Diamond Hotel Business Analysis - Case Study Example

HOTS report Name Professor Course Date HOTS report Summary of the hotel performance This is the third operational year of this Hotel. It is wise to understand that, following the whole strategies and decisions that the previous team layout, it can be noted that a great change has perfectly been implemented in this hotel. From the staffing to the environmental conservation, it is worth noting that a positive change has so far been witnessed. This report is primarily limited in areas that the hotel got a full control over the quality of information and data collection. It is of important to note that the financial report of this business is because of auditing the annual accounts in all departments. It should be understood that this Hotel operates from a ground of responsibility. Responsible business has acted as a strong supporter of the business turnaround. The main areas of responsible business curriculums here are perfectly aligned with three aspects. That is, think of the planet. Where, at this stage, the hotel ensures that the whole planet is secured when it comes to environmental pollution. The next aspect is to think people. In almost the same way, people are taken care of at this stage, in terms of health as well as safety of not only the employment but also of the guest. The performance of the Hotel in the past three years has as well been identified here under several sub-headings. Employees Employees in this organization have been well educated, in that they have all the capability of making a conscious decision all in favor of the ethical and social issues, environment in both their private and work lies. The percentage of the Hotel complies with local labor laws was 100%, employee’s satisfaction so far 87% and the percentage of information to employees 97%. Customers The clients are informant and so they get a fare chance of participating in the business activities. So far, the company has also witnessed its client enjoying a healthy environment, since they get healthy, organic, nutritious as well as fair-trade of beverages and foods. The above have seen to influence all categories of customers. Responsibility of the Hotel on web 69%, general service provision to the customers for the past three years 75%, hotel rooms that carters for non smokers 87%, and guest rooms services 59%. Property owners With the aim of finding innovative solutions, the Hotel has consistently been working together with property owners. The innovative solutions are meant to satisfy the company’s social objectives, economic and environment (Sheela, 2002). Information to the property owners 97%. Shareholders Investors and shareholders have been provided with timely, transparent, and accurate information that for the three years have demonstrated opportunities and business risks. Suppliers The Hotel has been purchasing products that have environmental impact that is very much reduced. The purchase has and is still being made from suppliers who value social and environmental responsibility. The above are some of the factors that have been propelling this Hotel, from its initial stage of almost three years ago. In the same way, the company is still determined to meet its destiny by fostering innovations mostly on employees. The following also makes supplication of the Hotel’s food perfect, for instance serving organic foods 67%, serving fair-trade certified foods 58%, and providing information about cultural and social as well as ethical issues to the customers 89%. Tables of contents 1. Introduction As it should be noted that a Hotel has long time been acting as a food store to many people regardless of the location. In other words almost every country cherishes the fact that hotels have been build in their land purposely to offer food to the natives. This is a fact to acknowledge anyway. With that in mind, this report purposely demonstrates the progress of a Hotel Diamond. So far, it is encouraging to note that the Hotel has been rated as a three star hotel, in the period of three years. This is an achievement since not all Hotels can attain this rating, but only those hotels that have the capability to give out a standardized service, which with no doubt can give clients what they have been looking for. In as much as no body or rather everybody can rate a Hotel, this is a different case. Diamond Hotel was rated based on customer opinion in regard to beddings, service at the Hotel, parking just to mention but a few. The Hotel has the best bedding and customer service in the country right now (Hotel Singh, 2006.p. 6). This is according to the statistic and views that was aired through the Hotel’s website and the government news watch all of which was clients voting and suggestion. It was amazing to also note that the Hotel has the best Parking. The clients who once visited the Hotel gave out their testimonials and proved the perfect parking area that the Hotel bears. This are