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Operation Analysis - Essay Example

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the company made around $0.2 million profits at that time. The profits and revenues continued to decline slowly after July, due to off-season and change in weather…
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Operation Analysis Operation Analysis The net revenue of the hotel in the previous year, July was recorded to be highest at $1.2 million approx. the company made around $0.2 million profits at that time. The profits and revenues continued to decline slowly after July, due to off-season and change in weather conditions, which lead to the decline in leisure consumption by the consumers. The leisure standard consumers were replaced by the Business premium bookings. Sales of business premium bookings were increased overtime from October in year one till date, due to the efficient marketing and advertisement policies in the business segment. Corporate contract bookings were also increased as a result. The average revenue earned by the Business and corporate segment together amounted to 40% of total revenue in Year 1. The percentage remained constant in year 1, and the same two segments with average revenue earnings of 38% approx. also support the current revenue. The company, however, is striving hard in the marketing department to increase its leisure standard and premium sales that are expected to be increased in July due to holidays and successful marketing campaigns.
Total revenues of the company were observed to be lowest in February this year with $0.8 million. This also had a negative impact on cash flows of the company. However, the subsequent increase in advertisement expenditures and holiday’s factor, the revenues were reported in this month to be equal to $1.1 million approx. with a net profit of $0.18 million.
Departmental financial analysis revealed that departmental profits of the company had increased over time and this month’s departmental profits were reported to be 62% as compared to 54% last year. The growth in profit percentage was due to the cost control measures adopted in the food and beverages expenses, which successfully resulted in the total expenses to be 68% as compared to 95% in the last year. The room services in which profits net of departmental expense were 45% earned major revenues of the company.
Cost control measures were also adopted in the administrative and general expenses, which resulted in a decrease of expenses to 12% as compared to 17% last year. Marketing and sales, however, were increased slightly due to the advertisement campaigns and discounts offered by the company to increase the summer sales packages. Fixed expenses of the company were reported to be performing positively, and the positive decline in total fixed expenses was observed. Fixed expenses this month were 13.4% as against 18.4% reported in the last year. The primary reason was the decline in depreciation expenses and tax charges, which had a positive impact on the overall financial performance of the company.
Due to the factors discussed above, the company was successful in achieving the net profit margin of 15.5% this month with a total net profit of $184,375. It is expected that hotel will increase its profit margin in the next quarter as a result of expected increase in summer sales.
The management of the hotel is performing efficiently and the financial decisions taken by the management, together with the cost control measures are expected to bring the further improvements in the profits of the organization (Revenue & Profit for Jun Y2, 2015). The hotel is also required to improve its customer services to attain the goodwill in the upcoming season. The overall financial performance of the hotel is satisfactory and is leading towards the achievement of financial goals of the organization.
Reference
Revenue & Profit for Jun Y2. 2015. [Online] Available at: [Accessed 28 May 2015]. Read More
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