...Additionally, the guaranteed lease payments indicate a consistent cash flow for the hotel regardless of the success of the pub venture. In comparison, depreciation is also lower from a leasing standpoint due to the lower initial capital expenditure. As the main responsibility of running the business is outsourced to the leasing company, this initiative also incurs less annual costs in terms of raw materials needed to run the business in addition to less operating expenses for the hotel. This situation proves to be a very safe investment for the hotel, as they are taking on minimal costs and have a guaranteed income of capital through the lease payments. Building This initiative proves to be more risky than leasing; nonetheless offers a higher return. The initial capital expenditure is double that of leasing the space, however it does give the hotel full earnings of all future revenue. While incurring additional raw material and operating costs throughout the year, this initiative does prove to be more expensive with a higher degree of labor required. That being said, if run properly the venture is projected to turn a much higher profit when compared with the leasing option. Operating cash flows are projected to double that of the leasing option in the first year alone as well as continue to increase as the years go on. In addition to the immediate profit, by building a business, the hotel will not only has full say over all aspects of the pub, but will also be able to benefit...
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...Financial Management. EBS ML. 4th course students. Case study. Phuket Beach Hotel. Valuing Mutually Exclusive Capital Projects. Questions 1. Please asses the economic benefits associated with each of the capital project. What is Initial Outlay? What are the incremental cash flows over the life of the project? What is an appropriate discount rate to use for discounting the cash flows of the project? SN 1 and SN 2 - 40% 2. Are the project comparable based on the standard NPV measure, given that they have unequal lives? What adjustment or alternative method is required in comparing such project? - 10% SN 3 3. How sensitive is your ranking to changes in the discount rate? What other "key value drivers" would affect the attractiveness of the project like patronage factor; amount of upfront investment; cost of capital, any of the key value drivers? Please estimate the sensitivity of your result to a change in any of the key value drivers. - SN 4 - 30% 4. Which project should the hotel undertake? Why - 10 % In case of Hotel, I would like to recommend to lease the Bar. First of all because of Payback period is much shorter ib both scenarios (discounted and nondiscounted).secondly Profitability ratio is also much higher, due to the fact that less investments are required to undertake the project. However the main draw back is EAA which is segnificantly lower as well as ROI. In conclusion, I may say that, in short prospective Lease is option is optimal, however in long term build...
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...Case 10:Phuket Beach Hotel VALUING MUTUALLY EXCLUSIVE CAPITAL PROJECTS Case Overview Planet Karaoke Pub Project Lives Monthly rental (5% increment for 3rd and 4th year) 4 years 170, 000 (THB) 770, 000 to 1, 000, 000 (THB) 55, 000 (THB) Up front renovation cost (Depreciated over the life of project - straight line method with zero salvage value) Overhead expenses Repair and maintenance cost 10, 000 (THB) / year Case Overview Beach Karaoke Pub Project Lives Up front investment (Equaled depreciation) 6 years 800, 000 to 1,200 000 (THB) 900, 000 (THB) 4, 672, 000 (THB) Other investment (Equipment and chairs) (Depreciated over the life of project - straight line method with zero salvage value) Estimated total sales (1st year) (5% average growth per annum) Operating costs: Food and beverage costs Salaries Other operating costs 25% of sales 16% of sales 22% of sales Repair and maintenance cost 10, 000 (THB) / year Case Overview Beach Karaoke Pub Capital structure (75% equity & 25% debt) Debt – loan from Siam Commercial Bank – interest rate 10% Hotel owners’ cost of equity - 12% Corporate tax rate – 30% Future profits – discounted 5% Risk factor – 25% Conservatism- risk factor (consideration due to the negative factor for pub) Question 1 Assess the economic benefits associated with each of the capital projects. What is the initial outlay? What are the incremental cash flows over the life of the project...
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...Using Case Studies in Real Estate and Finance Courses By Su Han Chan Department of Real Estate The Preliminaries Setting expectations Focus is on decision making Requires judgment No “right” answers Setting ground rules The student contract (4Ps) Knowing your participants Selecting cases and readings Using a mix of short (“breather”) and long cases Assigning a term project Case seminar series_Su H Chan A Short Case Phuket Beach Hotel: Valuing Mutually Exclusive Capital Projects* (4 pages) Synopsis Phuket Beach Hotel has an opportunity to lease its underutilized space to a karaoke pub and earn a rental income. Alternatively, the hotel could develop the unused space and create its own pub. The general manager of the hotel must decide which of the two capital projects to recommend to the hotel owners. This case presents sufficient information to build cash flow forecasts for each project and to rank the mutually exclusive projects using various evaluation criteria. *The case is available from HBSP.com Case seminar series_Su H Chan Using the case Undergraduate, graduate, and executive levels Exposes students to a wide range of capital budgeting issues Questions built into the case Student group presentations (2 teams presenting the same case) Class members evaluate team presentations Instructor debriefs case Lessons learned Evaluator__Please write your name on the back__________________ Group ___________________________ Grading Checklist for...