some of the few factor that propelled the Hotel to be rated a three star Hotel in the Country. The main firm that initiated this to the government gazette was the travel industry. “For the past three years, Diamond Hotel has emerged to be the best Hotel in the country, due to its perfect and secured parking, outstanding customer service, and better beddings”. This is one of the quoted statements that the travel industry manager noted, before approving the Hotel to be a five-star Hotel. It was not a surprise, since with the strategies laid, the Diamond Hotel managers know, the destiny of the Hotel if any, will be a perfect one. The approval process was based on the average that most clients had given. Overall, I feel the Hotel has gained favor and stability in the market. A brief account of this can be seen from the rating of the Hotel itself and from the service, it gives as per the executive summary(Hotel Singh, 2006.p.15). The clients service is perfect, employees and general information flow in the Hotel’s system of governance. With this, there is no doubt that the Hotel has proved to be the best among the many available Hotels, despite the competition it has been facing. All this is assumed to be caused by the strategy that the initial mangers and stakeholders laid before the company got its roots. 2. Financial analysis and performance Here, the report is intended to give a review of the financial and market performance of the Diamond Hotel for the past three years. Based on the data available in the company, fundamental analysis was done to find out the current and the future bottom of the Diamond Hotel. A brief History asserts that Diamond Hotel is one of the leading Hotel and resort Limited in the country. With the introduction of international standard, the Hotel has not only gained fame, but has also gained the market favor. This will be evident prior to the analysis of the financial finding below. One of the strategies that made this Hotel to shoot up as the highest in the world of Hospitality is that it focused in borrowing concepts from other international hotels. Among them is the famous Starwood Hotel and Resorts worldwide inc. after borrowing the basic operational concepts of the Hotel. Key indicators and business environment Some of the key indicators are as follows; first, the revenues are earned in USD. Then, the next thing to noted is that the sources of the same revenue is food and beverages, room rent, space rent (parking space), and other unmentionable non-Operating Income(Hotel Singh, 2006). This has caused the company to have three new projects in line, which is a focus of the fourth year. Key findings of the Diamond Hotel The estimated growth over the past three years is twenty-three percent in sales revenue, and if that is not enough the Hotel enjoys a sixteen point five earnings before tax. In terms of assets, the company has grown to 258% that is after three years, ranging from 2012 to now. From 2025 to around 12% is noted as a terminal growth rate, considering cash flow of the project from ongoing to become brand Hotel as well as current market performance. The company has witnessed an equity multiplier that indicates that the Hotel owns Tk. 1.25 value of asset for every ten-value share as on October 2012. All this have shown, or rather portrays a proper and steadfast advancement of the (Hotel Singh, 2006.p.96). 2.1 data for both the Hotel revenue and total net revenue The above chart’s data is as below: Months ADR OCC REVPAR Yr 1 1 83.78 25.41 21.29 2 68.9 24.63 16.97 3 55.97 23.44 13.12 4 52.43 31.9 16.73 5 61.65 25.78 15.89 6 57.92 35.09 20.32 7 57.88 33.61 19.45 8 64.94 26.5 17.21 9 60.95 40.83 24.89 10 57.28 40.34 23.11 11 61.19 38.31 23.44 12 59.84 50.09 29.97 Yr 2 1 55.75 68.37 38.12 2 53.76 77.83 41.84 3 57.41 76.34 43.83 4 63.47 57.7 36.62 5 67.99 40.71 27.68 6 64.22 46.93 30.14 7 64.51 51.26 33.07 8 75.95 42.42 32.22 9 75.33 57.91 43.63 10 70.52 60.13 42.4 11 73.24 52.99 38.82 12 72.03 61.56 44.34 Yr 3 1 68.48 78.19 53.54 2 65.66 84.63 55.56 3 66.94 80.96 54.19 4 71.72 64 45.9 5 76.97 43.57 33.53 6 73.5 48.24 35.46 7 72.52 54.33 39.4 8 78.15 48.56 37.95 9 77.28 61.27 47.35 10 72.92 65.66 47.88 11 75.87 62.33 47.29 12 74.95 71.04 53.25 As per the table above, it can be noted that from 2012, when new strategies were formulated in the hope of changing the stability of the Hotel. It can further be acknowledged that from 2012, the revenue of the Hotel has been growing with both largest market share and a thriving brand image. In the same year, expert affirms that the Hotel achieved a 22 percent growth in revenue alone against the 19 percent the previous year. According to the auditors, this happened prior to the change in strategy. Unusual trends It should be noted that from year one, after the change in strategy that is 2012, the whole revenue was 2,265,652,244. In addition, its net revenue was 1, 321,045,900. The second year, recorded an advancement of both the revenue and