appendix Economical Background of the Hotel

Hotel Economic Background
1970's Tourism Growth
In the 1970's, 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. This influx encouraged the establishment of annual tourism and recreational events, which, in
turn attracted increased levels of tourism. 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.
1980's Small Industry Growth
The town grew to a city of 200,000 residents and in the 1980's the city economy began to diversify
into service and soft industry, which generated a small market for commercial room nights. The
combination of regional tourist events and commercial growth prompted one of the established hotels
to build an excellent conference centre. With a diversified economy, a seafront location, and good
hotel facilities, the city seemed to be in a strong position.
1990's Decline
Unexpectedly, 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. There was also public criticism of the city's hotel
facilities, which had not kept up with the times. By 1995, 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. No longer a boomtown, and short on tax funds to maintain its infrastructure, the town was
also losing its appeal for small industry relocation as well.
2000's Revitalisation Plan
In the late 1990's, many companies were looking to relocate to areas that offered lower commercial
costs, lower taxes, and a higher quality of life. The local authority decided to offer an exceptionally
favorable economic relocation package to small and medium size firms. This plan has been very
successful and many companies have relocated or have committed to relocate. 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.
Up to this point, there has not been a great deal of interest from the major hotel companies, but many
smaller hotel developer/operators have been attracted to the town looking for low cost property. They
have been to purchase older hotel properties at a cheap price, demolish them, and replace them with
modern facilities. However, while the town council has been keen to support redevelopment, they
have insisted on one condition - the old hotels must be refurbished, not replaced.
24
11.1.5 Appendix: Hotel Facilities
25
11.1.6 Appendix: Current facilities condition
Facility Rating
120.00%
100.00%
80.00%
60.00%
40.00%
20.00%
0.00%
Rooms
Bar
Resturant
Front Desk
CURRENT CONDITION OF FACILITIES: (rated on a scale of 1, very poor, to 100%,

Excellent)
Facility
Rating (%)
Rooms
65.5
Bar
98.4
Restaurant
80.5
Front Desk
79.9
Source: HOTS Market Research: Business Advice by 3rd Year December.
26
11.1.7 Appendix: In Room Entertainment and Complimentary Items
Source: HOTS User Guide pp.25
27
11.1.8 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 - 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

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

You never see the same member of staff

twice
No one seems to be in charge
A very comfortable hotel - a home from
home
I will always go back
Excellent food - well done
There is always a friendly

face
The service is excellent
I prefer to go somewhere else
Source: Monthly Indicator Report December Year 3
28
11.1.9 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, its 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 - 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, its embarrassing
82
Source: HOTS Simulation
29
11.2 Website Layout

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

11.3.1 Appendix: Advertising Media and their Effectiveness
Weekday
Room
10.00
Local
Newspaper
20.00
Local Radio
35.00
Sunday
Newspaper
50.00
Business Press
10.00
Posters, and
Point of Sale
30.00
Direct Mail
20.00
Direct Sales
Force
40.00
Telemarketing
& Web
20.00
Local Visitor
Guide
55.00
PR Agency
Source: Self created
Weekend
Room
10.00
Meal
50.00
50.00
10.00
10.00
Weddings
Etc.
40.00
15.00
25.00
50.00
10.00
50.00
5.00
20.00
30.00
10.00
15.00
40.00
15.00
50.00
15.00
10.00
30.00
5.00
35.00
40.00
10.00
15.00
5.00
20.00
10.00
30.00
20.00
20.00
40.00
20.00
25.00
35.00
40.00
35.00
35.00
30.00
35.00
40.00
20.00
10.00
40.00
20.00
25.00
30.00
40.00
50.00
5.00
5.00
5.00
55.00
55.00
35.00
45.00
30.00
25.00
36
Beverage Conference Tours
11.3.2 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= 24.50 $
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, 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,

and Front Desk increased to level 2
Training= 10$-15$
Advertising:
Meals=1000$
Liquor= Level 3
Meals=25.00$
Tours=70$
Price
May
Corp Wd=111.50$
Corp We=97.00$
Leis Wd=97.00$
Leis We= 100.50$
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$
Meals=27$
July
Price
General Decisions:
Complimentary Items=Level 3
Advertising:
Weekday=19,800$
Weekend=14,750$
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= 100.50$

Leis Wd= 115.50$
Leis We= 110.50$
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 =14,800$
Weekend=14,800$
Corp Wd=97.50$
Corp We=97.50$
Tours=70$
Price
Corp Wd= 111.50$
Leis Wd= 116.50$
Leis We= 97$
Tours= 70$
Price
Source: Self Created
38
No Change

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%
50% - 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

% - price 100%
50 % - price 100%
Price
General Decisions:
No Change
Corp Wd= 110.00$

Corp We= 105.00$
Leis Wd= 100.00$
Advertising:
Meals=900$
Price
No Change
Price
June
39
July
Price
General Decisions:
40 Rooms= Level 3
Training= 10 $
Guest Comfort= Level 4
Advertising:
Weekday=9,900$
Weekend=9,900$
Liquor=1,600$
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 95 %
If occupancy would be below 60%
- Price 97 %
If occupancy would be above 70%
- Price 105 %
Price
No Change
Price
40
No Change

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 Visitors Guide=250$
May
Corp Wd=102.50$
Corp We=99.00$
Leis Wd=115.0$
Leis We= 112.50$
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
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=8,800$
Weekend=8,800$
September
Meals=27.50$
Price
General Decisions:
20 Rooms= level 2
Advertising:
October
No Change
General Decisions:
20 Rooms= Level 2
No Change
Price
No Change
Paid off 100,000 $ 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=2,000$
42
No Change
11.3.5 Appendix: Weekend VS. Weekday: Year 3

11.3.5.1 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%
11.3.5.2 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
44
20% Tours
11.3.6 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
45
10% Tours
11.3.7 Appendix: Average Room Rate vs. Room Occupancy for Year 3
Average Room Rate

$140.00
$120.00
$100.00
$80.00
$60.00
$40.00
$20.00
$0.00
Room Occupancy
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Source: Self Created; HOTS Monthly Indicator Jan-Dec Year 3
46
11.3.8 Appendix Competitors
1. Holiday Inn 6
2. Mve n Pick 7
3. Radisson 8
4. Sol Melia 9
5. Westin 10
6. Palace Hotel
7. The Park Hotel
8. The Mainer
47
11.3.9 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
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
Source: HOTS Competitor status Report December Year 3
48
11.3.10 Appendix: Local Diary Events
Source: HOTS Background Information pp.10
49
11.4 Performance Indicator from Year1 to Year3

11.4.1 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 %)
52.78
26.31
1
2
30.01
19.96
4
4
34.58
22.60
3
3
46.65
29.92
2
1
26.79
8.22
5
5
Rooms Market Share %
9.73
5.94
9.03
8.79
5.41
15.15
0.99
2.81
15.13
-6.66
60
49
53
58
47
59
2
1
58
3
4
55
4
3
66
1
2
46
5
5
OPERATIONS:
OWNER:
ROCE % - 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 ($)
8,225,652
4,527,804
4,650,075
7,252,722
4,047,461
Room Revenue ($)
4,789,432
2,729,101
3,143,133
4,223,041
2,431,174
Income Before Fixed Costs, IBFC ($)
2,163,876
903,845
1,050,848
2,170,305
332,697
Income Before Fixed Costs (IBFC %)

Fixed Property & Equipment ($)
26.3
7,466,375
20.0
7,466,375
22.6
7,466,375
29.9
7,497,615
8.2
7,466,375
Working Capital ($)
1,376,646
493,602
597,527
1,403,127
-54,709
EBITDA (earnings before interest, taxes &

depn)($)
Profit before Taxes ($)
1,753,583
493,552
640,555
1,760,012
-77,596
1,340,002
78,510
226,974
1,346,301
-493,354
Owners' Equity ($)
7,500,000
7,500,000
7,500,000
7,500,000
7,500,000
Income Tax Rate (%)

