Hotel Profitability And Success Factor Case Study Solution
Infrastructural Advancement
In today’s era of modern world where the disparate services are provided by the hotel, advanced infrastructural development within the hotel plays a vital role in enhancing the customer experience and assisting the hotel in generating revenues by retaining and increasing the occupancy rate for the hotel.Infrastructural advancement by hotel includes swimming pools, spa rooms, recreational activities area, indoor sports area and outdoor sports area. These advancement in infrastructural advancement however increases the operational cost for the hotel but assist the hotels in retaining and increasing the occupancy rate. Hence, advancement in infrastructural development has now become a need for hotels to remain competitive within the industry and increase the revenue as well as the occupancy rate for the hotel.
Conclusion
The hotel profitability is found to be highly dependent on the success factors which are examined in this report. Hence, the success factors are the revenue generating activities performed by hotel which results in increased customer satisfaction and experience enhancement and increased profitability for the hotels. Moreover, hotels should determine and work efficiently to achieve those success factors which are integrated to each other i.e. the increase in occupancy rate can be increased or decreased with the enhancement or diminution of other services provided by the hotels respectively. Therefore, the company should consider all the factors which are critical for enhancing the revenue and profitability of the company.
Exercise 2-1
Critique in Bullet points on Model
- The occupancy rates are assumed to increase in the model without any specific detail that what factors drive the occupancy rate upwards.
- Fund, Furniture and fittings are assumed to be eliminated by the year 4 according to the model which indicates that the contract will be ended. However, these are the requirement which can be demanded by the hotel business anytime therefore these should not assumed to be zero.
- The inflation rate is also assumed to be constant in the model which is not appropriate as the inflation rate of the countries does not remain constant.
- Inflation rate is not applied on the components of revenue which should increase the revenues as well as the cost with inflation is also increasing.
Discount rate is not used in the model for the analysis as it show the current value of the expected cash flows in the coming years for the company.......
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