net profit. Revenue was 3,564,767,229 and net profit was 1,820,291,430. Moreover, the thirds year, which is 20114, records a revenue of almost 5, 211,429,044. The net profit is yet to be calculated since it is calculated on a yearly base. The rest of the revenues indicated above are projections, prior to the plans that the managerial department have staged in place. However, the above analysis indicates that, there has been a drastic change on positive radar that has engulfed the company. This is a good position to the company, since so far it has set the whole company on a better ground, when it comes to market environment. Dividend payouts It should be noted that in 2011, the NPAT of the company fell by 12%. This is what alarmed the managerial team to make good and new working strategies. The company offered a 15% share, which was termed as a bonus and 15% for the following year. This was tactically okay, since it brought about 73.33 dividend layouts. In line with the market demand, which is ever growing, occupancy and exchange risk, the company is expected to retain a 26% after taxation in net profit. However, the whole circle revolves around data manipulation. The correctly manipulated data will always give out a clear and a correct line of manipulation. Revenue of the Hotel (current condition) Percent changes for multiple time periods are displayed: Supply: the number of rooms in the segment multiplied by the number of days in the period. Check to see if there are more rooms available in each area. Demand: the number of rooms sold (excluding complimentary rooms). Check to see if there are more travelers in an area. Revenue: the total room revenue generated from the sale (rental) of rooms. Check to see if there is more money coming into an area. 2.2 Room’s departmental income and revenue Rows display data for your hotel, four industry segments, and your comp set. Columns display values and percent changes for the current month, YTD, running 3 month, and running 12 month time periods. There are similar sections for Occupancy, ADR and RevPAR 2.3The department of food and beverages revenue and income 2.4Return on capital employment 2.5Occupancy average rate 2.6Short term and long term stability rations Return on investment (ROI) = EBIT/ Total Assets. ROI=EBIT/revenue x revenue/total assets ROI = 138 000x 250 000 ROI = 34500,000 (this is for the year ended 2013). According to managers, this is the determinant year for the next fourth year. Therefore, it was wise to use it in extrapolating short term and long time stability ratios. According to the above information, then the stability ratio can be noted as 2:3, of the year 2012 and 2013 consecutively. Short term stability ratio Yrs Short term stability ratio Long term stability ratio Yr 1 1 1.3 17.7% Yr 2 2 3.3 15.7% Yr 3 3 3.8 17.1% current assets/current liabilities all assets/all liabilities 1 current assets 1,041,642 total assets 9885329 current liabilities 775,778 long term debt 973,858 total liabilities 1,749,636 2 current assets 2,937,225 total assets 10935976 current liabilities 887,001 long term debt 834,775 total liabilities 1,721,776 3 current assets 5,714,615 total assets 12,949,158 current liabilities 1,521,719 long term debt 695,650 total liabilities 2,217,369 Long term stability ratio 2.7 Turn over Cumulatively, the whole system witnessed a turn over of almost 6687, 123 dollar billions of cash flow, plus a considerable amount of workers being absorbed in. 2.8 Marketing spend and activity 2.9 Marketing and activity spend for the three years 2.10 EMS activities and spend Months EMS spend Yr1 1 0 2 0 3 0 4 0 5 0 6 0 7 0 8 0 9 0 10 0 11 0 12 0 Yr2 1 0 2 0 3 0 4 0 5 0 6 0 7 0 8 0 9 0 10 0 11 0 12 0 Yr3 1 0 2 0 3 0 4 0 5 0 6 0 7 0 8 0 9 0 10 0 11 0 12 0 The whole round activities did amount to almost 1236, 5862, 000 dollars. This including the spend for the year following 2013. 2013, on the other hand showed a slight increase. 3. Part B 3.1 SWOT analysis (based on the year ending 2013) Considerably, in as much as the three past years were greater one, since the company saw a great achievement after the rescheduling of its operational strategy, it should be noted still that the company faced a great instability. The following detailed WOT analysis of the Hotel, can perfectly outline where the Hotel faced it rough, and where it gained the best. 3.1.1 Strength Its strength as per the three years is as follows: first, it has a 24-hour service centre. This made it to have a 24-hour selling period per day. There is also a brand new, convention center attached to it. It is located in the Nation’s one of the largest cities, and therefore attracting more and more clients. Next, it portrays an international standard of operation, hence attracting even those people who have international standards. On contrary, it also offers cheap foods for those natives who do not leave on a higher standard of life to achieve. This ensures all-round service, to all clients hence maximizing sells. It has an indoor heated water pool, for recreation. Here, the company has ensured that even those who are disabled can comfortably enjoy the company’s facilities, hence making available the disability accessible facilities. 