Income after Taxes ($)
30
938,001
30
54,957
30
158,882
30
1,027,969
30
-493,354
OPERATIONS:
Average Daily rate ($)
Occupancy %
Public Awareness
Market Image Index
Hotel Quality Index
Annual Staff Turnover (%)
Rooms Available
Number of Rooms Sold
103.51
50.99
36.45
25.76
21.83
68.6
90,744
46,272
94.24
31.84
23.93
14.60
15.46
69.2
90,942
28,959
95.04
36.39
34.63
19.30
14.75
77.5
90,884
33,070
101.36
46.02
31.57
23.96
23.04
61.2
90,527
41,663
97.28
27.54
25.46
12.92
14.17
98.9
90,734
24,992
Source: HOTS Scorecard Year1

50
HOTS SCORECARD
End of Year 2
KEY INDICATORS
TEAM1
TEAM2
TEAM3
TEAM4
TEAM5
Average
Rank
Average
Rank
Average
Rank
Average
Rank
Average
Rank
62.29
36.71
2
2
46.61
20.84
3
4
44.93
28.60
4
3
66.15
39.41
1
1
34.43
20.84
5
4
11.05
8.54
10.61
11.91
8.23
24.83
8.37
12.42
28.89
4.62
66
62
63
66
58
72
69
68
72
45
OPERATIONS:
REVPAR $
Gross Operating Profit (IBFC
%)
OWNER:
ROCE % - Pretax profit/Capital

Employed
GUEST:
Guest Satisfaction Survey (%)

STAFF:
OVERALL RANKING
TEAM1
TEAM2
TEAM3
TEAM4
TEAM5
Total Revenue ($)
9,632,866
7,256,269
6,630,267
10,224,374
5,591,976
Room Revenue ($)
5,475,100
4,213,544
4,069,802
5,952,822
3,133,500
3,536,466
1,512,339
1,895,957
4,029,405
1,165,134
36.7
20.8
28.6
39.4
20.8
11,876,287
7,211,982
7,131,213
8,019,847
7,101,500
Working Capital ($)
-1,227,208
1,195,606
1,621,640
3,080,575
622,145
EBITDA (earnings before interest, taxes & depn)($)
3,119,972
1,095,845
1,479,463
3,612,911
748,640
2,644,340
703,702
1,086,901
3,206,657
356,959
Owners' Equity ($)
7,500,000
7,500,000
7,500,000
7,500,000
7,500,000
Income Tax Rate (%)
30
30
30
30
30
1,851,038
492,591
823,629
2,244,660
356,959
104.26
59.74
45.82
42.77
29.39
57.3
87,901
52,516
100.83
46.22
41.45
29.92
21.72
59.5
90,402
41,788
97.10
46.27
37.15
30.29
23.00
59.6
90,576
41,914
107.78
61.38
40.85
41.10
32.21
57.2
89,986
55,233
84.38
40.81
40.29
24.04
16.46
102.5
91,000
37,135
FINANCES:
OPERATIONS:

Occupancy %
Public Awareness
Market Image Index
Hotel Quality Index
Rooms Available

51
HOTS SCORECARD
End of Year 3
KEY INDICATORS
TEAM1
TEAM2
TEAM3
TEAM4
TEAM5
Average
Rank
Average
Rank
Average
Rank
Average
Rank
Average
Rank
REVPAR $
71.06
62.25
52.36
66.91
29.81
Gross Operating Profit (IBFC %)
34.01
34.82
10.28
42.64
-1.98
13.06
9.58
11.81
11.64
7.50
23.83
27.71
0.58
27.22
-13.22
75
68
65
70
60
80
70
79
65
45
OPERATIONS:
OWNER:
ROCE % - Pretax profit/Capital Employed

GUEST:
Guest Satisfaction Survey(%)

STAFF:
OVERALL RANKING
TEAM1
TEAM2
TEAM3
TEAM4
TEAM5
Total Revenue ($)
11,733,522
10,253,411
8,312,104
10,474,969
5,342,834
Room Revenue ($)
6,418,246
5,521,913
4,680,527
5,995,558
2,698,339
3,991,099
3,570,612
854,473
4,466,267
-105,824
34.0
34.8
10.3
42.6
-2.0
11,452,295
10,424,809
8,026,446
9,936,093
6,782,716
974,800
-391,060
527,569
3,143,998
26,845
EBITDA (earnings before interest, taxes & depn)($)
3,568,313
3,147,826
431,687
4,043,481
-528,610
2,961,185
2,779,857
50,021
3,560,997
-900,153
Owners' Equity ($)
7,500,000
7,500,000
7,500,000
7,500,000
7,500,000
Income Tax Rate (%)
30
30
30
30
30
1,341,006
2,043,785
35,015
2,602,881
-900,153
101.07
70.30
46.84
59.55
42.29
51.8
90,327
63,501
105.62
58.94
47.61
46.62
33.70
58.2
88,701
52,281
83.34
62.84
43.23
40.83
28.12
52.5
89,383
56,165
108.35
61.76
42.85
49.15
37.31
62.4
89,600
55,335
73.99
40.29
41.32
26.46
18.85
103.7
90,509
36,468
FINANCES:

Working Capital ($)
OPERATIONS:

Occupancy %
Public Awareness
Market Image Index
Hotel Quality Index
Rooms Available
52
11.4.4 Appendix: F&B Departmental Income Statement- Year 1
DEPARTMENTAL INCOME STATEMENT - Page 2 $

Team - HolidayInn6
Year 1
FOOD & BEVERAGE DEPARTMENT

Food Revenue
Restaurant
Conferences
Tours
Wedding/Social
Room Service
1,258,996
0
348,690
0
500,903
59.7%
0.0%
16.5%
0.0%
23.8%
2,108,589
69.2%
938,406
0
100.0%
0.0%
Total Beverage Revenue
938,406
30.8%
Total Food & Beverage Revenue
3,046,995
100%
798,416
402,485
37.9%
42.9%
1,200,901
39.4%
1,310,173
535,921
62.1%
57.1%
1,846,094
60.6%
Food & Beverages

Conference & Banqueting
485,995
0
15.9%
0.0%
Total Payroll and Related Expenses
485,995
15.9%
36,660
95,867
12,843
1.2%
3.1%
0.4%
145,370
1,214,729
4.8%
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
Other Direct Costs

China & Glassware
Laundry
Training
Total Direct Costs
Departmental Contribution
Source: HOTS F&B Departmental Income Statement Year 1
53

Team - HolidayInn6
Year 2

Food Revenue
Restaurant
Conferences
Tours
Wedding/Social
Room Service
1,609,065
0
310,105
0
584,929
64.3%
0.0%
12.4%
0.0%
23.4%
2,504,099
67.6%
1,198,313
0
100.0%
0.0%
1,198,313
32.4%
3,702,412
100%
944,896
515,247
37.7%
43.0%
1,460,143
39.4%
1,559,203
683,066
62.3%
57.0%
2,242,269
60.6%
555,549
0
15.0%
0.0%
555,549
15.0%
37,458
97,800
13,920
1.0%
2.6%
0.4%
149,178
1,537,542
4.0%
41.5%
Total Food Revenue

Beverage Revenue
Bar
Mini-bars
Cost of Sales
Food
Beverage
Total Cost of Sales
Gross Profit
Food
Beverages
Total Gross Profit
Food & Beverages
Other Direct Costs
China & Glassware
Laundry
Training
Total Direct Costs
54

