HOT301 Assessment 2 guidance

HOT301 Assessment 2 guidance

• The prospectus report should aim to convince investors that the hotel is a profitable investment opportunity. It is essential that the prospectus is creative, professional and innovative in nature.
  • Use images throughout – find images online that you can use as ‘concept images’ in that they provide examples of what they hotel might look like once the new growth strategies are implemented. Must reference sources of all images (in-text and in the reference list)
• Select a location within Australia or New Zealand for the hotel and consider the implications of this location on their business – target market, reasons travellers visit this location, products/service/facilities that would attract these travellers, etc.
  • Choose a location that you aren’t familiar with and do some research – great way to gain a better understanding of hospitality & tourism in other areas in Australia or NZ. Please do not pick Sydney, Melbourne or the Gold Coast.
  • Overview of the chosen location
    • Give your hotel an interesting & evocative name that links to the story of the location you have chosen OR the type of hotel you have decided to develop.
    • Provide maps to show where the location is, as well as where your hotel is specifically located in the chosen location. Provide a couple of paragraphs on why people visit, local attractions, the type of consumer who visit, purpose (business or leisure). See if you can find information on local tourism/tourism growth in the chosen location – reference this.
  • Detail the facilities currently provided at their hotel – don’t make these up, you can find this information in the background document and in the ‘Extra Facilities’ Decisions tab. What types of rooms, how many rooms, number of seats in the restaurant, facilities installed, services available to guests, etc.
• Throughout your entire proposal you should focus on key revenue generating areas:
  • Rooms
  • Food & beverage
  • Conferencing
  • Other revenue generating centres (e.g. leisure club, potential new revenue generating facilities, etc.)
• Download the hotel data for the HOTS – look for the ‘Monthly Data to CSV file’ link on the homepage, will open in Excel. The workbook has 72 rows, each row represents one month i.e. 6 years (Years 0-6) x 12 months = 72 months. Months 1-12 is Year 0, the data for the year prior to you managing the hotel. The data is extensive, but much of it you will not use/is irrelevant to this assessment. You will need to sort through the data to decide which of it you are going to use.
  • Rather than using Years 0-5 as labels, use real years, i.e. Year 4 is 2018, Year 5 is 2019
  • Graph your data (using Excel) as it is easier for someone to read and understand, will also help to reduce your word count.
  • Each graph needs a brief explanation of WHY peaks, troughs, growth, decline, etc. occurred.
  • Use graph types that are appropriate to the data – e.g. changes over time can be graphed using line graphs, a breakdown of 100% of something at a particular time can be graphed using a pie graph.
  • Label graphs clearly and indicate whether figures are unit sales, $ amounts or %.
  • You can graph related data together, but it needs to be data of the same type (unit sales, % or $) e.g. Net income, expenses and revenue could be graphed together, but staff turnover, revenue and room nights sold are irrelevant to each other and are different types of data, so it does not make sense to graph them together.
• Overview of the financial position of the hotel prior to the simulation – Year 0, data should be graphed by months. Consult Monthly Indicators, but also look at other reports in the HOTS. Consider overall revenue, sources of revenue, expenses & breakdown, net income. Also look at hotel specific metrics – REVPAR, GOPPAR, average daily rate (ADR), occupancy.
• Compile the financial data throughout the five (5) years of the simulation – Years 1-5, data should be graphed yearly as much easier to read. Some monthly data can be added up (e.g. revenue, net income, room sales, etc). Other data will need to be averaged out per year (e.g. ADR, occupancy, REVPAR, GOPPAR, etc.). Use your common sense here.
• Provide an overview of the strategies that you implemented in the hotel over the 5 years – which strategies were successful, which strategies were unsuccessful and WHY.
• Summarise the major changes to the hotel at the end of the simulation – Year 5, data should be graphed by months, graph the same types of figures as you have for the Year 0 overview
• Compare the performance of their hotel to current and relevant industry benchmarks sourced through research
  • You need to find REAL benchmarks, you cannot create these yourself – these tend to be published by investment/real estate organisations such as Colliers, Savills, Ernst & Young, etc. These organisations gather information about hotels in a particular region and then average them out – this allows a hotel to compare its operations to its competitors.
  • Common hotel benchmarks are ADR, REVPAR & occupancy
  • Benchmarks must be recent – should have preferably been published in 2018 or 2019, no later than 2017. You must reference the source of the benchmarks (in-text and in your reference list)
  • Benchmarks must be relevant to the location of your hotel – i.e. comparing a hotel operating in the Barossa Valley to Sydney-based benchmarks are irrelevant. Try to find benchmarks for the location of your hotel, however if your hotel is not located in a capital city then this may be difficult. In this case compare your hotel to benchmarks for the relevant state, e.g. Barossa Valley is located in South Australia.
  • Provide a brief discussion to explain why the differences between your hotel and the benchmarks exist
  • You may want to structure your benchmark comparison in one of two ways:
  • Simple:
    HOTS hotel Benchmark Difference REVPAR ($) e.g $66.05 $78.92 -$12.87 ADR ($)

    Average Occupancy (%)

  • Complex – this is good if your hotel is not meeting benchmarks, because it may allow you to show that while you’re not meeting benchmarks, your hotel’s growth is faster than benchmarks and so has potential to meet benchmarks in the future. It does require you to find benchmarks for two consecutive years.

• Present a five (5) year growth plan and targets for the hotel – these targets should be financial/quantitative in nature and written using the SMART goals principle (Specific, Measurable, Achievable, Relevant, Time-based). Targets might relate to increasing REVPAR, revenue in a particular department, net income, average spend per head, etc. You could also have targets that look to reduce particular expenses. You should ensure that your targets relate to the revenue generating areas of your hotel (as mentioned above), e.g. Increase rooms revenue by 10% year on year for the next 5 years, decrease utility (water & electricity) expenses by 20% by 2023, etc. Any more than 5 targets are too many and makes your hotel look unfocused.
• Develop future growth strategies ensuring that opportunities for growth and emerging trends are discussed
  • No more than 5 strategies, should be linked to addressing emerging trends AND key revenue generating areas (you will need to research trends and briefly discuss these – e.g. consumer, technology, environmental trends, etc). Strategies should be INNOVATIVE/ENTREPRENEURIAL in nature. Strategies must have solid potential to generate additional revenue AND allow for your targets to be achieved. Need to be CLEAR, SPECIFIC and DETAILED
  • You might look at building brand new facilities, re-developing existing facilities, etc. to attract more clientele from your existing target market AND/OR attract a completely new target market to the hotel. Also consider whether you need to support with new marketing strategies (investors will not provide you money for this, however it is good to show how you plan to promote your hotel).
  • Strategies should support each other and align to one overall major strategy/direction for the hotel, e.g. if you decide to develop the hotel in to a green/sustainable health & wellness retreat, make sure that all of your proposed strategies support this.
• Consider potential risks/threats to the success of their strategies and devise contingencies to overcome these – This is NOT related to general risks of the hotel industry. For each of your strategies you need to identify factors that could impede/threaten the success of the strategy AND propose contingency/back up plan to reduce the likelihood and/or impact of the risks should they occur
• Request financial investment to support the implementation of the strategy – for each strategy you need to request an investment amount – I don’t expect you to have exact number but come up with realistic numbers. At the end of your proposal add this amount up – this is your final request investment amount. You need to offer investment incentives to encourage the investors to lend you their money – these need to be attractive but realistic. You might consider offering % return on investment, % of profits, guaranteed pay-back period, % ownership of the hotel, priority to invest into next future hotel development opportunity.