3.1.2 Weakness It is worth understanding that the company bears the following weakness, as witnessed in the past three years(Singh, & Dewan, 2009). First, the company was discovered to be business oriented and not family oriented as expected. It also has no special transportation therefore at most the clients are expected to hire taxis for them to be relocated, when the need arise. In as much as foods are cheaper, it is noted that its biggest weakness lies on the boardroom. Since it has very expensive rates per night, and therefore the only people who can manage such rates are allowed to spend. Hence, it has a limiting service scope for those who want to sleep. 3.1.3 Opportunities It has been linked to the brand new convention center; therefore, it receives many visitors. Further, the company is located in one of the largest cities in the country; therefore, it has the highest opportunity of getting what they want. The government knows it and therefore, the government usually makes it number one when it comes to meeting point. It gets the first priority with the government; hence heightened their relationship hence has gained advantage to the government. 3.1.4 Threat Since the company is located in one of the largest cities in the country, with a convention next to it, it experiences late night noises (Colomer, 2002). These noises at times usually make the visitors uncomfortable; hence, it faces the threat of being avoided when it comes to night visits. Terrorists, due to its bright5enign future, can as well target it. At times, it is noted that the parking at times can be an issue due to the busyness of the city. This is a threat since, a person may fight it hard to park and have a rest at the Hotel, during the times when the street is busy. The above are some of the noted SWOT analysis of the Hotel. However, it can be noted that its strength is more as compared to weakness, then followed by opportunities. These are the main factors that have so far raised the standards of the Hotel. In other words, the strength and opportunities are the main factors that made the Hotel to shot up in the world of business. Here, it is considered that the two are the positive side of the firm (Mathews, 2008.p.36). 3.2 Objectives The objectives for the fourth year are as follows; To operate furnished, and hotel opportunities as well as equipping the hotel to the top of the European market To build more relationship with the shareholders, as well as securing hotel management contracts and not forgetting successfully managing hotel investments To achieve levels of profit enough to give out reinvestment. To manage the hotel but the principle of human resource, that encourages both the reward and unification of efforts and achievement. In addition, the company is focused on providing training as well as interpersonal development within its area of reach. 3.3 Strategies The strategies are meant to give the Hotel a clear vision and target in the fourth year. The above is done in the efforts of meeting the worldwide standard of operation. 3.3.1 Security Strategies for the fourth year are as follows: first strategy will involve training the employees to be well versed with technology (Colomer, 2002.p.25). This is because, the company will move from a manual system, to a digital one. This is due to the insecurity reasons outlined in weakness step of SWOT analysis. Doors, gate and all exit and entering point, should be guarded with electric alarms and codes. This will involve proper scan and code use for the employees of the company plus clients. 3.3.2 Market conference The main struggle for the company is to meet the highest standards. This can as well be achieved with introduction of the conference market (Mathews, 2008.p.36). Here, the market expected will be operated in a conference manner. Where, the company will be able to meet the clients from all occupations, nearly the same time, to discuss issues related to marketing. This suggestion was conceptualized with the mangers and it is thought to perfectly fit in the system. 