Team - HolidayInn6
Year 3

Food Revenue
Restaurant
Conferences
Tours
Wedding/Social
Room Service
2,056,388
0
407,122
0
703,781
64.9%
0.0%
12.9%
0.0%
22.2%
3,167,291
66.6%
1,589,545
0
100.0%
0.0%
1,589,545
33.4%
4,756,836
100%
1,201,033
683,477
37.9%
43.0%
1,884,510
39.6%
1,966,258
906,068
62.1%
57.0%
2,872,326
60.4%
618,219
0
13.0%
0.0%
618,219
13.0%
41,551
110,725
13,760
0.9%
2.3%
0.3%
166,036
2,088,071
3.5%
43.9%
Total Food Revenue

Beverage Revenue
Bar
Mini-bars
Cost of Sales
Food
Beverage
Total Cost of Sales
Gross Profit
Food
Beverages
Total Gross Profit
Food & Beverages
Other Direct Costs
China & Glassware
Laundry
Training
Total Direct Costs
55
11.4.7 Appendix: Indicator Average Year 1
INDICATOR AVERAGES
Team - HolidayInn6
Year 1
Indicators (Averages for period shown)

Room Occupancy (%)
Average Room Rate $
Guest Occupancy (%)
Average weekly training spend per staff member($)
51.0
103.51
36.0
68.6
11.2
Rooms Market Share (%)

Market Image Index
Public Awareness Index
External Meal Sales (%)
External Liquor Sales (%)
Monthly Rooms Revenue ($000's)
9.7
25.8
36.4
24.8
20.9
399.1
Monthly Food & Beverage Revenue ($000's)
253.9
Monthly Revenue ($000's)

Monthly Net Income ($000's)
Weekday Room Occupancy (%)
685.5
111.7
67.3
Weekend Room Occupancy (%)
29.3
Weekday Guest Occupancy (%)
43.2
Weekend Guest Occupancy (%)
26.4
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
INDICATOR AVERAGES
Team - HolidayInn6
Year 2

Room Occupancy (%)
Average Room Rate $
Guest Occupancy (%)
59.7
104.26
42.0
57.3
13.0

Market Image Index
11.0
42.8
45.8
30.1
60.0

456.3
308.5

802.7
220.4
77.8
35.7
49.6
31.9

40@2, 210@3
Rooms
2@3
1@3
1@3
Bar
Restaurant
Front Desk
57
INDICATOR AVERAGES
Team - HolidayInn6
Year 3

Room Occupancy (%)
70.3
Average Room Rate $

Guest Occupancy (%)
101.07
48.5

51.8
12.7

Market Image Index
13.1
59.6
46.8
27.7

67.8
534.9
396.4

977.8
246.8

93.5
39.4

58.8
34.7

170@2
1@3
Rooms
Bar
1@3
1@3
Restaurant
Front Desk
58
11.5 Proposed Extension of Facilities & Service

11.5.1 Proposed Alternatives A & B
PROPOSED PROJECT A
Conference & Function Rooms, 100 Guest Room Extension, Business Services and Parking Area
Capital Investment Required
$500000.00
$3150000.00
$57750.00
$82500.00
$188098.73
$325522.80
$97480.00
$4,401,351.53
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, Spa & Health Club and Parking Area
Capital Investment Required
$500000.00
$825000.00
$82500.00
$188098.73
$242176.40
$97480.00
Capital Cost: Conference & Function Rooms

Capital Cost: Spa & Health Club
Interest on construction expenses
$1,935,255.13
59
11.5.2 Appendix: Pre-Opening Expenses
PRE-OPENING EXPENSES FOR PROPOSED PROJECT A
Salary
(Payroll 3)
Recruitment
Cost (10%)
Total
Staffing
Costs
Training
23660
2366
78078
447.2
3
1
0
23660
23660
0
2366
2366
0
78078
26026
0
1
1
23660
43900
2366
4390
26026
48290
Add.
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
1341.6
10000
10000
99419.6
447.2
447.2
0
1341.6
447.2
0
10000
5000
5000
10000
5000
5000
99419.6
36473.2
10000
447.2
447.2
447.2
447.2
5000
0
0
0
31473.2
48737.2
325522.80
PRE-OPENING EXPENSES FOR PROPOSED PROJECT B

Direct Impacts
Conference &
Function Rooms
Spa & Health
Club
Parking Area
Add.
Staff
Salary
(Payroll 3)
Recruitment
Cost(10%)
Total
Staffing
Costs
Training
Total
Training
Marketing
Grand
Opening
Overall Total
23660
2366
78078
447.2
1341.6
10000
10000
99419.6
25220
2522
110968
447.2
1788.8
10000
10000
132756.8
5000
5000
10000
242176.40
60
INTEREST ON CONSTRUCTION EXPENSE
Monthly Payment
Weekly Payment
Interest - Bank Loan
22,653.06
5,115.21
Interest - Equity Financing
15,210.97
3,434.74
8,549.94
Total Weekly Payment

Contraction Period
Construction Expense
Working Capital = Current Assets Current Liabilities

Working Capital = $3,600,221 - $2,625,421
Working Capital = $974800
Initial Working Capital = $974,800*10%
Initial Working Capital = $974,80
61
22 weeks
$
188,098.73
11.6 Analysis of Past Financial Statements

11.6.1 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
$1,991,890
$914,797
$50,360
$2,957,047
$5,062,139
$3,046,995
$116,518
$8,225,652
$5,796,253
$3,702,412
$134,201
$9,632,866
$6,812,102
$4,756,836
$164,584
$11,733,522
$ 385,851
$32,713
$418,564
$1,200,901
$75,713
$1,276,614
$1,460,143
$87,205
$1,547,348
$1,884,510
$106,950
$1,991,460
$831,878
$411,162
$1,243,040
$850,093
$485,995
$1,336,088
$926,823
$555,549
$1,482,372
$998,882
$618,219
$1,617,101
$1,160,012
$117,784
$17,647
$1,295,443
$4,212,046
$1,360,099
$40,805
$5,612,950
$4,869,430
$1,686,720
$46,996
$6,603,146
$5,813,220
$2,254,107
$57,634
$8,124,961
Central Admin Payroll

Total Other Direct Costs
Income Before Fixed Charges
$ 429,214
$609,790
$256,439
$492,545
$2,956,529
$2,163,876
$526,151
$2,540,529
$3,536,466
$551,549
$3,582,313
$3,991,099
Total Fixed Costs

Trading Profit
$906,249
$649,810
$823,874
$1,340,002
$892,126
$2,644,340
$1,029,914
$2,961,185
Other Income
Income Before Taxes
$649,810
$1,340,002
$2,644,340
$2,961,185
Business Tax
Income After Business Tax
$649,810
$402,001
$938,001
$793,302
$1,851,038
$1,620,179
$1,341,006
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; HOTS Summery Income Statements Year 0, Year 1, Year 2, Year 3, Year 4
62
11.6.2 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
254.14%
333.08%
231.37%
278.17%
TREND 0-3
290.99%
404.72%
266.48%
325.76%
341.99%
519.99%
326.81%
396.80%
100%
100%
100%
311.23%
231.45%
305.00%
378.42%
266.58%
369.68%
488.40%
326.93%
475.78%
100%
100%
102.19%
118.20%
111.41%
135.12%
120.08%
150.36%
100%
107.49%
119.25%
130.09%
100%
100%
100%
100%
363.10%
1154.74%
231.23%
433.28%
419.77%
1432.05%
266.31%
509.72%
501.13%
1913.76%
326.59%
627.20%
Central Admin Payroll

Total Other Direct Costs
Income Before Fixed Charges
100%
100%
100%
114.76%
484.84%
843.82%
122.58%
416.62%
1379.07%
128.50%
587.47%
1556.35%
Total Fixed Costs

Trading Profit
100%
100%
90.91%
206.21%
98.44%
406.94%
113.65%
455.70%
Gross Profit Less Wages

