After managing the motel for nearly twenty years, Dean and his family were faced with the decision to either sell or keep the motor hotel. If they were to sell the motel, Dean would have to determine if the offer of $2.9 million was actually a reasonable selling price for the property. The selection must be made in the neighborhood marketplace in the face of significant uncertainty. For the local region will raise the supply of available rooms by more than 80 percent in the next two years, new resorts planned. This significant increase in the supply of available rooms might have a significant impact on room rates and occupancy rates and, therefore, on the revenues and cash flows of the Super 8 Motel.
Moreover, sale of the property could affect the value of an adjoining property owned by Dean. Dean has fourteen days to choose whether to take the offer of $2.9 million for the motor hotel or reject it, retaining the motel and the future cash flows that the motor hotel renders.
Super 8 Motel- Guelph case study solution
PUBLICATION DATE: December 01, 2011 PRODUCT #: NA0160-PDF-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
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