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...Analisa Studi Kelayakan Proyek Karaoke Pub Phuket Beach Hotel MMBM 23 Kelompok 2 1. 2. 3. 4. 5. Arfy Frisnanto Bonishita Pinasthiko Pariwondo Erna Suria Darmawan Yosua Taniasurya 0152112011 0152112013 0152112015 0152112009 0152112010 Corporate Finance Wijantini, PhD, ICBRR Mata Kuliah Faculty Member Daftar Isi I. II. 1. 2. 3. 4. 5. 6. III. 1. 2. 3. 4. Pendahuluan .................................................................................................................................... 2 Asumsi-asumsi untuk dasar Perhitungan ........................................................................................ 2 Capital Expenses ......................................................................................................................... 2 Asumsi pendapatan atas masing – masing alternatif Proyek ...................................................... 3 Erosion Patronage = Full ............................................................................................................ 3 Relevant Cost .............................................................................................................................. 4 Discount Factor ........................................................................................................................... 4 Unequal Project life .................................................................................................................... 5 Analisa Kasus...........................
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...Chapter 2 Literature review This chapter reviews related literatures on overview of International and Thai tourists, general information about Phuket, current situation of tourist industry, attractions and activities, concept of tourist behavior and tourist perception, marketing concept, as well as previous research. Its purpose is to provide general knowledge and overall concept regarding the theories and previous research related to this research. 2.1 Overview of International and Thai tourists According to Tourism Authority of Thailand (2011), the international tourist arrivals to Thailand figure for 2011 reached 19.09 million, an increase of 19.84%. The number of tourists had shown an accumulative growth rate over the first ten months. The flooding crisis late in the year, however, slowed down the growth in the number of tourist arrivals in October, and caused shrinkage of 18% in November 2011. Fortunately, all market groups still retained an increasing growth at the good level, including East Asia at a 32.30% increase, ASEAN at a 21.96% increase, the Americas at a 12.85% increase, Europe at an 11.40% increase, Africa at a 6.73% increase, and the Middle East at a 5.95% increase. Domestic tourism by Thais in 2011 was estimated at 98 million tourists/trips, generating an income of 407.6 million Baht which was less than the target of 421.1 million Baht. The purchasing power dramatically shrank in the second-half year due to the flooding crisis, which abruptly halted...
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...Phuket Beach Hotel Case Analysis Phuket Beach Hotels (PBH) management has been approached by Planet Karaoke Pub (PKP) to lease a vacant space within the hotel. Management is intrigued by the offer because the space is currently not being used. Due to the recent success of karaoke pubs management is also considering creating a pub which they would call Beach Karaoke Pub (BKP). Finally, there is a possibility that the best option will be to seek an entirely different user type where the Karaoke Pub crowd may alienate 25% of the hotel patrons with young children. This paper seeks to use capital budgeting analysis tools; net present value, internal rate of return, equivalent annual annuity and profitability index to definitively say which project has the best financial viability. The data used to generate the key decision metrics were provided by PBH management and are as follows. Planet Karaoke Pub -Four-year lease, monthly 170,000.00 baht for the first 2 years and 5% increase 2 additional years -Upfront costs to PBH range between 770,000.00 baht and 1,000,000.00 baht with zero salvage -Pro-rata allocation of the common area maintenance fee is 55,000 baht -10,000.00 baht will be charged for common area maintenance fees Beach Karaoke Pub -Up-front investment will range between 800,000.00 baht and 1,200,000.00 baht -Furniture, Fixtures and Equipment will cost 900,000.00 baht -Estimated total sales in the first year are 4...