Room
Food
Other
Other Income
Income Before Taxes
Business Tax
Income After Business Tax
100%
206.21%
406.94%
455.70%
0%
100%
100.00%
144.35%
197.34%
284.86%
403.03%
206.37%
Source: Self Created, Appendix 11.6.1
63
11.6.3 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
$-687,673
$83,747
$11,976
$2,364,493
$299,250
$46,263
$95,177
$360,387
$56,344
$3,185,228
$354,693
$60,300
TOTAL CURRENT ASSETS
$-591,950
$2,710,006
$511,908
$3,600,221
PROPERTY & EQUIPMENT

Net Property & Equipment
$7,846,829
$7,466,375
$11,876,287
$11,452,295
TOTAL ASSETS
$7,254,879
$10,176,381
$12,388,195
$15,052,516
CURRENT LIABILITIES
Accounts Payable
Business Tax Owed
$163,145
0
$931,359
$402,001
$945,814
$793,302
$1,005,242
$1,620,179
TOTAL CURRENT LIABILITIES
$163,145
$1,333,360
$1,739,116
$2,625,421
LONG-TERM LIABILITIES
Long Term Debt
$306,544
$405,020
$360,040
$98,916
OWNERS' EQUITY
Share Capital
Retained Earnings
$7,500,000
$-714,810
$7,500,000
$938,001
$7,500,000
$2,789,039
$7,500,000
$4,828,179
TOTAL OWNERS' EQUITY
$6,785,190
$8,438,001
$10,289,039
$12,328,179
TOTAL LIABILITIES & OWNERS'

EQUITY
$7,254,879
$10,176,381
$12,388,195
$15,052,516
Source: Self Created; HOTS Balance Sheets Year 0, Year 1, Year 2, Year 3
64
11.6.4 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%
343.84%
357.33%
386.30%
13.84%
430.33%
470.47%
463.19%
423.53%
503.51%
TOTAL CURRENT ASSETS
100%
457.81%
86.48%
608.20%
PROPERTY & EQUIPMENT

Net Property & Equipment
100%
95.15%
159.06%
96.43%
TOTAL ASSETS
100%
140.27%
170.76%
207.48%
CURRENT LIABILITIES
Accounts Payable
Business Tax Owed
100%
570.88%
100.00%
579.74%
197.34%
616.16%
403.03%
100%
817.29%
1065.99%
1609.26%
LONG-TERM LIABILITIES
Long Term Debt
100%
132.12%
117.45%
32.27%
OWNERS' EQUITY
Share Capital
Retained Earnings
100%
100%
100.00%
131.22%
100.00%
390.18%
100.00%
675.45%
TOTAL OWNERS' EQUITY
100%
124.36%
151.64%
181.69%
TOTAL LIABILITIES &

OWNERS' EQUITY
100%
140%
170.76%
207.48%
TOTAL CURRENT
LIABILITIES
65
11.6.5 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
$2,084,728 $5,840,223
$6,839,332
Cash Sales
$843,572 $2,086,179
$2,732,397
Collection of Accounts Receivable
YEAR 3
$8,330,785
$3,402,254
$2,928,300
$7926402
$9,571,729
$11,733,039
$1,687,454
$508,067
$386,543
$1,856,898
$1,180,283
$1,827,781
$2,043,038
$1,544,431
$2,300,864
$2,212,540
$2,001,871
$2,577,193
$2,582,064
$4,864,962
$5,888,333
$6,791,604
$346,236
$3,061,440
$3,683,396
$4,941,435
$95,086
$485,367
$29,956
$804,466
$26,974
$620,187
$21,532
$1,323,749
$580,453
$834,422
$647,161
$1,345,281
0
0
0
0
0
0
0
0
Other Disbursements
Capital Expenditure
Debt Service (Principal)
Tax and other payments
0
$253,456
0
0
$44,980
0
$4,858,570
$44,980
$402,001
$111,913
$262,854
0
Increase in Cash
Cash Balance, Beginning of Period
$-487,673
$-200,000
$2,182,038
$182,455
$-2,269,316
$2,364,493
$3,221,387
$-36,159
Cash Balance, End of Period
$-687,673
$2,364,493
$95,177
$3,185,228
Loan at Start of Period

Proceeds from Outside Borrowing
$560,000
0
$253,456
450,000
0
$44,980
$405,020
0
$44,980
$361,770
0
$262,854
Loan at End of Period
$306,544
$405,020
$360,040
$98,916
Total Operating Receipts

Operating Disbursements
Food, Beverage & Other Inventories
Operating Expenses
Total Operating Disbursements
Cash from Operations
Fixed Charges
Interest
Other Fixed Costs
Total Fixed Charges
Other Receipts
Other Cash Receipts
Source: Self Created; HOTS Cash Flow Year 0, Year 1, Year 2, Year 3
66
11.6.6 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%
280.14%
247.30%
328.07%
323.91%
399.61%
403.32%
100%
270.68%
326.87%
400.68%
100%
100%
110.04%
232.31%
121.07%
303.98%
131.12%
394.02%
100%
472.85%
595.24%
666.73%
Total Operating Disbursements
100%
188.41%
228.05%
263.03%
Cash from Operations
100%
884.21%
1063.84%
1427.19%
100%
100%
31.50%
165.74%
28.37%
127.78%
22.64%
272.73%
100%
143.75%
111.49%
231.76%
Other Disbursements
Capital Expenditure
Tax and other payments
100%
-
17.75%
-
100.00%
17.75%
100.00%
2.30%
103.71%
-
Increase in Cash
Cash Balance, Beginning of Period
100%
100%
347.44%
191.23%
-465.34%
1282.25%
560.56%
81.92%
Cash Balance, End of Period
100%
443.84%
113.84%
563.19%
Loan at Start of Period

100%
80.36%
72.33%
64.60%
100%
17.75%
17.75%
103.71%
Loan at End of Period
100%
132.12%
117.45%
32.27%
Operating Receipts
Cash Sales
Collection of Accounts Receivable
Total Operating Receipts
Operating Disbursements
Food, Beverage & Other
Inventories
Operating Expenses
Fixed Charges
Interest
Other Fixed Costs
Total Fixed Charges
Other Receipts
Proceeds from Outside
Borrowing
Other Cash Receipts
67
11.6.7 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
2,957,047.00
100%
YEAR 1
8,225,652.00
278%
YEAR 2
9,632,866.00
326%
YEAR 3
11,733,522.00
397%
The results of the trend analysis show an increase in total revenue for the past 3 years. Due to a
consistent strategy of development the total revenue grew by 397% in Year 3 compared to Year 0.
Source: HOTS Monthly Indicators Y0, Y1, Y2 and Y3
68
11.6.8 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
-649,810.00
100%
YEAR 1
938,001.00
144%
YEAR 2
1,851,038.00
285%
YEAR 3
1,341,006.00
206%
In Year 3 the Net Income decreased by 79%, as there was a massive refurbishment campaign
launched in the hotel: 165 rooms refurbished to Level 2, restaurant, bar and front desk were
refurbished to Level 3. This resulted in $ 953.700 total refurbishment expenses for Year 3. As
refurbishment is considered to be revenue expenditure, it affected the net income.
Source: HOTS Summary Income Statement Y0, Y1, Y2, and Y3
69
11.6.9 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
99.15
103.51
104.26
101.07
100%
104%
105%
During the period of 4 years the average daily rate did not undergo any drastic changes. The highest
peak was achieved in Year 2, when the management was implementing a new pricing policy. Due to
insignificant results of this change and increased promotion expenditures, HolidayInn6 has decided to
return to previous policy, which was more successful.
70
102%
11.6.10 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
21.79
52.78
62.29
71.06
100%
242%
286%
A gradual growth of RevPAR was achieved by a number of actions undertaken by HolidayInn6s