3.3.3 Corporate leisure Right now, the company has a hot watered swimming pool; however, this is not enough facility for leisure activity (Colomer, 2002). Therefore, in the coming four years, the company has decided to make more leisure facilities, for instance table tennis, lawn tennis, and badminton grounds. This will ensure a good environ\met for the visitors who come in for more than two days. The above are mainly internal ideas; however, the company also has external ideas as below. Products will as well be introduced by the company in the leisure market, so that the clients can have the chance to enjoy their products while on a leisure activities. In this way, the company will be maximizing the use of both leisure activities and food. Competitive sets(Colomer, 2002.p. 25) Which hotels directly compete with my property? Participation – submit monthly, daily, and segmentation data Proximity - usually close to the subject hotel Pricing – usually similar in scale, class or price level Product – comparable features, number of rooms, meeting space Hotels can have more than one comp set… A hotel may have a local comp set and a 2nd that uses a broader geographic area with more similar features, or one for WD and another for WE, or Group/Transient, or chain versus management company, or old versus new 3.3.4 External ideas According to research (Shymark, 2008), it is noted that at most Hotels should embrace technology in their every activities. In the same way, apart from the alarm control doors and gates, the company will introduce a wire payment method. Where, it will not be necessary for a client to come at the premises so that he or she can book a room or any service. They can as well do that at the comfort of their homes, or while still travelling so that they can be assured of their accommodation or the service expected. Therefore, the company will give the clients an option of depositing money to the company’s account, and then they will, only have a code number to prove their deposition on arrival to the premises. 3.3.5 Other market segments Product promotion The company will as well enter into market product promotion in style. Here, the product promotion will be staged in media platform. Where, all the products and services that the company is offering will be aired officially on both the website of the company and the magazines as well as newspapers. The advertisement itself will comprise of the pricing and distribution. Since the company is looking forward to change product pricing, it will be better if the above is made familiar to the clients through advertisements(Singh, & Dewan, 2009.p.36). Therefore, with the above in place, it should be noted that the company will get not only potential buyers, but will also control incidents of miss-understandings. A client who comes for the service of the company should have already been told about the pricing. 3.3.6 Food and beverage The company intends to improve in its food and beverage production. At most, the three years ago have made the mangers to understand all kinds of food, which certain people prefer due to their cultural influence. Since the Hotel so far acknowledged cultural diversity, also food and beverages will be support by the culture. This will be successful with the employment of cooks, who understands most of the cultural foods and beverages of the clients. In this way, almost all clients who come in will get what he prefers, both in terms of culture and in terms of just peer influence. 3.3.7 Service and staffing quality The company operates on a staff that is more responsible and professional in their undertakings(Singh, & Dewan, 2009). With the increasing number of company’s client, the managers have though to also increase the number of employees plus their wages. Minimal payout will be 87 dollars and the maximum payout will be 256 dollars per week. Service quality should be improved as follows; I. The employees will be upgraded on housekeeping and reception II. With the help of a computerized system, clients will be assisted immediately they arrive III. Dancing troops will be made available, to entertain the guest that continuously entering the company The three steps above will be used to improve the kind of service the company has been offering to its client. III.3.7 physical property condition Most of the properties are still in the best condition. A bit of renovation will be required, although that will not involve many expenses. The pertinent part to for renovation is the boarding rooms, dining and the front rear. However, the other parts are still up to the task, for another year. However, the whole process is estimated to take almost 78, 598 dollars. It is mainly paintings and a little or repairs. III.3.8 EMS The planning committee will be meeting everyday to ensure the process stated above will come into existence within the shortest time possible. However, the expected period for the completion of the above plan is less than six months. Meetings are expected to take twice in a week, to ensure the above are implemented (Singh, & Dewan, 2009). It is encouraging to note that the company is determined to give out the best, so that it can remain in the highest position in the world market. The motto; “is togetherness for the best.” 4. 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Singh, R. K. (2006). Hotel management. New Delhi, India: Aman Publications ;. Singh, U. K., & Dewan, J. M. (2009). Hotel management. New Delhi: APH Pub. Corp., in association with Indian Institute of Management. 5. Appendices 5.1 Current sheet 5.2 Statement of income for the third year 5.3 monthly indicator reports Read More