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...HKU774 CATHY ENZ ALI FARHOOMAND BANYAN TREE: SUSTAINABILITY OF A BRAND DURING RAPID GLOBAL EXPANSION Within the next five years, if we play our expansion card right and we manage our growth properly, we have a reasonable, credible opportunity to become one of the top two or three dominant players in a global space which is very niche but nevertheless very global. - K.P. Ho, CEO of Banyan Tree Holdings Limited1 On 14 August 2006, exactly two months after its initial public offering (“IPO”), Banyan Tree Holdings Limited announced second-quarter results for the period ending on 30 June. Revenue had more than doubled to S$71.42 million, largely due to recovery following the 2004 Indian Ocean tsunami. The company felt that this was only the beginning, however, and had earmarked part of the IPO proceeds to finance an ambitious expansion plan. At the core of its business development plan was a proposal to open 21 new resorts3 over four years that would span non-Asian territories from Greece to Mexico. Banyan Tree CEO Ho Kwon Ping’s vision was to “string a necklace [of Banyan Tree properties] around the world”. The Asian Financial Crisis of 1997, the SARS crisis of 2003 and the Indian Ocean tsunami of 2004 had taken their toll on the travel and tourism industry [see Exhibit 1]. Although recovery was on the horizon, Ho understood the need to diversify risks across geographical regions and the IPO provided the finances to venture out of familiar territory. Two...
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...12/29/2014 Remembering Tsunami 2004: Phuket bounces back from disaster Asia | The Star Online Remembering Tsunami 2004: Phuket bounces back from disaster by stephen fein Just as popular: The Phi Phi Islands were badly devastated by the tsunami waves but recovered very quickly. Koh Phi Phi is pictured above, 10 years on. — Phuket Gazette/The Nation Tourism industry insiders who have monitored trends in the Phuket tourism industry over the past 10 years describe the recovery after the worst natural disaster to ever hit the region as ‘remarkable’. THAI tourism industry icon Wichit Na Ranong, managing director of the luxurious Indigo Pearl resort at Nai Yang Beach in Phuket, says, “I would say we had a very fast recovery after the tsunami. In fact, I think it may be the fastest recovery ever anywhere after a disaster of this kind. I think the industry had almost recovered after two years and was fully back to normal after three, with continuous progress after that.” Asked if there are still fears among tourists of another tsunami, he says, “Not at all. After just a few years, any such fears just faded from people’s minds.” A series of “tourism road shows” abroad and good cooperation among local and national authorities also helped assuage any such concerns, he says. Wichit says that it is still difficult to think back on some of the things he had witnessed after what he describes as a “tragic, tragic event”. Like most people in Phuket, he didn’t even know what a “tsunami”...
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...of the Marketing Mix. Promotion: * Use Internet advertisements: booking.com and some only for gay and lesbian Internet. How much? 1.Join booing.com for free, we just need to provide our hotel information and price detail. 2. There are guy and lesbian community website, we can put our hotel information on it. 3. Mobile app for guy and lesbian has social network. We can communicate with them, then give them our hotel information, and also flow them, if they have any new staff we can improve. And also we will created our own app for the customer can use it to connect to our hotel. 4. there are online thai gay magazine. * Special events: like gay/lesbian celebrate events：17，May. We will provide the celebration in that day. * Endorsements: we can invite popular gay or lesbian star to do it。 Spend money one time, we can earn more. * Newspapers: every month we can put our news in the magazine or newspapers. Not only put on local magazine or newspaper. And also we can put outside countries. * Incentive like discounts (i.e., coupons), free items, or a contest. Free wifi * Held in physical environments at special events such as concerts, festivals, trade shows. Place : We choose the place is patong hill villa. About Patong | Map About Patong About Phuket | | Patong is Phuket’s main tourist centre. Patong is sits half way down of the island’s, and it is in a famous west coast with its fabulous sandy beaches and picture postcard sunsets....
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...acknowledgement of the work of others. We have worked together as a group and we have all contributed equally and would therefore be graded as a group. …………..…………………………… Fouad El Ghzal …………..…………………………… Nikola Pamler …………..…………………………… Ulrich Sommer Executive Summary This paper assesses the different benefits and costs associated with each of the capital projects, Planet Karaoke Pub that offered to sign a four-year lease agreement and Beach Karaoke Pub that offered to sign a six-year lease. It develops in general, the relevant incremental cash flows for each option and the appropriate discount rate for discounting the incremental cash flows. Different evaluation criteria are used to rank the projects like internal rate of return (IRR), net present value (NPV), with the weighted average cost of capital (WACC) used as the discount factor, and the use of profitability index for comparison. The average return on the investment (ROI) and payback period that are usually used by Phuket Beach Hotel when evaluating capital projects are also considered. Despite the calculated financial benefits of each option, other risk factors, like the uncertainty of income, were considerably higher in importance when deciding on which project is most suitable for this investment recommendation. Therefore, in deciding the best investment option, fixed rental income over a shorter...