management. The value was added to rooms through increased levels of guest comfort, refurbishment
and auxiliary services implemented in the hotel.
71
326%
11.6.11 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
4.72
25.76
42.77
59.55
100%
546%
906%
1262%
Due to immense advertising efforts the Market Image Index has increased significantly from 4.72 in
Year 0 to 59.55 in Year 3. According to guest comments the hotel has strengthened its position in the
market and became a popular place for both local clients and tourists.
72
11.6.12 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
-687,673.00
100%
YEAR 1
2,364,493.00
344%
YEAR 2
95,177.00
14%
YEAR 3
3,185,228.00
463%
In Year 2 HolidayInn6 had 160 rooms, bar, restaurant and front desk refurbished to Level 3. The
cash balance was affected, as the total cost of Level 3 refurbishment resulted in $ 3.628.075 of capital
expenditure. There were Level 2 refurbishments carried out in Year 2, but these were revenue
expenditures and had no influence on cash balance.
Source: HOTS Cash Flow Y0, Y1, Y2 and Y3
73
11.6.13 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
-$591,960.00
YEAR 1
$2,710,006.00
YEAR 2
$511,908.00
YEAR 3
$3,600,221.00
$163,145.00
$1,333,360.00
$1,739,116.00
$2,625,421.00
-3.63
2.03
0.29
1.37
In Year 2 for each $ 1 of Current Liabilities HolidayInn6 had only $ 0.29 of Current Assets. Such a
decrease in CR was caused by extensive Level 3 refurbishment of the hotel, which influenced
negatively Cash at Bank and consequently the current assets.
Source: HOTS Balance Sheet Y0, Y1, Y2 and Y3.
74
11.6.14 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
$469,689.00
$6,785,190.00
0.07
YEAR 1
$1,738,380.00
$8,438,001.00
0.21
YEAR 2
$2,099,156.00
$10,289,039.00
0.20
YEAR 3
$2,724,337.00
$12,328,179.00
0.22
Debt-Equity Ratios for all the years show that HolidayInn6 was not financing its activities
aggressively through debt. In the last 3 years the Debt-Equity Ratio was fluctuating between 0.20 and
0.22. These fluctuations were caused by refurbishment in Year 2, which increased total assets, and
hence influenced directly both total liabilities and owners equity.
Source: HOTS Balance Sheet Y0, Y1, Y2 and Y3
75
11.6.15 Appendix: Profit Margin Ratio
Profit Margin Ratio

30.00%
20.00%
10.00%
0.00%
Profit Margin Ratio

YEAR 0
YEAR 1
YEAR 2
YEAR 3
-10.00%
-20.00%
-30.00%
PROFIT MARGIN
RATIO
Net Income
Total Revenue
Profit Margin Ratio
YEAR 0
-$649,810.00
YEAR 1
$938,001.00
YEAR 2
$1,851,038.00
YEAR 3
$1,341,006.00
$2,957,047.00
$8,225,652.00
$9,632,866.00
$11,733,522.00
-21.97%
11.40%
19.22%
11.43%
In Year 3 the profit margin has declined by 7.79% compared to Year 2. 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. The increase
of $ 1.041.784 or 141% had its reason in refurbishment expenditures, which influenced the net
income negatively in Year 3.
Source: HOTS Summary Income Statement Y0, Y1, Y2 and Y3.
76
11.6.16 Appendix: Gross Operating Profit

40.00%
30.00%
20.00%
10.00%
0.00%
YEAR 0
YEAR 1
YEAR 2
YEAR 3
GROSS OPERATING
PROFIT
Gross Operating Profit
Total Revenue
Gross Operating Profit
Ratio
YEAR 0
$256,439.00
$2,957,047.00
8.67%
YEAR 1
$2,163,876.00
$8,225,652.00
26.31%
YEAR 2
$3,536,466.00
$9,632,866.00
36.71%
YEAR 3
$3,991,099.00
$11,733,522.00
34.01%
A slight decrease of 2.7% in GOP ratio in Year 3 corresponds to a decrease in prices for rooms from $
104.26 in Year 2 to $ 101.07 in Year3, without decreasing the costs per room. The GOP ratio was also
decreased due to an increase in total other direct costs, which was discussed previously.
Source: HOTS Summary Income Statement Y0, Y1, Y2 and Y3
77
11.6.17 Appendix: ROCE
ROCE
30.00%
20.00%
10.00%
ROCE
0.00%
YEAR 0
YEAR 1
YEAR 2
YEAR 3
-10.00%
-20.00%
YEAR 0
ROCE
YEAR 1
-9.20%
15.15%
YEAR 2
24.83%
YEAR 3
23.83%
Through the last 3 years HolidayInn6s ROCE has been growing gradually, the highest ROCE
achieved was 24.83% in Year 2, and it decreased by 1% in Year 3. In general, the hotel shows good
trends of financial growth and stability.(change-sounds stupid)(Some say that an acceptable ROCE
has to be slightly higher than the rank loan rate. Ours is many times higher.)
Source: HOTS Summary Income Statement Y0, Y1, Y2 and Y3
78
11.6.18 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
22.00%
YEAR 1
67.3
29.3
51.00%
YEAR 2
77.8
35.7
59.70%
In Year 3 HolidayInn6 has achieved an Occupancy Percentage of 70.30%, thus achieving a final
number targeted for the end of Year 3.
Source: HOTS Background Information, Monthly indicator Y0; HOTS Scorecard Y1, Y2 and Y3;
HOTS Indicator Averages Y1, Y2 and Y3.
79
YEAR 3
93.5
39.4
70.30%
11.6.19 Appendix: Rooms Market Share
Rooms Market Share

14.00%
12.00%
10.00%
8.00%
Rooms Market Share
6.00%
4.00%
2.00%
0.00%
YEAR 0
Rooms Market Share
YEAR 1
YEAR 2
YEAR 0
4.72%
YEAR 3
YEAR 1
9.73%
YEAR 2
11.05%
In Year 3 room market share has augmented by 2.01% over Year 2 due to an increase of the
occupancy percentage of weekday rooms by 15.7%. Thus HolidaInn6 had 93.5% weekday room
occupancy, which constituted 234 rooms.
Source: HOTS Monthly Indicator Reports Y0, Y1, Y2 and Y3.
80
YEAR 3
13.06%
11.6.20 Appendix: Gearing Ratio
Gearing Ratio
6.00%
5.00%
4.00%
3.00%
Gearing Ratio
2.00%
1.00%
0.00%
YEAR 0
Long-Term
Liabilities
Shared Capital
+ Reserves +
Long-Term
Liabilities
Gearing Ratio
YEAR 1
YEAR 2
YEAR 3
YEAR 0
$306,544.00
YEAR 1
$405,020.00
YEAR 2
$360,040.00
YEAR 3
$98,916.00
$6,785,190.00
$8,438,001.00
$10,289,039.00
$12,328,179.00
4.52%
4.80%
3.50%
0.80%
In Year 3 HolidayInn6 has managed to pay its long-term liabilities back to creditors. Thus the gearing
ratio in Year 3 has reached 0.80%, which means that HolidayInn6 is not vulnerable to sales downturns
that may happen.
Source: HOTS Balance Sheet Y0, Y1, Y2 and Y3.
81
11.7 Capital Investments & Financing

11.7.1 Appendix: Capital Investment & Financing
PROPOSED PROJECT A
Conference & Function Rooms, 100 Guest Room Extension, 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
Interest on construction
expenses
$500,000.00
$500,000.00
$3,150,000.00
$57,750.00
$82,500.00
$188,098.73
$1,850,000.00
$57,750.00
$82,500.00
$188,098.73
$325,522.80
$97,480.00
$4,401,351.53
100%
$325,522.80
$97,480.00
$3,101,351.53
70.46%
Source: Self Created, HOTS User Guide
82
$500,000.00
$800,000.00
$500,000.00
11.36%
$800,000.00
18.18%
11.7.2 Appendix: Outstanding loan at the End of Year 3
Loan amount
Term
Rate
Payment
Date
$98,916.00
12
0.0125
$8,298.92
Month Interest
rate
Capital
outstanding
begin
Year 4
1
1.25%
$98,916.00
January
Year 4
2
1.25%
$90,720.12
February
Year 4
3
1.25%
$82,515.70
March
Year 4
4
1.25%
$74,302.74
April
Year 4
5
1.25%
$66,081.22
May
Year 4
6
1.25%
$57,851.13
June
Year 4
7
1.25%
$49,612.48
July
Year
4
8
1.25%
$41,365.24
August
9
1.25%
$33,109.41
September Year 4
Year 4
10
1.25%
$24,844.98
October
11
1.25%
$16,571.94
November Year 4
12
1.25%
$8,290.28
December Year 4
Source: Self Created, HOTS Balance Sheet Year 3
83
Payment
Interest
Capital
$8,298.92
$8,298.92
$8,298.92
$8,298.92
$8,298.92
$8,298.92
$8,298.92
$8,298.92
$8,298.92
$8,298.92
$8,298.92
$8,298.92
$103.04
$94.50
$85.95
$77.40
$68.83
$60.26
$51.68
$43.09
$34.49
$25.88
$17.26
$8.64
$8,195.88
$8,204.42
$8,212.96
$8,221.52
$8,230.08
$8,238.66
$8,247.24
$8,255.83
$8,264.43
$8,273.04
$8,281.66
$8,290.28
Capital
outstanding
end
$90,720.12
$82,515.70
$74,302.74
$66,081.22
$57,851.13
$49,612.48
$41,365.24
$33,109.41
$24,844.98
$16,571.94
$8,290.28
$0.00
11.7.3Appendix: Loan Financing Bank
PROPOSED PROJECT A
Conference & Function Rooms, 100 Guest Room
Extension, Business Services and Parking Area
Amortization Table - Bank
$ 800,000.00
36
1.25%
$ 22,653.06
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
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
$800,000.00
$778,180.27
$756,337.81
$734,472.60
$712,584.61
$690,673.82
$668,740.21
$646,783.75
$624,804.42
$602,802.19
$580,777.05
$558,728.96
$536,657.91
$514,563.86
$492,446.80
$470,306.71
$448,143.54
$425,957.30
$403,747.94
$381,515.45
$359,259.79
$336,980.96
$314,678.92
$292,353.64
$270,005.12
$247,633.31
$225,238.19
$202,819.75
$180,377.96
$157,912.79
$135,424.22
$112,912.22
$90,376.78
$67,817.85
$45,235.43
$22,629.49
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
1.25%
84
Payment
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
$22,653.06
Interest
$833.33
$810.60
$787.85
$765.08
$742.28
$719.45
$696.60
$673.73
$650.84
$627.92
$604.98
$582.01
$559.02
$536.00
$512.97
$489.90
$466.82
$443.71
$420.57
$397.41
$374.23
$351.02
$327.79
$304.54
$281.26
$257.95
$234.62
$211.27
$187.89
$164.49
$141.07
$117.62
$94.14
$70.64
$47.12
$23.57
Capital
Capital
$21,819.73
$21,842.46
$21,865.21
$21,887.99
$21,910.79
$21,933.61
$21,956.46
$21,979.33
$22,002.23
$22,025.14
$22,048.09
$22,071.05
$22,094.05
$22,117.06
$22,140.10
$22,163.16
$22,186.25
$22,209.36
$22,232.49
$22,255.65
$22,278.83
$22,302.04
$22,325.27
$22,348.53
$22,371.81
$22,395.11
$22,418.44
$22,441.79
$22,465.17
$22,488.57
$22,512.00
$22,535.45
$22,558.92
$22,582.42
$22,605.94
$22,629.49
outstanding
end
$778,180.27
$756,337.81
$734,472.60
$712,584.61
$690,673.82
$668,740.21
$646,783.75
$624,804.42
$602,802.19
$580,777.05
$558,728.96
$536,657.91
$514,563.86
$492,446.80
$470,306.71
$448,143.54
$425,957.30
$403,747.94
$381,515.45
$359,259.79
$336,980.96
$314,678.92
$292,353.64
$270,005.12
$247,633.31
$225,238.19
$202,819.75
$180,377.96
$157,912.79
$135,424.22
$112,912.22
$90,376.78
$67,817.85
$45,235.43
$22,629.49
$0.00
11.7.4 Appendix: Loan Financing Investors
PROPOSED PROJECT A
Conference & Function Rooms, 100 Guest Room Extension, 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
December
$ 500,000.00
36
6.00%
$15210.97
Interest
Capital
Capital
outstanding
begin
Payment
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$15,210.97
$2,500.00
$2,436.45
$2,372.57
$2,308.38
$2,243.87
$2,179.03
$2,113.87
$2,048.39
$1,982.57
$1,916.43
$1,849.96
$1,783.15
$1,716.02
$1,648.54
$1,580.73
$1,512.58
$1,444.09
$1,375.25
$1,306.07
$1,236.55
$1,166.68
$1,096.45
$1,025.88
$954.96
$883.68
$812.04
$740.04
$667.69
$594.97
$521.89
$448.45
$374.64
$300.45
$225.90
$150.98
$12,710.97
$12,774.52
$12,838.40
$12,902.59
$12,967.10
$13,031.94
$13,097.10
$13,162.58
$13,228.39
$13,294.54
$13,361.01
$13,427.81
$13,494.95
$13,562.43
$13,630.24
$13,698.39
$13,766.88
$13,835.72
$13,904.90
$13,974.42
$14,044.29
$14,114.51
$14,185.09
$14,256.01
$14,327.29
$14,398.93
$14,470.92
$14,543.28
$14,615.99
$14,689.07
$14,762.52
$14,836.33
$14,910.51
$14,985.07
$15,059.99
$487,289.03
$474,514.51
$461,676.11
$448,773.52
$435,806.42
$422,774.49
$409,677.39
$396,514.81
$383,286.41
$369,991.88
$356,630.87
$343,203.05
$329,708.10
$316,145.67
$302,515.43
$288,817.04
$275,050.16
$261,214.44
$247,309.54
$233,335.12
$219,290.83
$205,176.31
$190,991.22
$176,735.21
$162,407.92
$148,008.99
$133,538.07
$118,994.79
$104,378.79
$89,689.72
$74,927.20
$60,090.87
$45,180.35
$30,195.28
$15,135.29
$15,210.97
$75.68
$15,135.29
$0.00
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
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
6.00%
$500,000.00
$487,289.03
$474,514.51
$461,676.11
$448,773.52
$435,806.42
$422,774.49
$409,677.39
$396,514.81
$383,286.41
$369,991.88
$356,630.87
$343,203.05
$329,708.10
$316,145.67
$302,515.43
$288,817.04
$275,050.16
$261,214.44
$247,309.54
$233,335.12
$219,290.83
$205,176.31
$190,991.22
$176,735.21
$162,407.92
$148,008.99
$133,538.07
$118,994.79
$104,378.79
$89,689.72
$74,927.20
$60,090.87
$45,180.35
$30,195.28
36
6.00%
$15,135.29
85
Capital
outstanding
end
11.7.5 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
25000
Book value at
beginning of year
Depreciation
Expense
Accumulated
Depreciation
Book value at end