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...TROY UNIVERSITY INTERNSHIP PROGRAM TERM PAPER Submit day: June 1st ,2012 INTRODUCE ABOUT THE TOUSIST IN VIETNAM Vietnam has enough elements to develop tourism into a spearhead economic sector. With tourism potential and rich diversity, this country is a popular destination in the world. In 2008, Vietnam welcomed 4.218 million international passengers; this figure in 2009 was 3.8 million, down 11% over the previous year. Vietnam National Administration of Tourism predicts the number of international visitors to Vietnam in 2010 was 4.5 to 4.6 million; the number of domestic tourists was 28 million in 2010, up 12% to 2009. Revenue from tourism in 2009 reached Vietnam from 68,000 to 70,000 billion. According to the Vietnam National Administration of Tourism, 2015 Vietnam's tourism sector will attract 7-8 million international passengers, 32-35 million domestic tourists; the corresponding figure in 2020 was 11-12 million international 45-48 million domestic tourists. Revenue from tourism will reach 18-19 billion USD in 2020. However, Vietnam's tourism industry for many years, are also alarmed about the victims' tight guillotine, "bullying travelers, weak infrastructure and poor service quality, create a bad impression to tourists. Tourism potential of Vietnam: Monuments: As of May 8/2010, Vietnam has more than 40,000 relics, including places of over 3,000 monuments are ranked national monuments and ruins are over 5000 provincial rankings. and the number density most monuments...
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...are people who went through horrible things just to get to safety.This is how tsunamis tear people apart.What would you do if you were in a tsunami. An inspirational event from Feldt family’s story of surviving a tsunami. This family went thru a lot to stay alive and trying to hold on to hope. It all started with a peaceful family vacation to Phuket, Thailand for a christmas. It quickly changed on December 26, 2004 when a tsunami hit the resort they family was staying in. The family was separated the whole time during the disaster. At the end the family was reunited after about a week of trying to survive. Soon after be reunited they were soon back home after having medical attention. An inspirational event from Louis Cryer, his mother Zoe, and his brother Felix’s tsunami story is when the family struggles to stay alive, but managed to do so by reaching high ground together and even saving a disabled women. Louis Cryer states “Buildings were collapsing around us. We made a run for higher ground that had become a makeshift safe refuge area. People came up from the temple with dead...
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...Valuation of Potential Karaoke Pub Projects There are two mutually exclusive capital improvement projects under consideration: lease under-utilized space to an unrelated third party, Planet Karaoke Pub, or invest greater capital to open and manage your own nightclub, Beach Karaoke Pub. Using the predominant valuation methods, we have analyzed the relevant quantitative and qualitative data over their useful lives. In our assessment, we discuss the strengths and weaknesses of each approach as well as their relative weights in determining the financial viability of each project. There are three underlying assumptions driving our calculations: 1) a 10.75% discount rate, 2) a 10% guest room erosion rate, and 3) the omission of irrelevant staffing costs (16% of sales) due to long-term salary contracts. We have determined that while both options are profitable, Beach is more so. However, before a final decision is made, more research into the qualitative aspects of these undertakings needs to be done; community footprint impacts and room revenue erosion rates must also be examined in more detail. In order to assess the viability of each project we must first determine the initial outlays and the relevant cash flows, assigning an appropriate discount rate based on the weighted average cost of capital. Taking the weight of equity (75%), the cost of equity (12%), the cost of debt (10%) and the corporate tax rate (30%), we have calculated and recommend a discount rate of 10.75%...
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...Marketing Mix ………………………………………………………………………….20 Product ………………………………………………………………………….20 Price ……………………………………………………………………………..22 Place ……………………………………………………………………………..23 Promotion ………………………………………………………………………26 References ………………………………………………………………………………………28 Appendices .…………………………………………………………………………………….29 Executive Summary X-Vacation is a company with an innovative solution for the average family vacation. With our services, eventually all over the world, we will be able to provide the ideal vacation scenario for all family members. The company will have its roots in Orange County, but as soon as 2010 we hope to have contractual agreements with large hotel chains all over the world. We want to provide a network of extreme sports activities. The best way to do this is through hotels all over the world X-Vacation got its inspiration from a growing generation Y, a significant increase in participation in extreme sports, and the lack of competition. Generation Y is a generation with power, many are still in high school, but they influence the way the money in a family is spent, and their interest in our services will skyrocket the company’s success. Currently our main competitors are...
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