of year
$500,000
$481,000
$462,000
$443,000
$424,000
$405,000
$386,000
$367,000
$348,000
$329,000
$310,000
$291,000
$272,000
$253,000
$234,000
$215,000
$196,000
$177,000
$158,000
$139,000
$120,000
$101,000
$82,000
$63,000
$44,000
$19,000
$19,000
$19,000
$19,000
$19,000
$19,000
$19,000
$19,000
$19,000
$19,000
$19,000
$19,000
$19,000
$19,000
$19,000
$19,000
$19,000
$19,000
$19.000
$19.000
$$19000
$19,000
$19,000
$19,000
$19,000
$19,000
$38,000
$57,000
$76,000
$95,000
$114,000
$133,000
$152,000
$17,100
$190,000
$209,000
$228,000
$247,000
$266,000
$285,000
$304,000
$323,000
$342,000
$361,000
$380,000
$399,000
$418,000
$437,000
$456,000
$475,000
$481,000
$462,000
$443,000
$424,000
$405,000
$386,000
$367,000
$348,000
$329,000
$310,000
$291,000
$272,000
$253,000
$234,000
$215,000
$196,000
$177,000
$158,000
$139,000
$120,000
$101,000
$82,000
$63,000
$44,000
$25,000
86
11.7.6 Appendix: Depreciation Business Center
Business Services
Salvage Value:
Useful Life: 10
Year
1
2
3
4
5
6
7
8
9
10
Book value at
beginning of year
$57,750
$51,975
$46,200
$40,425
$34,650
$28,875
$23,100
$17,325
$11,550
5,775
Depreciation
Expense
$5,775
$5,775
$5,775
$5,775
$5,775
$5,775
$5,775
$5,775
$5,775
$5,775
87
Accumulated
Depreciation
$5,775
$11,550
$17,325
$23,100
$28,875
$34,650
$40,425
$46,200
$51,975
$57,750
Book value
at end of
year
$51,975
$46,200
$40,425
$34,650
$28,875
$23,100
$17,325
$11,550
$5,775
$0
11.7.7 Appendix: Depreciation Parking
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
$82,500
$79,750
$77,000
$74,250
$71,500
$68,750
$66,000
$63,250
$60,500
$57,750
$55,000
$52,250
$49,500
$46,750
$44,000
$41,250
$38,500
$35,750
$33,000
$30,250
$27,500
$24,750
$22,000
$19,250
$16,500
$13,750
$11,000
$8,250
$5,500
$2,750
Depreciation
Expense
$2,750
$2,750
$2,750
$2,750
$2,750
$2,750
$2,750
$2,750
$2,750
$2,750
$2,750
$2,750
$2,750
$2,750
$2,750
$2,750
$2,750
$2,750
$2,750
$2,750
$2,750
$2,750
$2,750
$2,750
$2,750
$2,750
$2,750
$2,750
$2,750
$2,750
88
Accumulated
Depreciation
$2,750
$5,500
$8,250
$11,000
$13,750
$16,500
$19,250
$22,000
$24,750
$27,500
$30,250
$33,000
$35,750
$38,500
$41,250
$44,000
$46,750
$49,500
$52,250
$55,000
$57,750
$60,500
$63,250
$66,000
$68,750
$71,500
$74,250
$77,000
$79,750
$82,500
Book value at end of

year
$79,750
$77,000
$74,250
$71,500
$68,750
$66,000
$63,250
$60,500
$57,750
$55,000
$52,250
$49,500
$46,750
$44,000
$41,250
$38,500
$35,750
$33,000
$30,250
$27,500
$24,750
$22,000
$19,250
$16,500
$13,750
$11,000
$8,250
$5,500
$2,750
$0
11.8 Appendix Pro-Forma Statements

11.8.1 Appendices Financial Targets and estimations for Years 4-8.
General Information:
Business Tax is 33, 33% (French Tax Office 2011)

The Rooms supply will increase from 250 to 350. The occupancy will
decrease from 70.30% to 50.23% respectively.
The construction period is 22 weeks.
Forecasts
-
Due to the construction period the opening of the conference center does not match
the high corporate season. Hence the management expects the increase in occupancy
to be the following.
To be able to balance the increase in expenses, HolidayInn6 will augment the prices
by $3 every year.
Based on the tendency, F&B sales are forecasted to increase as follows.
Other revenue is projected to increase accordingly.
89
11.8.2 Appendix: Forecasted Revenues
90
Assumed that with an increase by 100 rooms the average occupancy will decrease
from 70.30% in Year 3 down to 50.23%.
Assumed that average occupancy increases by a projected percentage respectively of
the year. Revenue increases by a projected percentage each year.
Assumed that average occupancy increases by a projected percentage respectively of
the year. Revenue increases by a projected.
The management assumes that the prices will increase by $ 2.5 each year.
Assumed that weekday and weekend yearly conference rooms occupancy will
increase by 5% and 3% respectively.
Source: Self Created, HOTS Background Year 0, 1, 2, 3, Appendix 11.8.2
91
11.8.3 Appendix: Pro-Forma Summary Income Statement
In year 4 business tax in France is applied which is 33.3% of total Income.

http://www.worldwide-tax.com [Accessed on: 12th May 2011].
Source: Self-Created; HOTS Summary income statement Year 3, Appendix all departments' pro-forma.
92
11.8.4 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; HOTS Summary Income Statement Year 0, Year 1, Year 2, Year 3, & Appendix
11.8.2
93
11.8.5 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, Appendix 11.8.5.
94
11.8.6. 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
11.8.7. 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).
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).
Source: Self-Created, HOTS Departmental Income Statement Food and Beverage Y3; See
Appendix 11.8.6
96
11.8.8 Appendix: Forecasted Tendency Departmental Income Statement Other
In year 4 other revenue has been increased to 2.50% of total room revenue.
In year 4 costs of sales has been increased to 65% of total telephone revenue.
Source: Self-created; HOTS Departmental Income Statement: Other Y0, Y1, Y2, and Y3;
Appendix 11.8.2
97
11.8.10. Appendix: Pro Forma Departmental Income Statement other
As Holiday Inn6 is not charging its guests for provided business room facilities, hotel
will not be generating revenues out of business but the payroll of business room
attended would be an expense to Other Department.
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; HOTS Departmental Income Statement Other Y3; Appendix 11.8.9
98
11.8.11 Appendix: Forecasted Tendency Departmental Income Statement Central

Administration
Total Revenues are calculated by adding total rooms revenue, total F&B revenue, and total
other revenue. Appendix 11.8.6, 11.8.8 & 11.8.10.
Marketing expenses will form 12% of total revenue from Year 4 onwards.
Miscellaneous expenses are supposed to increase in year 4 with the opening of new
projected facilities.
Because of purchase of uniforms, printing materials, Stationary, menus etc. From Year 5
Miscellaneous expenses will start decreasing.
Source: Self Created, HOTS Departmental Income Statement Central Administration Year 0 to
Year 3, see Appendix 11.8.2
99
11.8.12 Appendix: Pro Forma Departmental Income Statement Central Administration
Refurbishment investment is increased to $1,200,000 from Year 4 to year 8 because

Holiday Inn6 will have more facilities.
It is presumed that property tax will increase by 50% because of new facilities.
Insurance is in respect to all property and as Holiday Inn6 has extended its facilities,
insurance will increase by 50%.
Old Buildings depreciation is $585,596 per year, and will increase $98,400 of new
facilities.
Rooms' depreciation is calculated:
Cost of new rooms * 2.25%. 2.25% is French straight line depreciation if more than 6
years (Intl tax and business guide: France).
Bank charges in year 3 are $ 21,532, and interest is $ 34229.35, $ 21247.75, $
6101.24 for year 4, 5, 6 respectively.
Source: Self-created; HOTS Departmental Income Statement Central Administration Y3;

Appendix 11.8.11
100
11.8.13 Appendix: Staff and Training - Department Income Statement Conference Center
Source: Self-Created; Appendix 11.8.5 & 11.8.7
101
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
11.9 Cost Beneficial Analysis

11.9.1 Appendix: Payback Period
PAYBACK PERIOD
Years
Cash Flow
Proposed project
cost
Outstanding balance
1
1748141.68
2
2461466.20
3
2886250.67
2653209.85
191743.65
0.07
4401351.53
The payback period is 2.07 years
Source: Self Created; Schmidgall (2006); Appendix 11.8.15
105
4
3797419.02
5
4310434.52
11.9.2 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
$-4,401,351.53
$1,748,141.68
$2,461,466.20
$2,886,250.67
$3,797,419.02
$4,310,434.52
1.0000
0.9434
0.8900
0.8396
0.7921
0.7473
$-4,401,351.53
$1,649,190.26
$2,190,696.16
$2,423,351.72
$3,007,911.54
$3,221,007.42
Net Present Value
$8,090,805.57
Source: Self Created; Schmidgall (2006); Appendix 11.8.15
106
11.9.3 Appendix: Internal Rate of Return

k=
cost=
0.06
$-4,401,351.53
Annual Cash Flow

Year 4
$1,748,141.68
Year 5
$2,461,466
Year 6
$2,886,251
Year 7
$3,797,419
Year 8
$4,310,435
NPV=
$8,090,805.57
IRR=
50.40%
IRR
Years
0
1
2
3
4
5
Cash Flow
Present Value
Factor (1)
$-4,401,351.53
$1,748,141.68
$2,461,466.20
$2,886,250.67
$3,797,419.02
$4,310,434.52
1.0000
0.6678
0.4459
0.2978
0.1989
0.1328
49.75%
Present value of Cash Flow (1)
$-4,401,351.53
$1,167,373.41
$1,097,640.73
$859,475.60
$755,129.08
$572,383.22
$50,650.52
Years
0
1
2
3
4
5
Cash Flow
Present Value
Factor (2)
$-4,401,351.53
$1,748,141.68
$2,461,466.20
$2,886,250.67
$3,797,419.02
$4,310,434.52
1.0000
0.6645
0.4415
0.2934
0.1949
0.1295
50.50%
Present value of Cash Flow
(2)
$-4,401,351.53
$1,161,555.93
$1,086,728.05
$846,690.23
$740,188.82
$558,262.62
$-7,925.88
The IRR therefore lies somewhere between 49.75% and 50.50%.

Source: Self Created; Schmidgall (2006) Appendix11.8.15.
107
11.10 Sensitivity Analysis

11. 10.1 Appendix: Sensitivity Analysis: Rooms Year 8
80.23%
85.23%
Year 8
90.23%
Revenues
Weekday
Weekend
Conferences
Tours
Wedding/ Social
Other
Total Rooms Revenue
$4,743,794.56 $6,102,847.74 $6,703,526.63

$1,010,972.61 $1,200,560.21 $1,208,832.67
$933,205.49 $2,401,120.42 $2,857,240.86
$155,534.24
$200,093.37
$219,787.76
$466,602.74
$700,326.79
$879,151.03
$466,602.74
$600,280.11
$659,363.27
$7,776,712.38 $11,205,228.64 $12,527,902.22
$7,335,160.66
$1,202,485.35
$3,366,958.99
$240,497.07
$1,082,236.82
$721,491.21
$13,948,830.10
$5,638,086.00
$1,180,064.60
$3,933,548.65
$262,236.58
$1,311,182.88
$786,709.73
$13,111,828.84
$5,919,990.30
$1,239,067.83
$4,130,226.08
$275,348.41
$1,376,742.02
$826,045.22
$13,767,419.86

Front Office/ Uniformed Staff
Housekeeping
$428,413.00
$689,809.00
$1,118,222.00
$428,413.00
$689,809.00
$1,118,222.00
$428,413.00
$689,809.00
$1,118,222.00
$428,413.00
$689,809.00
$1,118,222.00
$428,413.00
$689,809.00
$1,118,222.00
$428,413.00
$689,809.00
$1,118,222.00
Other Direct Costs

Guest Comfort
Laundry
Training
Total Direct Costs
$777,671.24
$233,301.37
$35,000.00
$1,045,972.61
$1,120,522.86
$336,156.86
$35,000.00
$1,491,679.72
$1,252,790.22
$375,837.07
$35,000.00
$1,663,627.29
$1,394,883.01
$418,464.90
$35,000.00
$1,848,347.91
$1,311,182.88
$393,354.87
$35,000.00
$1,739,537.75
$1,376,741.99
$413,022.60
$35,000.00
$1,824,764.58
Department Contribution
$5,612,517.77
$8,595,326.92
$9,746,052.93
$10,982,260.19
$10,254,069.09
$10,824,433.28
65.23%
70.23%
108
95.23%
109

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Feasibility Study for Holiday Inn6

Marketing Management for the Service Industry (MK301)

Lecturer: Mr. Evangelos Vantzos

11.1.2 Appendix Nice, Ambiance and Scenery ............................................................................ 22

11.5 Proposed Extension of Facilities & Service .............................................................................. 59

11.8.4 Appendix: Forecasted Tendency Departmental Income Statement: Rooms ...................... 93

2.2: Analysis of Existing Clients and Existing Business:

3. Site, Area and Hotel Website Evaluation

3.2 Hotel Website

3.2.2 Structure and Content

3.2.3 Colour Scheme

4. Supply, Demand and Competitive Considerations

4.2 Hotels Currently Serving the Local Market

4.3 Competitive Information of the Key Competitors

4.4 Supply and Demand Analysis

5.2: Sales and Sales Actions

5.3: Advertisement and Promotional Tactics

6. Proposed Extension of Facilities and Services

6.2 Proposed Future Extension

7. Financial Assessment, Projections & Viability

7.2 Ratio Analysis

Profit Margin Ratio

Gross Operating Profit Ratio

Rooms Market Share

7.3 Capital Investment Required & Financing

$ 22,653.06/ monthly ( Appendix 11.7.4)

Conference Centre: $19,000 (3.8%) / annually (Appendix 11.7.5.)

100 Guest Rooms:

$2,750 (3.33%) / annually ( Appendix 11.7.7)

7.4 Operations and Capital Budgeting

7.5 Cost - Benefit Analysis

Payback Period ( Appendix 11.9.1)

Net Present Value ( Appendix 11.9.2)

Internal Rate of Return ( Appendix 11.9.3)

7.6 Evaluation of projections

9. Conclusion & Recommendations

Bennett, J. G. 2005. Design Fundamentals for New Media. Florida: Thomson

Burton, J. E. & Bragg, M. S. (2001) Accounting and Fincancefor your

Deloitte. (2010). International Tax and Business Guide: France. Deloitte.

European Commission Multilingualism. (2010). EU Languages and Language

Gary, B. et al., 2009.Web Designs: Introductory Concepts and Techniques. USA:

Kotler, P; Bowen, J. T; and Makens, J. C. (2010), Marketing for Hospitality and

Schmidgall, R. S., (2006), Hospitality Industry Managerial Accounting,6th ed.

Trading Economics (2011) TRADING ECONOMICS: FRANCE INTEREST RATE

11.1.2 Appendix Nice, Ambiance and Scenery

1st Picture: Panoramic

3rd Picture: View of the Beach from Holiday Inn

11.1.3 Appendix: Hotel Location

Source: HOTS Background Information, Spring 2011 pp.4

11.1.4 Appendix Economical Background of the Hotel

11.1.5 Appendix: Hotel Facilities

Source: HOTS Background Information, Spring 2011 pp.7

11.1.6 Appendix: Current facilities condition

CURRENT CONDITION OF FACILITIES: (rated on a scale of 1, very poor, to 100%,

Source: HOTS Market Research: Business Advice by 3rd Year December.

11.1.7 Appendix: In Room Entertainment and Complimentary Items

Source: HOTS User Guide pp.25

11.1.8 Appendix: Comments from Monthly Indicator Report Year 1 to Year 2

Most Recent Customer Comments

You never see the same member of

There is always a friendly face

Source: Monthly Indicator Report December Year2

You never see the same member of